BusinessDay 02 Mar 2020 by BusinessDay

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news you can trust I ** monDAY 02 march 2020 I vol. 19, no 510

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Investors brace for further sell-off on coronavirus, oil

Iheanyi Nwachukwu

LOLADE AKINMURELE & SEGUN ADAMS

Nigeria bourse set to make history as world’s 57th demutualised exchange

embers of the Nigerian Stock Exchange (NSE) will tomorrow (Tuesday) through a voting process pass requisite resolutions to make the bourse the 57th exchange to demutualise amongst the 70 members of the World Federation of Exchanges (WEF) as at June 27, 2019. A convene d mandator y Court-Ordered Meeting (COM) of the Exchange’s members as Continues on page 42

Inside

FMDQ, FC4S Lagos, UNEP, others kick off Nigerian Green Tagging Project P. 2 UBA records 13% earnings growth, delivers N111bn profit P. 2

he outbreak of the coronavirus which has plunged oil price to its lowest in the year is expected to still weigh on investors’ senti-

Bank stocks slide to 4-year low Oil slips again as Eurobond yield jumps

ment this week as the Nigerian government has reported over

a hundred contacts to the country’s first case, a 44-year-old

Italian man who flew into Lagos Continues on page 43 l-r: Olayinka Ogunsulire, director, Afriland Properties plc; Emmanuel Nnorom, president, Heirs Holdings; Agatha Obiekwugo, director, Afriland Properties plc; Ayo Liadi, ED, United Bank for Africa(UBA) plc; Awele Elumelu, chairperson, Avon Healthcare Limited; Tony Elumelu, group chairman, UBA plc/founder, Tony Elumelu Foundation; Rilwan Akiolu, Oba of Lagos; Babajide Sanwo-Olu, governor, Lagos State; Uzo Oshogwe, MD, Afriland Properties plc; and Angela Adebayo, chairman, Afriland Properties plc, at the commissioning of the remodelled Afriland Tower by the governor in Lagos.

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news FMDQ, FC4S Lagos, UNEP, others kick off Nigerian Green Tagging Project … Stanbic IBTC, Sterling, Wema Bank to participate in pilot phase

he Financial Centre for Sustainability (FC4S), Lagos – a member of the International Network of Financial Centres for Sustainability – established as part of efforts to accelerate the expansion of sustainable finance in Nigeria through the collaborative partnership of FMDQ Group, Africa’s first vertically integrated financial market infrastructure group, comprising FMDQ Exchange, FMDQ Clear and FMDQ Depository and other key stakeholders in the Nigerian financial market, organised the Green Tagging Project kick-off ceremony. The Green Tagging Project seeks to leverage the work carried out through the development of the Nigerian Sustainable Finance Roadmap to design a reporting framework through which all financial institutions can report, in a homogenous manner, their financing of projects. The project shall in like vein develop a monitoring mechanism which would serve as a transparency tool required to inform regulators of green and sustainably compliant market

activities. The UN Environment Programme (UNEP) Inquiry into the Design of a Sustainable Financial System has been working with six countries (China, Kazakhstan, Nigeria, India, Mexico and Mongolia) that are keen to advance their ambitious yet crucial national sustainable finance agendas. The overall outcome of the Inquiry’s project is to build international consensus to align financial systems with the Sustainable Development Goals and catalyse national regulatory actions. Of the six countries in view, Nigeria is one of the few to have a preexisting roadmap that highlights major barriers such as market failures, information asymmetries, lack of awareness, amongst others, as well as several high potential areas with an estimated $92.00 billion sustainable investment opportunity. The kick-off ceremony for the Green Tagging Project which was sponsored by FMDQ and Financial Sector Deepening (FSD) Africa fo-

Nigeria’s dilapidated infrastructure persists despite N83trn oil revenue in 37yrs DIPO OLADEHINDE

espite raking in N83 trillion from oil revenues in the last 37 years, Africa’s largest economy has been unable to utilise the funds to improve the lives of its citizens through provision of badlyneeded infrastructure. The economy, meanwhile, hasn’t made much progress. Nigeria realised N83 trillion from oil revenue in the last 37 years, according to the biennial Benchmarking Exercise Report (BER) of the Nigerian Natural Resource Charter (NNRC) released in February 2020. Ironically, despite the huge resources earned from petroleum, the country has nothing concrete to show. Nigeria is still besieged with inadequate infrastructure, epileptic power situation, low foreign exchange reserves, low savings and an abysmally

low standard of living, with its currency currently exchanging at about N360 to a dollar. The NNRC report, which exposed the lax regulation and poor management of the nation’s oil earnings, showed Nigeria’s average daily crude oil production at 1.9mbpd. Despite producing more crude oil per day than Norway’s 1.84mbpd, Norway has $956 billion saved for future generation while Nigeria has less than $1.3 billion. “It’s very ironical and laughable that despite huge revenues that have accrued from oil and gas over the years, Nigeria has one of the lowest natural resource revenue savings in the world,” Luqman Agboola, head of research at Sofidam Capital, said. According to the NNRC’s report, the nation’s resources failed to address living standard of the citizens because gaps remain in the institutional and legal frameworks of the oil

and gas sector, as none of the components of the Petroleum Industry Bills (PIB) and many other critical pieces of legislation has been signed into law. “The development of Nigeria’s infrastructure and its positive impact on industrialisation, economic empowerment, balance of payments and strength of the naira cannot be over-emphasised, but it seems some of our political leaders are not interested,” a senior business leader who did not want to be quoted said. The World Bank acknowledged that Nigeria faces a $100 billion annual investment gap in infrastructure, while a study conducted by McKinsey on Nigeria’s infrastructure requirement threw up the need for the investment of well over $31 billion annually over a 10-year period for the country to bridge its huge infrastructure deficit. Other experts renewed the call for government to take

advantage of a variety of financing instrument options in the capital market to finance critical infrastructure, which is identified as the most challenging factor in doing business in Nigeria. While very few Nigerians, especially political office holders and their allies, feed fat from national resources under a cloudy system lacking in transparency and accountability, Nigeria’s unemployment rate, according to National Bureau of Statistics (NBS), stands at 23.13 percent as of the third quarter of 2018. Nigeria arguably has one of the highest-paid federal legislators in the world with each senator earning around $597,000 per year in salaries and allowances. This amounts to a total of N20 billion ($65 million) per year and N79 billion ($260 million) at the end of each legislative tenure.

•Continues online at www.businessday.ng

Continues on page 43

UBA records 13% earnings growth, delivers N111bn profit … gross earnings cross N0.5trn mark … contributions of ex-Nigeria operations now at 46% … proposes final dividend of N.80 HOPE MOSES-ASHIKE

an-African financial institution, United Bank for Africa plc (UBA), has announced its audited results for the full-year ended December 2019, recording impressive growth across top and bottom lines. According to the 2019 financials filed at the Nigerian Stock Exchange (NSE) on Friday, Africa’s global bank’s gross earnings grew by 13.3 percent to N559.8 billion, compared to N494.0 billion recorded in the corresponding period of 2018. The bank’s total assets also grew significantly by 15.1 percent to an unprecedented N5.6 trillion for the year under review. This is the first time the bank’s gross earnings and assets will, respectively, cross the N500 billion and N5 trillion marks. Notwithstanding the challenging business environment in Nigeria, the bank’s Profit Before Tax was impressive at N111.3 billion, compared to N106.8 billion at the end of the 2018 financial year. Furthermore, the Profit After Tax

rose by 13.3 percent to N89.1 billion compared to N78.6 billion recorded in 2018. On the cost side, operating expenses grew by 10.1 percent to N217.2 billion, as against N197.3 billion in 2018, well below average inflation rate within the period, a reflection of cost efficiency gains. These results depict the bank’s deepening of its panAfrican business strategy, given the growth in the contribution of its 19 African subsidiaries to the Group’s net earnings and total assets. ExNigeria operations contributed 46 percent to the Group’s Profit Before Tax (PBT) in the year under review. In addition, UBA has been deploying innovative lifestyle products to expand its market share across sub-Saharan Africa, leveraging its presence in the United Kingdom, United States of America and France, to build a true Africa’s global bank, facilitating trade and capital flows between Africa and the rest of the world.

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

L-R: Marcos Mancini, head, International Cooperation, United Nations Environment Programme Inquiry; Bola Onadele. Koko, chairman, Financial Centre for Sustainability (FC4S) Lagos; Justine Leigh-Bell, deputy CEO/director, market development, Climate Bonds Initiative (CBI), UK; Olumide Lala, African programme partner, CBI, UK, and Emmanuel Etaderhi, executive secretary, FC4S, Lagos, at the Green Tagging Kick-Off Ceremony held at FMDQ’s Exchange Place in Lagos.

Gainers, losers in Nigeria’s busiest city’s ban on motorcycle, tricycle taxis ... as policy clocks one month ENDURANCE OKAFOR

ne month after the Lagos State government commenced enforcement of its ban on commercial motorcycles (okada) and tricycles (keke), a survey by BusinessDay has shown that the policy has been a mixed bag for businesses and residents of Nigeria’s largest. While some are counting their losses, others have cashed in on the opportunities created by the ban. The policy, which came into effect February 1, was to address “safety and security concerns” in a city with

a population estimated at above 20 million, the Lagos State government said. Gbenga Omotoso, commissioner for information and strategy, said riders of okada/keke ignore traffic laws and also allow criminals to use them as getaway vehicles. In the last three years, “the total number of deaths from reported cases of okada/keke is over 600”, Omotoso said in January while giving reasons for the ban. As such, he said, the only motorcycles now allowed in Lagos highways are those used for “delivery services”. Before the enforcement

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of the ban, okada was the preferred mode of transportation for many residents of Nigeria’s traffic-ridden economic capital with a population of about 22 million – because of its speed and ability to manoeuvre through a maze of gridlocks. Gainers Taxi hailing platforms E-hailing companies like Uber, Bolt and OCar are among the biggest gainers as they have stepped in to fill the transportation gap created by the ban. The surge in the demand for the e-hailing services since the ban has led to @Businessdayng

a jump in the fares, more than 100 percent in some cases. A distance of 12km, for instance, now goes for N5,000 as against N2,000 before the ban. “Fares are higher due to increased demand,” Uber said on its app. Bolt corroborated, saying “price is higher due to high demand”. The hike in fares charged by the e-hailing platforms, while it pokes holes in the pockets of commuters already burdened by weak purchasing power, however, means more money for the com-

Continues on page 43

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NCC to ensure passage of CNI bill to criminalise telecom infrastructure vandalism Jumoke Akiyode-Lawanson

igerianCommunications Commission (NCC) says active steps are being taken to find lasting solutions to the frequent fibre cuts, infrastructure theft, network congestion, community access denial and other issues that have resulted to poor voice and data service quality for subscribers. Also, these have subsequently caused huge revenue losses to Nigeria’s telecoms operators. Wakil Bako, director, tech-

nical standards and network integrity, NCC, told BusinessDay that there were certainly issues of dropped calls and poor network quality across Nigeria, but the regulator was taking necessary steps to resolve the issues as soon as possible by working to ensure the Critical National Infrastructure (CNI) bill was passed to criminalise vandals. “Apart from the issues of theft and vandalism, we also have a lot of bad handsets and mobile devices smuggled into the country when NCC has not type approved them. These bad devices come with voice

interferences that contribute to poor quality for voice calls. “The NCC is currently working with the National Assembly, the ministry of works, ministry of environment, security agencies and other ministries to ensure that there is a passage of the Critical National Infrastructure bill, so that those who are vandalising and stealing infrastructure are criminalised and the issue of road construction and cuts of fibre cables are minimised,” Bako said in an interview. Telcos in Nigeria, last week, urged the Federal Government to come to their rescue

concerning vandalism and theft of their investments on infrastructure to provide communication service in the country. Airtel said over 1,022 fibre cuts had occurred, disrupting its network just between July 2019 and February 11, 2020, and although they have worked with the Nigerian Civil Defence to arrest vandals, there had not been any successful prosecution to deter criminals, as the case ended up in the police stations. Speaking at a media round table held at the Airtel Nigeria head office in Lagos, Emeka

Oparah, director of corporate communications and CSR, Airtel Nigeria, said, “There are so many issues that we encounter, and it is unreasonable to think that we just sit down and do nothing about it because we are the ones that feel the hurt, as we are losing money by the minute. There was a time that one of our base stations was submerged in flood and although it wasn’t our fault, we had to quickly respond to that because customers would not want to hear stories.” Oparah said declaration of telecoms infrastructure as critical national infrastructure

BusinessDay awards top distributors with prizes Gbemi Faminu

usinessDay Media, weekend celebrated its top five agents that participated in its agent/vendor competition who had significantly contributed to the sale of the company’s product in the last quarter of 2019. The competition ran from October 1 to December 31, 2019, and the winners of the various prizes were picked based on the volume of sales made. Speaking during the presentation of prizes, Ella Kadiri, copy sales manager, BusinessDay, said BusinessDay had always looked forward to appreciating its business partners as well as those who put in more effort in contributing significantly to the company’s revenue. Oghenevwoke Ighure, executive director, strategy, innovation and partnerships, BusinessDay, said, “Although the company appreciates all its agents and vendors, however, there is need to encourage those who work tirelessly to help the company grow. “We at BusinessDay appreciate all our agents because they are valuable and hold significant position in our value chain. This is one of the many more to come, everyone is a winner and if you didn’t get a prize today you will get next time.” The winners were five agents, four of whom from Lagos Island and one from Oshodi zone. The prizes included television sets, generators, and standing fans. Godwin Akpan, chairman, Newspaper Distributors Association of Nigeria, Lagos Island zone, commended BusinessDay for its efforts and for fulfilling its promises, and urged the agents to work harder to receive more rewards for jobs well done. www.businessday.ng

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by the government would help safeguard telecoms infrastructure, create better user experience and reduce revenue losses to telcos. According to Oparah, 405 cases of the fibre cuts were as a result of road rehabilitation activities, and 617 cases due to vandalism. He urged the federal and state governments to hasten the approval process for fibre development as well as quicken the Environmental Impact Analysis (EIA) approval process, saying these would help solve the problem of network congestion and network failure.

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Ikeja Electric appoints Soetan as acting CEO

keja Electric plc has announced the appointment of Folake Soetan as its acting CEO. The electricity distribution company made the announcement in a statement signed by its head of corporate communications, Felix Ofulue on Friday in Ikeja. The appointment takes effect from March 2. Ofulue said the new CEO takes over from Anthony Youdeowei, who had been the CEO for the past four years. According to him, Youdeowei presided over Ikeja Electric transformation initiatives resulting in one of the most aggressive loss reduction recorded in the sector. “In her previous role as chief operating officer of Ikeja Electric, Soetan led a team that introduced several initiatives, which engendered the improvement of the quality of power supply in the Ikeja franchise areas. “She was also in charge of the team that delivered the Bilateral Power initiative, which for the first time in Nigeria, witnessed the provision of a minimum of 20 hours of power supplied through the National Grid to customers,” he said.

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In Association With

The pandemic

A Balkan Tito time betrayal

The virus is coming

Wise words are not enough to fix South Africa’s economy

Governments have an enormous amount of work to do

N PUBLIC HEALTH, honesty is worth a lot more than hope. It has become clear in the past week that the new viral disease, covid-19, which struck China at the start of December will spread around the world. Many governments have been signalling that they will stop the disease. Instead, they need to start preparing people for the onslaught (see article). Officials will have to act when they do not have all the facts, because much about the virus is unknown. A broad guess is that 25-70% of the population of any infected country may catch the disease. China’s experience suggests that, of the cases that are detected, roughly 80% will be mild, 15% will need treatment in hospital and 5% will require intensive care. Experts say that the virus may be five to ten times as lethal as seasonal flu, which, with a fatality rate of 0.1%, kills 60,000 Americans in a bad year. Across the world, the death toll could be in the millions. If the pandemic is like a very severe flu, models point to global economic growth being two percentage points lower over 12 months, at around 1%; if it is worse still, the world economy could shrink. As that prospect sank in during the week, the S&P 500 fell by 8% (see article). Yet all those outcomes depend greatly on what governments choose to do, as China shows. Hubei province, the origin of the epidemic, has a population of 59m. It has seen more than 65,000 cases and a fatality rate of 2.9%. By contrast, the rest of China, which contains 1.3bn people, has suffered fewer than 13,000 cases with a fatality rate of just 0.4%. Chinese officials at first suppressed news of the disease, a grave error that allowed the virus to take hold. But even before it had spread much outside Hubei, they imposed the largest and most draconian quarantine in history. Factories shut, public transport stopped and people were ordered indoors. This raised awareness and changed behaviour. Without it, China would by now have registered many millions of cases and tens of thousands of deaths.

The reformist finance minister bumps up against political reality

WO DAYS before he outlined South Africa’s budget, Tito Mboweni shared a Photoshopped picture of himself in a spacesuit. The caption read: “man on a mission”. It was characteristic skylarking by the finance minister, an ebullient reformer who spends much of his time warning colleagues in the ruling African National Congress (ANC) that unless the economy is overhauled the country faces ruin. On February 26th political gravity brought Mr Mboweni down to earth. His budget was billed as the most important since the end of apartheid in 1994. South Africa’s

The World Health Organisation was this week full of praise for China’s approach. That does not, however, mean it is a model for the rest of the world. All quarantines carry a cost—not just in lost output, but also in the suffering of those locked away, some of whom forgo medical treatment for other conditions. It is still too soon to tell whether this price was worth the gains. As China seeks to revive its economy by relaxing the quarantine, it could well be hit by a second wave of infections. Given that uncertainty, few democracies would be willing to trample over individuals to the extent China has. And, as the chaotic epidemic in Iran shows, not all authoritarian governments are capable of it. Yet even if many countries could not, or should not, exactly copy China, its experience holds three important lessons—to talk to the public, to slow the transmission of the disease and to prepare health systems for a spike in demand. A good example of communication is America’s Centres for Disease Control, which issued a clear, unambiguous warning on February 25th. A bad one is Iran’s deputy health minister, who succumbed to the virus during a press conference designed to show that the govern-

ment is on top of the epidemic. Even well-meaning attempts to sugarcoat the truth are self-defeating, because they spread mistrust, rumours and, ultimately, fear. The signal that the disease must be stopped at any cost, or that it is too terrifying to talk about, frustrates efforts to prepare for the virus’s inevitable arrival. As governments dither, conspiracy theories coming out of Russia are already sowing doubt, perhaps to hinder and discredit the response of democracies. The best time to inform people about the disease is before the epidemic. One message is that fatality is correlated with age. If you are over 80 or you have an underlying condition you are at high risk; if you are under 50 you are not. Now is the moment to persuade the future 80% of mild cases to stay at home and not rush to a hospital. People need to learn to wash their hands often and to avoid touching their face. Businesses need continuity plans, to let staff work from home and to ensure a stand-in can replace a vital employee who is ill or caring for a child or parent. The model is Singapore, which learned from SARS, another coronavirus, that clear, early communication limits panic. China’s second lesson is that gov-

ernments can slow the spread of the disease. Flattening the spike of the epidemic means that health systems are less overwhelmed, which saves lives. If, like flu, the virus turns out to be seasonal, some cases could be delayed until next winter, by which time doctors will understand better how to cope with it. By then, new vaccines and antiviral drugs may be available. When countries have few cases, they can follow each one, tracing contacts and isolating them. But when the disease is spreading in the community, that becomes futile. Governments need to prepare for the moment when they will switch to social distancing, which may include cancelling public events, closing schools, staggering work hours and so on. Given the uncertainties, governments will have to choose how draconian they want to be. They should be guided by science. International travel bans look decisive, but they offer little protection because people find ways to move. They also signal that the problem is “them” infecting “us”, rather than limiting infections among “us”. Likewise, if the disease has spread widely, as in Italy and South Korea, “Wuhan-lite” quarantines of whole towns offer scant protection at a high cost.

public finances are in a sorry state, a result of sluggish growth and lavish state spending, especially on publicsector wages. Debt was just 27% of GDP in 2008. A decade later it was 57%, and is set to rise to 66% over the next year, warned the finance minister. But it is unlikely that his comrades were paying attention. Mr Mboweni announced some sensible policies aimed at speeding growth, such as making it easier to start a business and giving more power to cartel-busters. He also set aside more money for the public prosecutor to go after corrupt officials. Then there was Eskom, a stateowned electricity utility that epitomises South Africa’s struggles. Decades of mismanagement, outright theft, and contracts and jobs for pals have left it broke and unable to keep the lights on. About a third of its capacity is out of action because of breakdowns. Rolling blackouts Continues on page 13

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Wise words are not enough to fix South Africa’s economy Continued from page 12

Will Israel’s third election in a year finally produce a government? The polls predict more deadlock

HE BLUEPRINTS had been gathering dust for 25 years. No Israeli leader, not even Binyamin Netanyahu, prime minister for the past decade, was willing to face the international criticism that would follow from building 3,500 new homes near Jerusalem, in the occupied West Bank. The new district would cut off the Palestinian part of Jerusalem from the rest of the West Bank, ending any possibility of a viable Palestinian state with Jerusalem as its capital. So the plans were put on the shelf—until February 25th, when Mr Netanyahu publicly dusted them off. It is no mystery why Mr Netanyahu changed his mind. Israel is holding a general election on March 2nd, its third in a year. The last two, in April and September 2019, failed to produce a government. The prime minister thinks the only way for his bloc of nationalist and religious parties to eke out a majority this time is by mobilising the base. He is under pressure from his main rival, Benny Gantz. The former general and leader of Blue and White, Israel’s largest party, has been pursuing “soft-right” voters by matching many of Mr Netanyahu’s campaign promises. Israelis appear exhausted by a campaign that has been running, on and off, since December

2018, when the first of the three elections was called. That one left Mr Netanyahu one seat short of a majority. His coalition lost seats in the September re-run, which produced a majority opposed to his rule. Still, Mr Gantz was unable to form a government. Since then, despite Mr Netanyahu’s gimmicks, such as promising to decriminalise the recreational use of cannabis, and Mr Gantz’s rightward shift, the polls have hardly budged. The main issue is still Mr Netanyahu himself. Israel’s longestserving prime minister is a polarising figure. He has kept Israel safe, forged closer ties to Arab states and overseen a flourishing economy. But in November he was indicted on charges of bribery and fraud for allegedly receiving illegal gifts and trading political favours for positive news coverage. His trial will begin on March 17th. Mr Netanyahu denies any wrongdoing and blames his legal troubles on lefty prosecutors, police and journalists (though he appointed the police chief who investigated him and the attorney-general who charged him). Critics accuse him of sowing division and demonising Arabs for political gain. Mr Gantz, a bland campaigner, has struggled to fire up voters—or bring the opposition together. The parties that want

to see Mr Netanyahu go range from Yisrael Beitenu, a fiercely nationalist outfit, to the Joint List, an alliance of Arab-majority parties. There is no prospect of them sitting together in a coalition. Mr Gantz says Arab parties “won’t be a part of my government”. He failed even to convince the rightwingers in his own party to serve in a minority government with outside support from the Joint List. Their antipathy to ArabIsraeli politicians, who are eager to play a bigger role (see article), apparently outweighs their animus against Mr Netanyahu. On other issues, Mr Netanyahu and Mr Gantz are not so far apart. Both candidates say they will implement Donald Trump’s peace plan for Israel and the Palestinians, which was prepared in close co-ordination with the prime minister’s advisers and allows Israel to annex West Bank settlements and the Jordan Valley. Mr Netanyahu has already met American officials to draw up new maps. Once that task is completed, he will “immediately” apply sovereignty over the land in question. Mr Gantz says he would move forward “in co-ordination with the international community”. But annexation may be put on hold if the election produces another stalemate. Israel’s election commission is already preparing for a possible

fourth vote, in September. That might suit Mr Netanyahu, who would like to show up in court as a sitting prime minister. But most Israelis, including many of Mr Netanyahu’s allies, want to avoid another election. Though things have been running smoothly under the interim government, it cannot pass a budget or make big decisions. The monthly outlays for government ministries have automatically reverted to those in the 2019 budget, making it harder to build new infrastructure, fund social programmes or raise taxes to shrink a deficit that reached 3.7% of GDP last year. The lack of a budget “will not only affect government offices, but also the entire economy”, warned the accountant-general in November. If they cannot form a government on their own, Mr Netanyahu and Mr Gantz will come under pressure to team up. A unity government featuring Likud and Blue and White was discussed after the last election. Mr Netanyahu agreed to split the prime minister’s term with his rival, but insisted on going first. Mr Gantz has ruled out serving under Mr Netanyahu while he is facing criminal charges. The prime minister’s allies could force him to the sidelines—though it is just as likely that the indomitable Mr Netanyahu will defy the odds, and hang on to his office.

that regularly shut factories, shops and mines are pushing the economy towards recession. Mr Mboweni promised to make it easier for independent firms to sell power into the national grid. Many have heard that before. Most importantly, Mr Mboweni outlined his plan to reduce the country’s budget deficit—forecast to be almost 7% of GDP next year. Duties on some alcoholic drinks will increase. But most of the reduction in borrowing will be made by cutting spending by 261bn rand ($17.2bn) over the next three years. Savings on the wage bill are supposed to provide 160bn rand. The hope for Mr Mboweni and President Cyril Ramaphosa is that these steps will be enough for South Africa to avoid a downgrade this year by Moody’s, the only one of the three main credit-rating agencies not to rate the country’s debt as “junk”. The president and the finance minister must still get their proposals through a thicket of vested interests. COSATU, a federation of trade unions, warned before the budget that cuts to members’ pay would mean “war”. Meanwhile, powerful figures on the left of the ANC, such as Gwede Mantashe, the energy minister, are blocking efforts to reform Eskom. Mr Ramaphosa is reluctant to pick a fight with the opponents of reform, partly because he fetishises consensus, but also because he has an eye on the ANC’s National General Council meeting in June. Two of his predecessors, Thabo Mbeki and Jacob Zuma, were “recalled” from office by the party before they had concluded their terms. Party insiders believe that the ANC’S rules would not allow opponents of the president to oust him at this year’s gathering. But they may try nonetheless. Even if they do not try, South Africa remains in peril. Those in the ruling party face a clear choice: wise up and cut spending on their own or, in the not too distant future, do so under the thumb of the IMF.

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Giving and misgivings – Human trafficking; Polio eradication commitment

(Third in the series of an address delivered at the Rotary Foundation dinner/dance at the MUSON Centre, Marina, Lagos on 8th February 2020)

Bashorun J.K Randle

n the back page, Daily Trust newspaper carried the following chilling headline: “I was sold into prostitution for 500,000 cefa” “An 18-year-old victim of a human trafficking syndicate, Victoria Oshioke, has narrated how her boyfriend sold her into prostitution for 500,000 cefa (about N350,000). Operatives of the Nigerian Security and Civil Defence Corps (NSCDC) disclosed yesterday that they rescued Oshioke, along with three other girls, from the leader of a human trafficking syndicate. The girl told our reporter at the headquarters of the Lagos State Command of the NSCDC that she was first sold to the syndicate three years ago when she was 16-years-old and taken, first, to Cotonou, Republic of Benin and later to Mali to engage in prostitution. But, as she said, she found her way back to Nigeria because she could not cope with the stress of having sex with different men. She said, “the syndicate took me to Mali where I was made to sleep with different men. I came back two years ago and later got a call from my boyfriend, Maxwell, that I should come to Benin. I was living in Auchi then. When I got to Benin along with my elder sister, my boyfriend asked me to go back to Mali. “I refused. In the midnight, he threw us out of his apartment. For fear of being attacked, we agreed to go. The next day, which was Tuesday, he put us in a bus coming to Lagos after calling his contact, who resides at Iyana-Ipaja, Lagos, residence and rescued Ishioke, together

with three other girls, who were identified as Joy Aloaye, 22; Amaka Eze, 23; and Anuoluwapo Mustapha. Our reporter learnt that Omowunmi Michael’s arrest was sequel to a disagreement between her and the girls over how much each of the girls would pay her. The suspect had allegedly demanded an upfront payment of N1 million from each of the girls before she would hand them over to the syndicate’s leader in Cotonou. The girls were, however, understood to have refused to give Michael any commitment to that effect and she allegedly threatened to return them to Edo State. It was further gathered that two of the girls, Aloaye and Oshioke, stormed out of the house in anger and proceeded to the main road where they asked a truck driver to give them a lift to Benin. It was at that point that the NSCDC officials sighted them and took them in for questioning. Parading Michael at Alausa, Ikeja, the Commandant of the NSCDC, Lagos State Command, Cyprian Ehi Otiobhi, alleged the suspect was apprehended on Wednesday January 15, 2020 at No. 13, Abuke Oku Street, Iyana Ipaja, at about 9.20 am for attempting to traffic four ladies to Mali for prostitution. “Two of the victims, Victoria Oshioke and Joy Aloaye, were transported form Benin, Edo State by one Favour, who is currently on the run, while Amaka Eze, who hails from Onitsha, Anambra State, was linked to the suspect by one Lekan,” he added. Regardless, the Bill and Belinda Gates Foundation has remained steadfast in its diligent pursuit of impactful philanthropy in Nigeria. “Rotary and the Bill & Melinda Gates Foundation extending fundraising partnership to eradicate polio. EVASTON, II. (January 22, 2020) – Rotary and the Bill & Melinda Gates Foundation are renewing their longstanding partnership to end polio, announcing a joint commitment of up to $450 million to support the global polio eradication effort. “Because of the efforts of Rotary and

its partners, almost 19 million people are walking today who would have otherwise been paralysed,” said John Germ, Past President of Rotary International who leads Rotary’s polio fundraising efforts. “By partnering with the Bill & Melinda Gates Foundation, we’re ensuring that children in polio-affected countries get the lifesaving vaccines they need to be protected from polio for life. As the first organisation to envision a polio-free world, Rotary is more committed than ever to delivering on our promise that one day, no child will ever again be paralysed by polio.” To an audience of Rotary volunteer leaders around the world, Bill Gates, co-chair of the Bill & Melinda Gates Foundation delivered a video message announcing the extension of a funding partnership forged more than a decade ago. Rotary is committed to raising $50 million per year over the next three years, with every dollar to be matched with two additional dollars from the Gates Foundation. This expanded agreement will translate into up to $450 million for polio eradication activities. “The Gates Foundation’s longstanding partnership with Rotary has been vital to fighting polio,” said Mr. Gates in today’s message to Rotary volunteers. “That’s why we’re extending our funding match, so every dollar that Rotary raises is met with two more. I believe that together, we can make eradication a reality.” In addition to the extended funding partnership with the Gates Foundation, Rotary is also announcing $45 million in funding for polio eradication efforts in countries throughout Africa (Angola, Ethiopia, Mali, Nigeria, Somalia and South Sudan), and Asia (Afghanistan, Pakistan, Papua New Guinea, Pakistan and the Philippines). The funding will help support crucial polio eradication activities such as immunization and disease detection, research, and community mobilisation. Polio – a paralysing and sometimes deadly disease – is on the verge of becoming the second human disease in history to be eradicated. This critical funding helps

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The suspect had allegedly demanded an upfront payment of N1 million from each of the girls before she would hand them over to the syndicate’s leader in Cotonou

ensure that children in at-risk countries are protected from polio, and that the wild poliovirus is eliminated in the last two countries that continue to report cases. While only Afghanistan and Pakistan continue to report cases of wild poliovirus, the remaining challenges to global eradication – like difficulty reaching children amid insecurity and conflict and weak health systems – have proven to be the most difficult. In order to meet these roadblocks head on and ensure the continuation of program efforts, funding and support from donors and world governments is imperative. Rotary has contributed more than $2 billion to fight polio, including matching funds from the Gates Foundation, and countless volunteer hours since launching its polio eradication program, PolioPlus, in 1985. In 1988, Rotary formed the Global Polio Eradication Initiative with the World Health Organisation, UNICEF, and the U.S. Centres for Disease Control and Prevention. The Gates Foundation and Gavi, the Vaccine Alliance later joined. When the initiative launched, there were 350,000 cases of polio every year. Today the incidence of polio has plummeted by more than 99.9 percent. Anyone can be a part of the fight to end polio and have their donation to Rotary matched 20-to-1 by the Bill & Melinda Gates Foundation. Visit endpolio.org to learn more and donate. Rotary brings together a global network of volunteer leaders dedicated to tackling the world’s most pressing humanitarian challenges. We connect 1.2 million members from more than 35,000 Rotary clubs in almost every country in the world. Their service improves lives both locally and internationally, from helping those in need in their own communities to working toward a polio-free world. Visit Rotary.org and endpolio.org for more about Rotary and its efforts to eradicate polio.” However, that is not all that the Bill and Melinda Gates Foundation has been doing in Nigeria. Randle is Chairman/Chief Executive JK Randle Professional Services Chartered Accountants

Statistical perfection is over the horizon

he quality of statistics is improving in Nigeria and most other jurisdictions. We need look no further than at the state of the National Bureau of Statistics (NBS) ten years ago to make the point. The authorities accept the value of good data, not least for the investment community. We remember, showing our age, pointing out to a federal finance minister at a conference before the return of civilian rule in 1999 that several African micro-states without oil revenue were able to produce far more detailed and timely statistics than Nigeria. He was not bothered, and gave the unspoken message that the FGN would flourish with or without the data. The FGN and its agencies, of course, are now “on message”. The reworking of the national accounts in 2014, supported on the technical side by Nigeria’s multilateral and bilateral partners, proved the point. As a result of the first rebasing for close to 20 years, the economy in 2013 was 89 per cent larger than had previously been thought. This was welcomed in official circles but, more importantly, investors had a reasonably accurate snapshot of the economy. The reworking showed, for example, that the largest segment of the economy was (is) the services sector not agriculture. The rebasing should take place every ten years according to international best practice, so a new Herculean effort should be under consideration. This reinforces the point that the quality of data supply requires regular and steady funding so that

research work in the field and number-crunching in the office can continue without interruption. The standing of the data provider suffers whenever regular reports are not released on schedule. The labour force and unemployment reports are a case in point. In the current straitened fiscal circumstances, a sharp increase in funding for statistical provision is highly unlikely. If such somehow materialized, we would like to see: a monthly report on producer price inflation to complement the CPI series, and seasonally adjusted national accounts from the NBS; fuller data on official reserves from the CBN, perhaps on the model of the South African Reserve Bank; and an update of the 2006 census. We could easily add to the wish-list. There is a need to respond to periodic loose talk about national and international statistics. Only national sources can provide core macroeconomic data. Only they have the resources and only they have the remit. There are flaws in the data but we have to work with what we have got. Once we have understood the methodology and have identified the inconsistencies, we still have invaluable data for our analysis. Our fairly bright take is based upon FGN data, and would be brutal if we were commenting upon the statistics emanating from state governments. The IMF produces its comprehensive monthly International Financial Statistics with detailed country pages. This is an essential tool for country www.businessday.ng

and cross-country analysis but the data are drawn from national sources. International sources have a role to play in the supply of social and business indicators, examples being the UN Development Programme’s human development index and the World Bank Group’s Ease of Doing Business reports. Survey-based league tables abound: some have their rightful place in the sun such as Transparency International’s corruption perceptions index and others are designed to give their creators, notably management consultancies and think tanks, free publicity on the newswires. Additionally, a new genre of data collection firms is providing material of obvious interest to businesses selling consumer goods and services. Typically, they combine traditional methods with geospatial sources and tech to track spending patterns. The US-based Fraym released a report last year quantifying premium and other consumers across Africa (Finding the Dynamic African Consumer). Another operation, Reach Technologies, drew upon eight million users of its app to chart the top ten transactions in more than 50 cities in Kenya and Nigeria in 2018. The provision of data in Nigeria is broader than may appear at first sight. Alongside the official sources (the CBN, the NBS and the Debt Management Office notably), we can access a selection of social indicators, league tables and new-era statistics. There is no perfect provision:

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Gregory Kronsten possible improvements are endless. The journey is becoming a little smoother with the rise in financial inclusion, which stood at 63.6 per cent in 2018, at the expense of the informal economy. It would be much smoother more quickly in the unlikely event of a sharp increase in funding for statistical agencies. Developed economies are making the same journey with some mistakes on the road. It emerged last year in Japan that national wage data had been understated for 15 years, and that 20 million people had therefore not made adequate payments for unemployment insurance. In the flawless statistical world to which we all aspire, we would add up all the current-account surpluses and deficits across the world, and arrive at a figure of zero. Sadly, we don’t. Kronsten is the head, macroeconomic & fixed income research at FBNQuest

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Monday 02 March 2020

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How long will the Corona-selloff last?

Patrick Atuanya

he global economy is at risk of screeching to a complete halt as the coronavirus also known as COVID-19, continues its march across all continents. Last week the first new cases of the virus were diagnosed in the lone holdout country in North America yet to be affected until now, (Mexico) and sub-Saharan Africa (Nigeria). Investors are clearly worried about what all these means for the global economy and supply chains that powers most of the growth in the world. That sentiment can be clearly seen from the sell-off in risk assets from equities to oil and an ongoing flight to safety. The U.S main stock gauge, the S&P 500 plunged more than 3 percent on Friday and is now down over 15 percent from its record high, Crude oil (Brent) slid toward $49 a barrel, while European stocks fell to lows last seen in August and Asian equities also sold off. In the ensuing hunt for havens, investors bought currencies like

the Japanese yen, and U.S Treasuries or bonds. The World Health Organization (WHO), meanwhile raised its global risk level for the virus and major companies warned that the disruptions from the virus could scupper sales and profit forecasts. Nigerian and African markets weren’t left out of the melee. The NSE All-Share Index and Market Capitalization both fell by 4.28 percent to close the week at 26,216.46 points and N13.658 trillion respectively. Nigerian stocks are down 2.33 percent so far this year. In South Africa (the continents second largest economy), the rand fell to near a four-year low, while stocks entered a correction and bonds slumped. Amid the market hysteria, here are some facts about the virus that suggests things are not as bad as they seem. The new coronavirus that originated in China, appears to get more dangerous with age, with older people 70 to 90 years appearing to be worst hit in terms of fatalities. While this is cold comfort for older folks it still suggest that younger healthier people likely to be found in the labour force have a natural ability to fight off the virus if exposed to it. Michael Mina, MD, PhD, an assistant professor of epidemiology at the Harvard T.H. Chan School of Public Health, told WebMD Health news that: “There seems to be this threshold — below [age] 35 we’re seeing practically zero [cases]. As

people increase in age from their 40s to 80s, we’re seeing mortality increase.” The virus now counts more than 80,000 cases and 2,700 deaths, the majority of them in China. That is equivalent to a mortality rate of about 3.37 percent, which is lower than the severe acute respiratory syndrome (SARS) a similar virus that started in China in 2002. SARS also hit people over the age of 60 the hardest, and more than 8,000 people contracted the virus over 8 months, out of which nearly 10 percent died. A study published in The Journal of American Medical Association that examined the first 45,000 cases in China found that 80 percent of the reported cases appear to be mild. Of people aged 70 and above who got the virus, 8 percent died, the study found, along with nearly 15 percent of those aged 80 and older. Smokers also seemed more vulnerable to the disease, as well as people with heart problems, diabetes, or lung issues. Some doctors and researchers have compared COVID-19 to viral pneumonias, which tend to have a worse effect on people who already have a weakened immune system. Pregnant women also do not seem to be impacted by the infection, though only a few have been tracked globally so far. One study published recently found that nine women who became infected with COVID-19 did not pass the virus on to their babies.

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The IMF expects China to have a sharp recovery once the virus abates and for it to have only a “mild impact on the rest of the world”

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

A new Nigerian rate of growth?

ust over a week ago I was heading back to Abuja from Jos. Just after Mararaba we hit a bit of traffic. After waiting for nearly twenty minutes, a huge inconvenience by Abuja standards especially on a Sunday, we finally got to see the main cause of the traffic. A bus had broken down while trying to make a U-turn and there were a couple of hefty looking men trying to push it out of the way. They were pushing it slowly and were making progress but, as evidenced by the traffic build up, were not pushing it fast enough. In this instance the problem was not the amount of effort they were putting in. The problem was that the bus had broken down. The engine was not working. The release last week of the fourth quarter 2019 GDP data made me remember this incident. For those who are unaware, the economy grew by 2.55 percent in the fourth quarter compared to the same quarter in 2018. For the whole of 2019 the economy grew at 2.27 percent. That growth is a long way better than the collapsing economy we saw in 2016 when the economy shrunk by 1.6 percent. So, I guess we should be thankful for that. However, this 2.55 percent growth is still wholly inadequate. As at

last estimate the population is growing at about 2.59 percent. Which means on average Nigerians are still getting poorer. Even more worrying given the already high level of poverty and unemployment. Far away from the kind of growth we need to see to move the needle on that. In some sense the performance of the economy is just like the incident with the people pushing the bus. The bus has broken down and needs to be fixed. Pushing the bus out of the way is of course necessary and if they get lucky, they may be able to push the bus to speeds of five or even ten kilometres per hour. But they can never hope to get the bus to speeds of 70 to 80 where it needs to be to function as a bus. Same with the economy. There are a lot of people working very hard both in government and in the private sector to “push” the economy forward. But the economy is fundamentally broken. All that pushing, while useful, cannot replace the fundamental job of fixing the engine. If the engine is not working properly then the sluggish growth will continue. If you look at the sectors of the economy responsible for growth in 2019 then it becomes clear that the engine www.businessday.ng

So as the world races to find a vaccine for the virus (Israeli researchers recently announced that they were “weeks” away from developing a vaccine), it is important for everyone to note that this is not yet a global Pandemic and fatality rates are much lower than other major outbreaks in the past, even as people are expected to adhere to better hygiene like washing of hands often with soap. Of course the rationale for the sell-off in global and domestic markets may well be justified, due to the potential disruptions to economic activity like consumption and travel and hit to global growth. However market reactions are seemingly overblown. The IMF expects China to have a sharp recovery once the virus abates and for it to have only a “mild impact on the rest of the world.” Looking at historical selloffs similar to this scenario, the negative sentiment also looks overdone. The SARS outbreak contributed to a slump in global markets in early 2003, but stocks recovered once the outbreak was contained. The S&P 500 dropped roughly 10 percent from the start of the year until mid-March, but finished up more than 26 percent for the whole year. With bellwether stocks like Guaranty Trust Bank (GTB) and MTNN sitting at or near 52 week lows, it may be time for the smart money to begin to take a look.

ECONOMIST is faulty. The oil industry was a major driver thanks in no small part to the Egina platform that came on stream and boosted oil production. But it is unlikely that growth will continue. There are rumours of the petroleum industry bill being passed this year but until it passes, we must wait and see. The second major driver, at least in the fourth quarter, was the financial sector thanks to the one-off policy tricks that forced banks to rapidly expand their loan books. The verdict on that one is still out but again it also looks unsustainable. Finally, the only major sector that appears to be powering on is the telecommunications sector. That looks set to continue because we continue to see investment go there. If you want to know where growth will be tomorrow look at where people are investing in today. The two big sectors that employ a lot of low skilled labour, agriculture and trade, continue to struggle though. Agriculture continues to grow at near the slowest pace in two decades and the trade sector continues in technical recession no thanks to the border closure. All that slow growth is due to the core parts of the economy that remain broken. International trade policy remains

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NONSO OBIKILI

broken. The foreign exchange market remains broken. The economy continues to systematically not invest enough in education and health, instead burning value on energy subsidies. The security challenges which underpin any economy remain difficult. The infrastructure deficit continues to close only at very slow pace. And investment in Nigeria, beyond short term government paper, continues to be non-existent. If we want to get the economy growing fast enough to start to reduce poverty and unemployment, then all those things and more need to be tackled. Until then we continue pushing at the new Nigerian rate of growth. Dr. Obikili is the chief economist at BusinessDay

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BUSINESS DAY

Monday 02 March 2020

EDITORIAL Publisher/Editor-in-chief

Frank Aigbogun

Disband SARS, not their offices, end this rogue unit now! Closing SARS satellite offices won’t do, more radical action needed

editor Patrick Atuanya DEPUTY EDITOR John Osadolor, Abuja NEWS EDITOR Chuks Oluigbo MANAGING DIRECTOR Dr. Ogho Okiti 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

he Special AntiRobbery Squad (SARS), a police unit created in 1992 by Simeon Danladi Midenda, a retired Commissioner of Police in Lagos has outlived its existence and should be disbanded immediately. It is time to defenestrate its amoral personnel, reform those amenable and throw the books at the criminals in their ranks. When SARS was created, there were already three AntiRobbery Squads operating in Lagos – Force CID at Alagbon Close, Zone Two Command and at Panti, Lagos state CID. There were also special anti-robbery squad units in each state police command. Midenda’s unit, however, was “special”, it lent it some mystic. They operated in plain clothes and drove unmarked cars unlike regular police patrol teams. They did not visibly carry guns or walkie-talkies; the idea was to blend in. Intelligence and surprise were their

most potent weapons. Operatives though were always fully combatant, remained undercover and monitored all police communications. When there was a reported robbery, they laid in wait to capture the fleeing robbers. At other times, they simply captured them on their beds, hotels or other leisure places. They did not interface with the public, didn’t stop people on the streets or pry their phones. They relied on intelligence, smart police investigation and were the most successful unit in the police. This is why it was replicated at every police command in Nigeria. That SARS is history. In its place is the stuff of nightmares. Hiding in plain sight which helped them fight crime has become a tool to harass Nigerians. They are dreaded more than armed robbers. Thus the directive by Mohammed Adamu, the Inspector General of Police, to close satellite offices created under the Zonal Intervention Squad (ZIS) of SARS nationwide is unconvincing in a country where the order of the

IGP carries the same efficacy as singing to a corpse and hoping it will dance. Removal of illegal checkpoints and withdrawal of police attached to VIPs is a stock in trade maiden speech of every new police chief. It has taken the protests that followed the killing of Tiyamiyu Kazim, a footballer, for the IGP to order the closure of satellite offices created under the Zonal Intervention Squad (ZIS) of SARS nationwide. In the past, more peaceful complaints and campaigns from the public yielded piecemeal measures such as the rebranding of SARS as Federal SARS which took orders from the police headquarters. Neither branding nor the closure of some offices can repair police unit gone rogue. You know our police force has gone to the dogs, when complaining to Segun Awosanya, a human rights activist is the most effective way to get justice. The entire police force is longoverdue for reform. Compare the year-long protests in Hong Kong

which resulted in two deaths, 7,300 arrests and over 2,600 injuries to the deaths that followed protests in Abeokuta and the sad video of Tiyamiyu’s father. Shutting down some stations won’t do. The IG’s must provide clarity. Will the alleged killer police officers be brought to book? What happens to other notorious police formations including the Ogudu Police Station, Awkuzu, in Anambra State, Port Harcourt in Rivers State? After years of protests like the #EndSARS campaign, #killSARS is trending lately. People are now tired of crying out and may be ready to take matters into their hands. This is a dangerous. To do nothing is to provoke mob action when next SARS officers misfire. President Buhari must lead by example with radical action, beyond holding meetings with his security chiefs. Nigerians are living in fear from herdsmen, bandits, cultists, kidnappers, terrorists, and shockingly police officers.

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Monday 02 March 2020

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The growth delusion: Why economic growth is meaningless in Nigeria global Perspectives

OLU FASAN

ast week, virtually every newspaper in Nigeria trumpeted the news that the economy grew at its highest rate in four years in 2019. BusinessDay’s headline read: “Nigeria’s economic growth surges to fastest since 2016”. For Bloomberg, it was “Nigeria’s economic growth at 4-year high”. But beyond those positive headlines, the story was nuanced. The growth was driven not by the real sectors but by oil and credit boost, which is not the kind of growth that would herald the muchneeded transformation in the structure of the economy. Yet, it’s somewhat understandable why the media loudly proclaimed the 2.27 percent growth rate, as reported by the National Bureau of Statistics (NBS). In 2016, for the first time in two decades, Nigeria’s economy went into recession, with a negative growth rate of -1.5 percent. But the economy later crawled out of recession and grew at 1.99 percent in 2018. So, the 2.27 percent achieved in 2019 suggests a steady, if slow, economic recovery, which is a positive development. Any growth is better than no growth! But does the difference between 1.99 percent in 2018 and 2.27 percent in 2019 merit all the excitement? Certainly not, especially when you consider that the oil sector growth rate of 4.59 percent dwarfs that of the non-oil sector growth rate at 2.06 percent – in fact, manufacturing actually grew by a tiny 0.77 percent in 2019, while agriculture, despite the subsidies and protection it enjoys, doesn’t achieve any significant growth either. In light of President Buhari’s vow to diversify the economy away from the oil sector, there’s nothing exciting about the growth figures. So, what caught the media’s attention? Well, it was, it would seem, the fact that the 2.27 percent growth rate defied the

IMF’s prediction of 2.1 percent and the World Bank’s projection of 2.0 percent . In that context, the 2.7 percent achieved last year took everyone by surprise. But growth, what growth? I will come back to the problems with economic growth in Nigeria shortly; first, allow me, by way of context, to touch on the concept of growth. The truth is that economic growth matters. When Simon Kuznets created the concept in 1955, his argument was that growth would benefit everyone. The Kuznets’s theory is captured in the mantra: “Growth is a rising tide that lifts all boats”. But Robert Solow came up with the concept of “balanced growth path” and argued that this trajectory would only be achieved when all variables – output, incomes, profits, wages, capital, asset prices etc – progress at the same pace. When such balanced growth is achieved, Solow’s posited, every social group would benefit from growth. But not everyone believes growth should be measured solely through the Gross Domestic Product (GDP), which is the sum of the value of all goods and services produced within a country’s territory. One recent criticism of the GDP came from David Pilling, the Africa Editor of the Financial Times, who wrote a well-acclaimed book entitled “The growth delusion: The wealth and well-being of nations”. Pilling’s argument is that the GDP is not measuring everything that matters, such as activities that are not monetised and things that really contribute to the wellbeing of people. Indeed, such concerns have led to the development of alternatives to the GDP, such as the Human Development Index (HDI), the Genuine Progress Indicators (GPI) and the Gross National Happiness (GNH). Yet, notwithstanding the criticisms of the GDP, it is still the best available quantitative measure of how an economy is performing. And the assumption remains that if a country is experiencing a high GDP growth rate, which reflects the fact that its economy is expanding, then such a country should also be experiencing high levels of job creation and poverty reduction. But that’s not always true. It is quite possible for an economy to be growing and yet not lead to reductions in poverty and inequality. There is the

phenomenon of “jobless growth”, where, despite a growing economy, people can’t get jobs or make ends meet. Which brings us back to Nigeria. For if there is one country where the jobless growth phenomenon is prevalent, it is Nigeria! The World Bank identified this problem a few years ago in its 2014 Nigeria Economic Report. At that time, Nigeria’s economy was growing at about 7 percent, yet unemployment was very high, while the poverty rate was at more than 60 percent. The World Bank called it “the poverty/growth puzzle”, saying this posed two major economic questions: 1) “Why has the rapid economic growth in Nigeria not generated greater poverty reduction?” and 2) “How could the economy of the size and wealth of Nigeria have such high poverty rates?” The World Bank’s answer was that “the quality and quantity of the growth has proved insufficient to generate the productive jobs needed by a rapidly growing population”. In her book “Reforming the Unreformable”, Dr Ngozi Okonjo-Iweala, two-time finance minister, highlighted the same problem. She noted that while the economy had been growing “at a respectable 7 percent average annual rate, it’s clear that it is not yet creating the number of jobs needed to absorb the youth”, adding that “the need to create jobs is the most important problem confronting the Nigerian economy now and for years to come.” So, even when the economy was growing at 7 percent, it was a jobless growth. But the problem is not with the Kuznets’s theory: growth should benefit everyone. The problem is with the quantity, quality and spread of growth in Nigeria. In other words, economic growth in Nigeria fails the Solow’s balanced growth theory. The truth is that, apart from the fact that Nigeria’s economy is not growing fast enough (it needs to grow at about 8 or 9 percent annually), it is also not growing in the right sectors. The quality and spread of the growth matter. The oil sector is currently over-privileged. It contributes less than 10 percent to the size of the economy, but accounts for over 85 percent of Nigeria’s foreign exchange and 70 percent of its revenue. Yet, in terms of job creation, it absorbs less than 5 percent of Nigeria’s labour force. That’s not surprising because the

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The government pours money into the agricultural sector and protects it from international competition. As a result, it lacks the impetus to improve productivity, which drives growth

oil sector is capital, not labour intensive. The services sector, given its specialised nature and associated low productivity, is also not a major job-creating or povertyreducing sector. The most productive sectors are the industrial and agricultural sectors. Yet, these are the most inefficient sectors in Nigeria. But the reasons are obvious. The government pours money into the agricultural sector and protects it from international competition. As a result, it lacks the impetus to improve productivity, which drives growth. Similarly, the industrial sector is shielded from international competition, in addition to facing a multitude of supply-side constraints. Unsurprisingly, it suffers from huge productivity and competitiveness challenges, which inhibit its growth. It is interesting that the sectors that dominate the Nigerian economy – agriculture (25.16 percent), industries (22.25 percent) and services (52.60 percent) – are all servicing the domestic market. In other words, they are not export-oriented. Yet, according to a World Bank study, “exporters on average are more productive, larger and pay higher wages than non-exporters”. In other words, sectors that export will experience higher productivity and growth than those that do not. But, despite the hype about promoting non-oil exports, Nigeria is not creating the conditions for building productive and export capacities in its industrial and agricultural sectors. Surely, Nigeria’s defensive approach to AfCFTA and other international trade agreements reflects its unwillingness to abandon import substitution for export orientation. But Nigeria will continue to have meaningless economic growth unless its growth is underpinned by significant inflow of foreign direct investment and dynamic real sectors, with huge capacities to export goods and services. Yet, that won’t happen without macroeconomic stability and structural reforms that embrace trade and investment liberalisation – in other words, a competitive market economy! Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

Achieving board effectiveness using board committees

he composition, mix and structure of the Board of Directors of a Company and the effectiveness of the decision making process are key elements of sound corporate governance. A Board Committee consists of Directors mandated to carry out specified functions assigned by the Board. The establishment of Board Committees is one way of achieving greater efficiency in the performance of the Board’s oversight functions, thereby strengthening the Governance structure. The Companies and Allied Matters Act (CAMA) allows the Board to exercise its powers through Committees consisting of such members of the Board as it deems fit. Section 9.1 of the SEC Code of Corporate Governance for Public Companies provides that the Board “should determine the extent to which its duties and responsibilities should be undertaken through Committees”. It goes on to recommend the establishment of a Governance and Remuneration Committee, a Risk Management Committee and any other Committee that the Board may deem appropriate, depending on the size, needs or industry requirements of the company. The various industry Codes have similar provisions. The Nigerian Code of Corporate Governance 2018 recommends the establishment of the Nomination and Governance, Remuneration, Audit and Risk Management Committees. It further recommends that each

Committee should be composed of at least three members with a majority of Independent Non-Executive Directors. The Board may combine any of the responsibilities of Board committees, taking into consideration the size, needs and other requirements of the Company. All members of the Audit committee should be financially literate and should be able to read and interpret financial statements. At least one member of the committee should be an expert and have current knowledge in accounting and financial management. Beyond regulatory compliance however, Board Committees if properly structured are indeed quite useful to the overall efficiency and effectiveness of a Board. Generally, Board Committees focus on specific areas, thereby allowing the Board concentrate on more strategic issues. An effective Committee structure allows the Board to focus expertise where it can best be utilized, and also manage the flow of information so Directors are not unduly burdened with too many details that may hinder rather than facilitate effective decision making. Committees are usually charged with drilling down on specific issues; generally assume responsibility for forming an opinion on such issues and making recommendations to the Board. They are at liberty to seek independent professional advice at the expense of the company and seek clarification from senior management as required. www.businessday.ng

An effective Board is composed of Directors with diverse experience, skills and expertise. To maximize the benefits of this diversity, Committees should comprise of Directors with relevant skills and competences in specific areas. Membership of Committees also affords Directors the opportunity of gaining better insight into the business of the company in respect of which they have oversight responsibilities. When used effectively, Committees can increase the Board’s ability to carry out its mandate. It is however key to note that while the Board may delegate some responsibilities to Committees, the Board as a whole retains ultimate oversight responsibility over the affairs of the Company Whilst Committees would make recommendations to the Board based on extensive consultations and deliberations, the Board has to approve such recommendations before they become effective. To ensure the effectiveness of the Committee structure, the Board should ensure that Committees are composed of Directors with the relevant skills and who are able to devote sufficient time to Committee work. The Board should also ensure that the requisite information is made available to its committees timeously. Below are some of the elements that would ensure Board Committee effectiveness: Committee Charters It is recommended that Board Committees have specific Charters or terms of reference setting out their roles and responsibilities in the

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Bisi Adeyemi area of membership, quorum, scope of work, as well as authority and reporting obligations. Effective Committee Chairs As with the Chairman of the Board, the role of the Committee Chairman is an important one and the effectiveness of the incumbent ultimately determines the effectiveness of the Committee. Thus the Board should carefully select Committee Chairs, taking cognizance of availability, strength of character, relevant skills set (knowledge, experience, proven leadership and people’ management) respect from peers, etc.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to badeyemi@dcsl.com.ng. DCSL provides Governance Advisory, Corporate Restructuring & Board Evaluation, Board & Senior Management Training, Retreats & Strategy Sessions, Executive Talent Recruitment, HR Outsourcing, Company Secretarial services

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Monday 02 March 2020

BUSINESS DAY

cityfile Gombe: Agency seizes 53.41kg drugs, arrests 48 suspects

Members of God Bless Nigeria Group during a solidarity rally organised by the group in support of the Armed Forces in Abuja. NAN

A’Ibom moves against illegal mining in communities ANIEFIOK UDONQUAK, Uyo

kwa Ibom government has warned against illegal mining in the state to avoid environmental hazard. The commissioner for environment and petroleum resources, Ekong Sampson, gave the warning during a visit to a mining site at Ikot Ekong, in Mkpat Enin local government area by a joint special team on constituted by the state government, at the weekend. Sampson said that government would take appropriate steps to check the activities of illegal miners, as they posed serious dangers to the environment. According to him, the activities of the illegal miners,

if not checked, could ruin families and wipe out communities in the state. “We’re therefore warning illegal mining operators in the state to desist from their activities, which constitute economic and environmental sabotage and are punishable under the law. “The communities too should refrain from selling or leasing out their lands for such activities,” he said. The commissioner, however, charged registered miners in the state to ensure compliance with the laid down rules and regulations in carrying out their activities. He also appealed to traditional rulers across the state to support the efforts of government in fighting the menace by enlightening

the people on the dangers of illegal mining. The permanent secretary, ministry of environment and petroleum resources, Nsudo Nsudo, said that the ministry would take inventory of all the illegal mining sites in the state in order to assess the impact of the act. Nsudo said that the ministry has set the regulatory framework to ensure that the activities of the miners do not have negative effects on the affected communities and the people. Head of solid minerals in the state, Emem IbokEtte, called for collaboration between the federal and state governments to stop illegal mining in the country. According to him, this would avert environmental disasters posed by the illegal

mining acts, stressing that their activities have left the environment unsustainable for future generations. The team led by the commissioner also inspected sites at Ibesikpo and Onna local government areas of the state, where they appealed to the traditional ruler of Onna local government area, Edidem Raymond Inyang, to support the efforts of government in fighting the menace by enlightening the people on the dangers of illegal mining and ensuring such act are stopped in the local government. The monarch commended the team for taking such steps and assured the team of his readiness to partner government effort to curb the menace.

Kaduna engages locals, seeks end to clashes, killings

he Kaduna government at the w e ekend engaged members of some communities in the state in continuation of its search for an enduring peace in the state. The commissioner for internal security and home affairs, Samuel Aruwan, while meeting with Fulani, Chawai and Iregwe community leaders in Kauru local government area of the state, said the government was committed to end spate of clashes and killings in the state. Aruwan said the engagement has been yielding positive results, adding

that all stakeholders have agreed to set up vigilant groups to support troops of ‘Operation Safe Haven’ and the police operating on Kaduna-Plateau States border areas. “Peace is very important; we have been going round the state, meeting with critical stakeholders on the importance of peace and the need for all to recourse to the law. “We are also complementing security agencies in enhancing internal security in the state. “We are happy with the feedback we are getting and will continue to work towards sustainable peace www.businessday.ng

and security.” The commissioner appealed to leaders of the various communities to take the messages to their subjects, so that everyone would key into the peace initiative. Dauda Ravo, who represented the district head of Unguwan Magaji Chawai, said the meeting was an opportunity to appraise the security issues in the area and come up with more ideas for lasting peace. He called on Fulani natives who left their homes to return and continue with their livelihood. The leader of the Fulani community in the area,

Ardo Garkuwa and that of Iregwe, Sunday Durai agreed on the need to have a joint taskforce to weed out impostors who come to their communities to commit crime. According to them, it is important to forgive one another and forge ahead for more development to come to their area. A resident of the area, Morris Yaris, backed the establishment of local joint taskforce to control inflow of people into the communities. He said that the task force would be able to supervise and take action against troublemakers.

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he National Drug Law Enforcement Agency (NDLEA) has seized 53.41kg of cannabis sativa and other psychotropic substances and arrested 48 suspects in Gombe State. Olisaemeka Okafor, the NDLEA’s acting commander in GombedisclosedthisonFriday. The suspects comprise 45 males and three females, while the seized 53.41kg of illicit drugs consist of 31.156kg psychotropic substances and 22.26kg cannabis sativa. According to Okafor, the agency has restructured its operations to a more surveillanceinclined approach in the fight against illicit drugs in the state. He said that 60 percent of the medicine stores in Gombe town had been raided to ensure that psychotropic substances were not sold to the residents. “In Gombe, there is a paradigm shift in the way illicit drugs and substances are now kept. Those operating patent medicine shops do not keep them in their shops anymore; they keep them elsewhere. “They direct buyers to the locations where there are sales representatives to attend to buyers. Some use their car; like the woman we just arrested

and now facing prosecution.” The commander added that with the ban on sales of codeine and efforts by the agency in Gombe, such substances were nowdifficulttoget,addingwhereveryoufindcodeineinGombe, it is sold for N3,000 per bottle. He said that the agency made major breakthrough in the arrest of members of a cannabis sativa-cartel in ‘Angwan-Kwaya’ (community of drug) which had operated without interference for long. “At ‘Angwan-Kwaya’ near Billiri local government area, over 12kgs of dried weeds suspected to be India hemp was seized, while three suspects were arrested. “This is a major cartel that had operated for long and defiled security penetration.” He added that while investigation was ongoing in some of the arrests made by the agency, some suspects had been charged to court. “Four drug clients have been successfully counseled and another one is undergoing counseling. He appealed to youths in the state to support efforts of the NDLEA and other relevant agencies in the fight against illicit drugs.

Man to die by hanging over armed robbery

n Ado-Ekiti High Court, on Friday, sentenced a middle-aged man, Isa Abdulkareem, to death by hanging for armed robbery. The judge, Mosunmola Abodunde held that the prosecution proved its case beyond reasonable doubt. The prosecution from the state ministry of justice, Gbemiga Adaramola, had told the court that the convict while armed with guns and a cutlass, robbed one Taiwo Olomola of N110,000 and a Techno Phone on December 19, 2016 at Ureje area in Ado-Ekiti.

He said he also robbed one Adeya Olalekan of N74,000 and an Infinix Note 2 phone, all offences which contravene the provisions of Section 402, (2) of the Criminal Code Law, Cap C 16, Laws of Ekiti State. 2012. The prosecution, called four witnesses to prove its case, and tendered exhibits including the two guns, five live cartridges, phones as well as a confessional statement from the convict. The defence counsel, Adeyinka Opaleke, called the convict as witness during the trial. He pleaded not guilty.

Police arrest 33 cultists in Benue

enue Police Command says it has arrested 33 suspected cultists and armed robbers in the state. According to Mukaddas Garba, the Commissioner of Police (CP) in charge of Benue command, the suspects were arrested between January and February 2020, with arms and seven stolen vehicles recovered from them. He said some of the suspects were already charged to court. “I want to use this medium to assure members of the pubic that the command is working tirelessly to put the menace of cultism under total control and bring to book those who engaged in cult activities. ‘I urge all stakeholders to avail the police with nec-

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essary information to fight cultism in Benue’’. The CP disclosed that the command on February 23 during a stop-and-search operation at North-Bank, Makurdi arrested a suspect with one locally made pistol, while further investigation led to the recovery of two small axes, one black beret and charms. The command, he said, also received information about cult activities in Ugbokolo town, in Okpokwu local government area and deployed police teams. “During stop and search operations in the town, one suspect from Okonobo village in Okpokwu, was arrested along Ugbokolo market area, and on the-spot-search led to the recovery of one locally made double- barrel pistol. NAN

Monday 2 March 2020

BUSINESS DAY

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Monday 2 March 2020

BUSINESS DAY

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Monday 02 March 2020

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

TELECOMS

MTN sustains trillion naira revenue mark as 2019 revenue jumps 12.57% OLUFIKAYO OWOEYE

espite regulatory headwinds in the Nigerian market, MTN’s revenue for the period ended 31st December 2019 surged 12.57 percent to N1.16trillion in 2019 from N1.03 trillion in 2018. Operating profit surged 48.54percent to N395.29 billion from N266.11 billion in 2018. Profit before tax surged 31.07 percent to N290.1 billion from N221.34 billion in 2018. Profit After Tax ballooned 38.73percent at N202.11billion from N145.68billion in 2018. Revenue from Voice grew from N681.91bn in 2018 to N725.44billion in 2019, accounting for 72.7percent of service revenue. The teleco giant added 5.3million new smartphones to its network bringing the smartphone penetration to 41.8percent; revenue from Data stood at N219.39billion in 2019 from N154.13billion in 2018,

…grows subscriber base by 10.5% to 64.3m revenue from SMS dropped slightly to N13.50billion from N14.30billion in 2018; revenue from interconnected and roaming stood at N125.04billion in 2019 from N102.56billion in

2018; revenue from handset and accessories was flat at 2.20billion; Digital revenue also dropped slightly to N35.9billion in 2019 from N40.70billion; value added services stood

a t N 3 7 . 1 6 b i l l i o n f ro m N32.27billion in 2018 Mobile subscribers increased by 6.1million to 64.3million, active data subcribers increased by 6.5million to 25.2million.

The Board of Directors approved interim dividends of N60 billion for the year ended 31 December 2019. During the year, the Nigerian Communication

L-R: Maryjane Ogeah, personal assistant to the managing partner, Zenera Consulting; Meka Olowola, managing partner, Zenera Consulting; Monday Eze, Zenera Pro Golfer; Bekeme Masade, chief executive, CSR-in-Action, and Idongesit Edet, client service manager, Zenera Consulting, at a reception for Eze upon turning pro-golfer in Lagos.

Commission (NCC) granted Visafone Communications Limited the approval to transfer its 800MHz license and spectrum to MTN Nigeria Communications PLC. On 24 July 2019, the Board of Visafone approved the voluntary winding up of Visafone Communication Limited. The liquidation process is currently on-going and is expected to be concluded in 2020 On 20 October 2015, the Nigerian Communications Commission (NCC) imposed a fine relating to the timing of the disconnection of 5.1 million MTN Nigeria subscribers. An agreement was reached between the NCC and MTN Nigeria on 10 June 2016 in the sum of N330 billion as full and final settlement of the fine to be paid in seven (7) installments. A sum of N220 billion in five installments was paid between 2016 and 2018. During the year the final N110 billion was paid in two installments.

MARKETS

Goldman Sachs predicts zero profit growth for corporates amid growing coronavirus spread

oldman Sachs has warned that most companies would generate no earnings growth in 2020 as the effect of the coronavirus worsens. “the trajectory of the US and global economy is highly

uncertain at this time” said Goldman Sachs in a report. They added that a more severe pandemic could lead to a more prolong disruptions and US recession Coronavirus panic sent global equities markets plummeting last week, further

Foluso Phillips, chairman of NigeriaSouth Africa Chamber of Commerce (NSACC); Olusegun Zaccheaus (l), guest speaker, with Tanzania Mseleku, new South African high commissioner to Nigeria, at the February breakfast meeting of NSACC, in Lagos www.businessday.ng

worsening their worst week since the 2008 global financial crisis. Nigerian stocks suffered their biggest weekly loss since April 2019 with investors exiting on increasing regulatory risk in the banking sector, a slump in oil prices, and as the

first case of the Coronavirus was reported in the country. Consequently, the benchmark index declined by 4.3% w/w to 26,216.46 points, driven primarily by selloffs in GUARANTY (-14.8%), MTNN (-5.2%) and NB (-16.4%), and bringing the YTD return (-4.3%) deep into negative territory for the first time in 2020. US (DJIA: -11.1%; S&P: -10.8%) and European (Euro Stoxx: -11.6%; FTSE 100: -10.8%) shares tumbled into correction territory, as investor fears heightened over just how much damage the fast-spreading COVID-19 virus will wreak on the global economy. In Asia, Japanese (Nikkei 225: -9.6%) stocks suffered their largest weekly decline in four years, while Chinese (CSI 300: -5.0%) stocks suffered their largest weekly fall since last April. Emerging markets (MSCI

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EM: -4.9%) and Frontier markets (MSCI FM: -2.6%) were not immune to the selloffs, with significant losses in China (-5.0%) and Vietnam (-5.5%) weighing down the respective indices. Big players in the U.S. consumer and tech sectors have already warned of a hit from the rapid spread of the virus that has disrupted supply chains, hurt global travel and led to temporary shutdowns

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of businesses. Tech-giant, Apple warned it was unlikely to meet its March-quarter sales forecast as the iPhone maker’s manufacturing facilities in China were ramping up slower than expected. Microsoft said it does not expect to meet its quarterly revenue forecast for its Windows and personal computing business due to a hit to its supply chain.

Monday 2 March 2020

BUSINESS DAY

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Monday 2 March 2020

BUSINESS DAY

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Monday 02 March 2020

BUSINESS DAY

COMPANIES&MARKETS OIL & GAS

NNPC to expand domestic gas footprint from 1.1BSCF to 2.2BSCF OLUSOLA BELLO

he Nigerian Na t i o n a l P e t ro l e u m C o rp o r a t i o n (NNPC) says i t w i l l ag g re ss i ve l y e xpand its domestic gas footprint with the delivery of the Escravos-Lagos Pipeline System (ELPS) II to double capacity from 1.1billion standard cubic feet of gas (BSCF) to 2.2BSCF and the OB3 gas pipeline to connect East and the West. M e l e Ky a r i , G r o u p Managing Director of t h e c o r p o rat i o n , ma d e this known at the 4th Sub-Saharan Africa International Petroleum Exhibition and Conference (SAIPEC) in Lagos. Speaking on the con-

f e r e n c e t h e m e : “O i l & Gas as an Enabler for Economic Transfor ma tion in Sub Saharan Africa”, Kyari stated that the NNPC would commence the construction of the Ajaokuta-Kaduna-Kano gas pipeline in Q2 2020 to serve as an enabler to further boost the economic activities of the country. Represented by the Chief Operating Officer (CO O), Gas and Power, Yusuf Usman, Mele Kyari stated that the recent passage of the Deep Offshore Act into law has set the Industry on the path of irreversible growth. H e p o s i t e d t h a t Ni geria as Africa’s leading exporter of LNG and the 4 t h i n t h e Wo r l d a f t e r Qatar, Australia and Ma-

laysia, was ready to captu re m o re L N G ma rke t with the Final Investment Decision of the NLNG Train 7. “Oil and gas resources have remained the major s ou rce o f re ve nu e that has kept the whe els of Nigeria moving for over five (5) decades. Oil, as we all know, has served as key enabler to the economic transformation of many nations like Norway, Saudi Arabia, UAE, Qatar and many other oil resources dependent nations,” Kyari submitted. According to him, it is not a new story that most resource dependent nations rely on their dominant natural resource to drive other key economic initiatives and activities, noting that this is true of

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Nigeria and many other countries represented at the conference. He informed that the connection between Oil and Gas Industry and the Nigeria economy was intricate, stressing that the state of every aspect of the nation’s economic and social life revolved around the hydrocarbon resource. The NNPC boss called for more hard work to diversify the economy away f ro m ov e r- d e p e n d e n c e on oil revenues in order to avoid the risk of market fluctuations that may impact the nation’s fiscal equation. “The current Government under the leaders h i p o f P r e s i d e n t Mu hammadu Buhari has made it a priority to en-

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sure re venues from oil and gas resources are utilized to suppor t the emergence and grow th of other non-oil sectors of the economy. In order to achieve this objective, it means more money will be required from the oil and gas to fund new economic projects outside the Oil and Gas Industry,” the GMD stated. The NNPC, he said, as a national Oil Company, ha d b e e n re p o s i t i o n e d to support the vision of M r. P re s i d e n t f o r e c o nomic diversification, even as he maintaine d that in the Upstream, the corporation targeted increasing oil production from 2.3million barrels per day to 3million bbl/ day and at the same time working with partners

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t o s ig n i f i ca nt l y re d u c e cost per barrel in order t o i mp rove t h e f l ow o f t h e n e e d e d re ve nu e t o support economic diversification. He said the NNPC was encouraging private investors to join the train that traverses the oil and gas value chain to create more value and job opportunities for the nation’s teaming youths. In his opening remarks, the Chairman of the Petroleum Technology Association of Nigeria (PETAN), Bank-Anthony O k o r o a f o r, a p p l a u d e d Mele Kyari for being a true friend of the Industry and called for deeper re gional inte gration among African Countries to boost the Continent’s economic activities.

Monday 02 March 2020

COMPANIES&MARKETS APPOINTMENTS

BUSINESS DAY

Business Event

Mastercard appoints Ifeoma Dozie new director area marketing for Sub-Saharan Africa

feoma Dozie, a Nig e r i a n m a rk e t i n g and brand leader with more than 17 years’ experience, has joined Mastercard’s Sub-Saharan Africa leadership team. Mastercard announced the appointment of Dozie as its Director Area Marketing for Sub-Saharan Africa. Dozie brings a wealth of expertise to the role and will be based in Mastercard’s regional head office in Lagos, Nigeria. As Director Area Marketing for Sub-Saharan Africa, Dozie is responsible for driving Mastercard’s marketing and communications strategy across the region, and leveraging her knowledge of the market to drive Mastercard’s business performance. “Ou r i nve st m e nt s i n Africa demonstrate our continued commitment to driving a world beyond cash and bring more people into the formal economy. At Mastercard, our people are one of our most important investments.

This is why we are thrilled to welcome Ifeoma Dozie to our Sub-Saharan African team. With a wealth of experience in all aspects of traditional and digital marketing and a clear understanding of the region’s diversity and the innovative transformation our brand, Ifeoma will play an invaluable role in engaging consumers, using marketing as a business driver for both Mastercard and its customers.” said Raghav Prasad, Divisional President of Mastercard Sub-Saharan Africa. In recent years Mastercard has been on a multisensor y brand journey, starting with the evolution of its logo to become a symbol brand; the introduction of its sonic identity; the launch of the Taste of Priceless - two bespoke macaron flavors, Passion and Optimism; and most recently dropping its firstever sonic-integrated music single. With a strong-track record of successfully executing brand strategies

across different regions, Dozie will be responsible for communicating Mastercard’s brand transformation in Sub-Saharan Afr ica. In her last role she was Senior Regional Marketing Manager for Heineken in the Africa, Middle East and Eastern European region, where she was responsible for the development of strategic business plans and capability building. Prior to this she worked as the brand’s Portfolio Director in the UK, as Global Marketing Manager in its Netherlands office, and as Marketing Manager of Nigerian Breweries Plc. She holds a law degree from the University of Bristol in the UK and a master’s degree in international business from King’s College London. In line with Mastercard’s commitment to advance gender equality and women empowerment, Dozie is also passionate about girls’ education in Nigeria and actively participates in mentorship programs.

L-R: Jubril Enakele, MD, Iron Capital; Oyinda Olaniyan, head of media, The Ben Enwonwu Foundation; Chijioke Uwaegbute, partner, Tax (West Africa), PricewaterhouseCoopers; Odunayo Sanya, executive secretary, MTN Foundation; Yvonne Ike, head Sub-Saharan Africa, Bank of America Merill Lynch, and Femi Akinsanya, chairman, First Ally Capital, at the 5th edition of the Point of View series hosted by The Ben Enwonwu Foundation in Lagos

L-R: Otto Orondaam, founder, Slum2School; Fregene “Chef Fregz” Gbubemi; Kemi Lala Akindoju, and Abubakar Suleiman, MD/CEO, Sterling Bank, at the FregzDucation Charity Fundraising Dinner in Lagos.

BANKING

Access Bank makes top 500 global valuable banking brands HOPE MOSES-ASHIKE

i g e r i a’s l a r g est retail Bank, Access Bank Plc., has been named as one of the top 500 global banking brands, according to leading business valuation and strategy consultancy, Brand Finance. Access Bank has demonstrated grow th since it was last ranked as the fifth most valuable Nigerian bank in the 2017 Banking 500 report. The Bank now ranks second with a valuation of $242 million. The Bank’s valuation comes on the back of its successful merger with Diamond Bank in April 2019, and its recent expansion into the East African market. The ninemonths post-merger financial results posted by the Bank showed gross earnings of N513 billion,

an increase of 37 percent above the N375.2 billion recorded within the same time frame in 2018. Further analysis of the results show ed the B a n k ’s a s s e t b a s e r e ma i n e d s t ro ng a n d d i versified, growing by 33 percent to N6.6 trillion as at September 2019, up from N4.95 trillion as of December 31, 2018. T h e He r b e r t Wi g w e, group managing director, Access Bank Plc., talking about the Bank’s growth trajectory, said, “In the last twelve months, Access Bank has grown into a powerhouse in the Nigerian and indeed, African banking industry. We are happy with all the successes recorded so far, and we hope to reach and surpass other targets we have set for ourselves. Access Bank will continue on its journey to becoming Africa’s gateway to the world, through www.businessday.ng

strategic expansion into new and emerging markets within and outside Africa and providing best in-class customer experience.” He went further to urge investors and other stakeholders to keep their faith in the Bank, reassuring that the Bank will stay true to its values of ethical and sustainable banking practices. “Access Bank will continue to innovate and remain p ro f i t a b l e w h i l e o f f e ring value to all investors and stakeholders. As we strive to expand our business operations, we will remain true to our core values of sustainable banking and adherence to global best practices,” Wigwe concluded. Published in the United Kingdom, the Banking 500 Report is an annual r a n k i n g o f t h e w o r l d ’s strongest and most valuable banking brands.

L-R: Wilson Erumebor, senior economist, NESG; Titilope Oni, head, Think Tank Operations, NESG; Ola Brown, founder, Flying Doctors Nigeria; Solape Hammond, SA to Lagos State governor on SDGs and Investments, and Yinka Iyinolakan, head, corporate communications, NESG, at a panel session at the 2020 Social Media Week in continuation of it’s ‘’Nigeria 2050: Shifting Gears’’.

L-R: Olayinka Oye-Bamgbose, representative of the ministry of wealth creation and employment, Lagos State, director for partnership; Abigail Ogwezzy-Ndisika, head of department, mass communication, University of Lagos; Nwamaka Onyemelukwe, public affairs, communications & sustainability manager; Olufunmilola Johnson, founder and CEO, Whitefield Foundation, and Adenike Josephine Coker, justice of Lagos High Court, at the launch of the SHAPE 2020 programme sponsored by The Coca-Cola Foundation in Lagos.

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Monday 02 March 2020

BUSINESS DAY

Access Bank Rateswatch Market Analysis and Outlook: February 28 – March 6, 2020

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.55

Q4 2019—higher by 0.27% compared to 2.28% in Q3 2019

Broad Money Supply (N’ trillion)

36.48

Increased by 2.9% in Nov’ 2019 from N35.45 trillion in Oct’ 2019

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

26.41 2.20

Increased by 2.18% in Nov’ 2019 from N25.85 trillion in Oct’ 2019 Increased by 7.17% in Nov’ 2019 from N2.06 trillion in Oct’ 2019

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

12.13

Increased to 12.13% in January 2020 from 11.98% in December 2019

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

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

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

36.70 52.36 1.77

February 27, 2020 figure — a decrease of 4.09% from February start February 27, 2020 figure— a decrease of 13.33% from the previous wk January 2020, figure — an increase of 1.42% from December 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

Change(%)

28/2/20

21/2/20

NSE ASI Market Cap(N’tr)

26,216.46 13.66

27,388.62 14.27

(4.28) (4.28)

Volume (bn)

0.42

(1.18)

Value (N’bn)

6.19

5.55

11.52

NIBOR Friday Rate

Friday Rate

Change

(%)

(Basis Point)

(%) 28/2/20

21/2/20

OBB

15.50

3.83

1167.0

O/N CALL 30 Days

16.42 16.56 6.69

3.00 4.00 8.87

1342 1256.3 (218)

90 Days

6.63

8.98

(235.4)

FOREIGN EXCHANGE MARKET Market

Friday (N/$)

28/2/20

Friday

1 Month

(N/$)

Rate (N/$)

28/2/20

21/2/20

28/1/20

Official (N) Inter-Bank (N) BDC (N)

306.95 365.38 0.00

307.00 364.80 0.00

307.00 362.83 0.00

Parallel (N)

360.00

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) Agriculture Cocoa ($/MT) Coffee ($/lb.) Cotton ($/lb.) Sugar ($/lb.) Wheat ($/bu.) Metals Gold ($/t oz.) Silver ($/t oz.) Copper ($/lb.)

Tenor

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

(13.33) (9.63)

(18.77) (44.70)

2706.00 108.95 61.69 13.96 522.00

(5.45) 2.78 (10.85) (6.62) (6.83)

39.77 (16.32) (20.40) (8.94) 20.42

1628.14 17.23 253.40

(0.44) (6.97) (2.26)

23.57 0.23 (22.70)

Friday

(%)

Change

(%)

(Basis Point)

21/2/20

0.00 6.70 6.99 8.75 10.26 12.00

0.00 7.45 8.69 9.55 10.79 12.08

0.0 (74.4) (170.6) (80.2) (52.9) (9)

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

(Basis Point)

28/2/20

21/2/20

3.13 3.04

2.85 3.39

29 (35)

6 Mnths 9 Mnths 12 Mnths

3.45 4.51 5.25

3.69 4.57 5.23

(24) (6) 3

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Friday

Change

(%)

(Basis Point)

28/2/20 Friday

Change

(%)

1 Mnth 3 Mnths

AVERAGE YIELDS Friday

(%)

52.36 1.69

Friday

BOND MARKET

28/2/20

YTD Change

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

Indicators

Tenor

1-week Change (%)

MONEY MARKET Tenor

Indicators

21/2/20

Index

3889.07

3836.95

1.36

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr) YTD return (%) YTD return (%)(US $)

12.15 8.40 58.32 2.51

11.99 8.18 56.20 -0.36

1.36 2.68 2.12 2.87

TREASURY BILLS (MATURITIES) Amount (N' million)

Rate(%)

Date

91 Day

4,384.18

3.5

12-Feb-2020

182 Day

10,000.00

4.5

12-Feb-2020

Tenor

364 Day

140,000.00

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

6.5

12-Feb-2020

Global Economy The India economy witnessed its weakest growth since the first quarter of 2013. It advanced 4.7% year-on-year in Q4 2019, following an upwardly revised 5.1% expansion in Q3 (4.5% earlier reported) according to the Ministry of Statistics and Programme Implementation (MOSPI). On the expenditure side, faster declines were seen for gross fixed capital formation, exports and imports while private consumption growth accelerated. On the production side, gross value added expanded while output for utilities and manufacturing contracted. In a separate development, the US consumer sentiment index according to the University of Michigan was revised slightly higher to 101 in February 2020 from a preliminary estimate of 100.9. It is the highest reading since March 2018. The gauge for current conditions was higher than expected (114.8 from a preliminary figure of 113.8) while expectations rose less (92.1 from 92.6). Inflation for the year ahead was seen at 2.4%, down from a preliminary estimate of 2.5% while those for the five-year outlook fell were unchanged at 2.3%. The coronavirus was mentioned by 8% of all consumers in February although on the last days of the February survey, 20% mentioned the coronavirus due to the steep drop in equity prices as well as the Centre for Disease Control and Prevention (CDC) warnings about the potential domestic threat of the virus. Elsewhere in Brazil, the Brazilian Institute of Geography and Statistics (IBGE) reported that unemployment rate fell to 11.2% in the three months to January 2020 from 11.6% in the August to October period. The number of unemployed declined by 3.7% to 11.91 million while employment rose by 0.1% to 94.15 million. The labour force participation rate declined 0.4% to 61.7% while the employment rate decreased 0.1% to 54.8%. Domestic Economy The Nigerian economy advanced 2.55% yearon-year in Q4'19 compared to an upwardly revised 2.28% rise in Q3. It was the strongest expansion since the Q3 2015, mainly driven by the oil sector (6.36% vs 6.49% in Q3), amid higher crude oil production (2.00 million barrels per day, up from 1.91 mbpd in the same period a year earlier) and more favourable prices. Growth in the non-oil sector of the economy advanced further in Q4'19, coming in at 2.26% annually (Q3: +1.84% year-on-year) propelled by information and communication (telecommunications), agriculture (crop production), financial and insurance services (financial institutions), and manufacturing. According to the Nigeria Bureau of Statistics (NBS), the overall GDP in 2019 indicated a real growth of 2.27%, compared to 1.91% in 2018. In a separate development, the Manufacturing Purchasing Managers' Index (PMI) stood at 58.3 index points in January 2020. This indicates an expansion in the manufacturing sector for the thirty-fifth consecutive month. The index grew at a slower pace when compared to the previous month (59.2 points). This performance was shown in the latest PMI report by the Central Bank of Nigeria. A PMI above 50 points indicates that the manufacturing sector is generally expanding, while a reading below 50 points indicates a contraction. Twelve of the subsectors surveyed recorded growth during the month, while the primary metal and printing & related support activities subsector recorded decline in the period under review. Stock Market The Nigerian Stock Exchange (NSE) extended its losing streak and negative sentiment last week amidst the continued selling pressure among large-cap stocks. The market is also reflecting sentiments from the global market as the coronavirus continues to spread dampening economy growth. Consequently, the All Share Index (ASI) declined 4.28% to close at 26,216.46 points from 27,388.62 points the prior week.

Similarly, market capitalization dipped by 4.28% to N13.66 trillion from N14.27 trillion the prior week. This week, market might remain depressed due to the spread of the coronavirus and the report of a known coronavirus patient in Nigeria. Money Market Cost of borrowing spiked up due to Cash Reserve Ratio (CRR) debit of N500 billion and Fx auction held at the close of the prior week. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates settled higher at 15.5% and 16.42% from 3.83% and 3% previous week. The slightly longer dated instruments such as 30-day and 90-day Nigeria Interbank Offered Rate (NIBOR) closed at 6.69% and 6.63% from 8.87% and 8.98% the prior week. This week, rates are expected to decline slightly as liquidity is restored by OMO maturity of N500 billion. Foreign Exchange Market Last week, the naira gained across most market except at the Nigerian Autonomous Foreign Exchange (NAFEX) where it depreciated. The official window saw a marginal appreciation as it ended N306.95/$, a 5 kobo gain from the prior week, while the parallel market remained unchanged at N360/$. At the Nigerian Autonomous Foreign Exchange (NAFEX) segment the local currency depreciated by 58 kobo to close at N365.38/US$ from N364.80/US$ the previous week. The relative stability of the local currency continues to be supported by the intervention of the apex Bank across various market segments. This week, the naira is expected to remain around prevailing levels due to the apex bank's sustained supply of liquidity. Bond Market The bond market sustained its buying sentiment as market rallied for most maturities across the yield curve. Activities in the fixed income space stemmed from robust systemic liquidity and the absence of relatively better investment outlets. Yields on the five-, seven-, ten- twenty- and thirty-year debt papers finished at 6.7%, 6.99%, 8.75%, 10.26% and 12% from 7.45%, 8.69%, 9.55%, 10.79% and 12.08%. The Access Bank Bond index increased by 52.11 points to settle at 3,836.95 points from 3,836.95 points the prior week. We expect reduced activity this week given the liquidity squeeze that will be caused by the CRR debit by CBN. Commodities The price of oil plummeted as the spread of the coronavirus outside China raised fears of slowing global demand. Bonny light, Nigeria's benchmark crude dipped 13.3% or $8.05 cents to close the week at $52.36 per barrel. In a similar light, precious metal prices fell mostly due to profit-booking and muted demand by jewellers in the spot markets. Consequently, gold lost 0.44% to $1,628.14 per ounce while silver tapered 6.97% to $17.23 per ounce. This week oil prices will remain pressured as fears of additional demand destruction amid the coronavirus outbreak continue to weigh on market sentiment. Precious metal prices might trend higher as investors buy safehaven assets, avoiding riskier equities amid rising fears of coronavirus becoming a pandemic.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Feb’20

Mar’20

363

362

Inflation Rate (%)

12.20

12.25

12.27

Crude Oil Price (US$/Barrel)

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

www.businessday.ng

https://www.facebook.com/businessdayng

Apr ’20

Exchange Rate (NAFEX) (N/$)

@Businessdayng

Monday 02 March 2020

BUSINESS DAY

real sector watch Nigerian manufacturers rethink strategies as Coronavirus threatens inputs, FX ODINAKA ANUDU

igerian manufacturers are rethinking their strategies as the deadly Coronavirus spreads across the world. Some of the manufacturers are thinking of reducing their foreign exchange exposure as Coronavirus continues to hit crude oil price. Brent crude price tumbled to $50.87 per barrel on Friday as China, world’s largest consumer, cuts oil spending on the back of the spread of the disease in the country. One senior official in a Fast-Moving Consumer Goods (FMCGs) company told Real Sector Watch over the weekend that his firm had finalised plans to start a backward integration project in Ogun or Edo state. “We will also, in the interim, increase our local sourcing of raw and packaging materials,” the official, who spoke in anonymity because he was not authorised to speak, said. “We will not be able to face the shock of FX scarcity

to import raw materials if it starts again,” the official further said. Coronavirus has pummelled all the markets in the world, and there are fears it could drag the global economy into recession. Cases of the disease and death have soared in China, Europe, the United States, Middle-East and several parts of the world. The disease entered Africa’s

most populous country last Thursday from an Italian who works in the country. Public health officials have intensified efforts to contain the spread. The virus has exposed the Nigerian economy as volatile as the fate of oil price determines the state of the economy. “Coronavirus, perhaps, shows us why we need to look more inwardly as man-

ufacturers, ”Ike Ibeabuchi, CEO of a chemical firm, MD Services, said. “Coronavirus and African Continental Free Trade Area are making a lot of us tweak tactics,” he said, stressing that he knew many firms that were slightly facing panic already. In 2016, oil price fell to below $40 per barrel, pushing the Nigerian economy into recession. Fifty-four

L-R: Jean Bakole, UNIDO representative to ECOWAS and regional director, Nigeria Regional Office Hub; Jens-Petter Kjemprud of Royal Norwegian Embassy in Nigeria and Ingrid Skjolaas, deputy head of mission, Royal Norwegian Embassy in Nigeria, during a courtesy visit to UNIDO Office in Abuja last week.

manufacturing firms shut down in one year, according to Frank Jacobs, the then president of MAN. 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. Africa’s most populous country is yet to fully diversify its non-oil sector as crude oil accounts for over 70 percent of foreign exchange. Mansur Ahmed, president of the Manufacturers Association of Nigeria (MAN), said Nigerian manufacturers importing machineries or inputs from China were already seeking alternatives from other countries in the wake of the spread of the disease. “Coronavirus is having an impact on trade between Nigeria and China,” he said last week at a press briefing in Lagos. “Obviously, if you are importing raw materials from China, you may have to look at alternatives,” he further said. Mansur said this when the disease had not yet been announced in Nigeria.

Nigerian manufacturers import some of their raw materials and most of their machines. According to MAN’s latest economic review, local raw materials utilisation in the manufacturing sector has maintained a downward trajectory since the first half of 2017 when the Central Bank of Nigeria commenced policy intervention in the official foreign exchange market. “The relatively more available forex resulting f ro m t h e i nt e r v e nt i o n may have been rubbing off negatively on backward integration agenda as firms prefer to import rawmaterials as against inward looking,” MAN said in the first half of 2019 economic review. In the first half of 2019, local sourcing of raw-materials in the manufacturing sector stood at 57 percent as against 56.87 percent recorded in the corresponding half of 2018, representing 0.13 percentage point increase over the period. It was, however, a decline of 6.7 percentage point when compared with 63.7 percent recorded in the preceding half.

Largest gathering of manufacturers to promote new uses of raw materials—MAN ...expo to display new technologies ODINAKA ANUDU

h e Ma nu f a c t u rers Association of Nigeria (MAN) is planning a largest gathering of West African manufacturers in Lagos with a view to promoting new uses of inputs and unveiling new manufacturing technologies. Addressing journalists in Lagos, Mansur Ahmed, president of MAN, said the 5th Nigeria Manufacturing & Equipment (NME) Exhibition was collocated with Nigeria Raw Materials (NIRAM) Expo. The event starts on March 10 and ends on March 12, he said. He said the event was part of a series to promote the manufacturing sector and enable real sector players to scale. He noted that this year’s expo was special as it would go beyond equipment to widen the market and create stronger basis for manufac-

turers to scale and improve their efficiency. He disclosed that the event was fully sponsored by MAN and the Raw Materials Research and Development Council (RMRDC). On the upcoming African Continental Free Trade Area (AfCFTA), Ahmed explained that the platform would create a single market for Africa and a bigger market for locally-made goods in Nigeria, opening up opportunities for suppliers who would face a larger market. “Many are importing raw materials outside Africa. This gives an opportunity for manufacturers to source these raw materials within Africa,” he said. He said since most of the raw materials would likely be sourced with little or no duty under the AfCFTA treaty, it made a lot of sense for Nigerian manufacturers to exploit the opportunity. He explained Nigerian manufacturers could also exwww.businessday.ng

port raw materials to Africa. “This year’s expo will be an opportunity to test the potential to expand and invest among African countries,” Ahmed noted. “Along with the expo itself, we are looking at how to bring to our members the new manufacturing technologies,” he said. “In the industry today, new technologies are chang-

ing things, creating new efficiencies that we were not aware of. There are processes in the manufacturing like 3D, robotics and many others which we expect manufacturers to see,” he disclosed. He pointed out that it would be an opportunity to look at the role of women in the Nigerian manufacturing sector, stressing that the sector was no longer an exclusive

Mansur Ahmed https://www.facebook.com/businessdayng

preserve of men. On the backward integration policy (BIP), which started during the administration of Goodluck Jonathan, Ahmed said the policy was gaining more traction among firms. “There are tremendous efforts to expand the BIP in sugar, cement, tomato and many others,” he said. Hussaini Doko Ibrahim, director-general, RMRDC, said the event demonstrated the importance of industrialising Nigeria. Ibrahim, who was represented by Tokunbo Habeeb, Lagos coordinator of RMRDC, explained the NME and NIRAM expo now connected the entire manufacturing value chain, stressing that NIRAM expo was set up in 2012 to create a platform where manufacturers could access raw materials and current research within the industry. He disclosed that through the research of the institute, @Businessdayng

manufacturers were now locally using commodities such as cassava, maize, limestone, phosphate, iron and steel, among others,in production and no longer imported much of them. Ambrose Oruche, acting director-general of MAN, disclosed that the event would also be collocated with exhibitions from logistics firms, financial institutions and equipment suppliers. “The interest of everyone is taken care of,” he said. Chizoba Kalu Ogba, project manager of the event, said Vice President Yemi Osinbajo would declare the event open on March 10. She said there would be CEO forum, session on women entrepreneurs, including raffle draws. Oranu Chris Chidume, chairman of MAN’s corporate affairs, urged Nigerians to come out in large numbers, stressing that the association was interested in making it a global event.

Monday 02 March 2020

BUSINESS DAY

real sector watch

Guinness, Nosak, Wemy confident of competing in AfCFTA ...but canvass good infrastructure, incentives ODINAKA ANUDU

u i n n e ss Ni geria plc, Nosak Group and Wemy Industries are confident of giving a strong showing when the African Continental Free Trade Area (AfCFTA) begins in July. But they say the federal government must address issues around policy flip-flops, poor infrastructure and challenges at Lagos seaports to enable them compete better. Baker Magunda, chief executive officer of Guinness Nigeria plc, said the brewer was ready for the continental opportunity. “We have been exporting and still do in many countries,” he told Real Sector Watch in an interview. Guinness exports its products to several parts of Africa. The brewer invested N52 billion in capacity expansion about 10 years ago and recently pumped N2 billion into expanding its non-alcohol brands. Nosak is a diversified business group with interests in agriculture, finance, logistics/haulage, real estate and manufacturing. The distillery plant was established in 2001 in Lagos and

it manufacturers food-grade ethanol which serves as a raw material for paint makers, pharmaceuticals, soap manufacturers, perfume makers and brewers, among others. The group has invested more than $75 million in three ethanol plants in the country and recently commenced the process of setting up a backward integration project in Edo State. Osaro Omogiade, managing director of Nosak Distilleries Limited, told Real Sec-

tor Watch that his company was well positioned to tap opportunities in the AfCFTA. “Let me even take you from the point of the Group. The Group’s presence in the export free trade zone is an indication that we are ready. We have resumed export to neighbouring West African countries, commencing with Ghana,” he said. He further said that steps taken by the company signified readiness for the upcoming continental trade treaty.

“We believe in living global because of the associated advantages. If you do export, you will hedge against the foreign exchange problems,” he explained. He noted that the company had experimented with some neighbouring West African countries, which placed it on the right footing for regional and continental competitiveness. “After Ghana, we plan to go to other African countries. That has always been

our roadmap— to export to most African countries. We are also looking at other countries such as Togo, Benin Republic, Cote d’ivoire, Angola and Central African Republic. Those are the countries we are looking at, and we have the capacity to do so,” he disclosed. The AfCFTA is targeted at creating a single market for Africa and it opens an opportunity for Nigerian companies to tap into the continental opportunities. Paul Odunaiya, managing director and CEO of Wemy Industries, imported a new adult diaper line with a view to tapping opportunities in the AfCFTA. He said of all the lines in his factory, the adult diaper lent itself for exportation easily. “If you go to West Africa, a lot of Chinese firms dump cheap diapers into the market because of weak policies and regimes,” he said. ‘But that happens in the baby diapers category, but it is less so in the adult diapers category. The price points we can manufacture is so strong that even if there is dumping, we are still competitive,’ he assured. But these manufacturers say the government must create the right environment for

real sector players to thrive. For Odunaiya, the government must put a diaper policy to cut importation of substandard products. For Magunda, the issue of infrastructure must be taken seriously. “The things that we still have to do are operational. If Apapa Port does not improve, I will get orders from Ghana, from Ivory Coast, but I can’t supply,” he said. “It does not matter how competitive I will be in terms of cost of production. But if I cannot move goods out of this port, I cannot be competitive. So, the guys will be looking at Douala Port and wherever they can import stuff,” he further said. He stressed the need to upgrade infrastructure to facilitate manufacturing. He further said the government needed to speed up incentives for exporters. “We currently have the Export Expansion Grant (EEG) where, whenever you export, you get some grants. But when it takes seven to 10 years to get the money refunded, it defeats the purpose for which it was put in place. That is the policy we ask from the government as we grow into the export business,” he said.

education policy and our youths are no more idle, they are into agriculture or small

scale businesses. “Most of the moribund assets of the state are being revamped to create wealth and job opportunities for the people and we seek the support of MAN to make this achievements sustainable,” he noted. In his statement, Nanzing Rinder, executive secretary, MAN (Southwest), covering Oyo, Osun, Ondo and Ekiti, promised to make sure the association keys into the vision of the state government. Rinder said MAN remains the best development partner in order to advance the manufacturing industry, stressing that the establishment of the association was motivated by the desire to have a focal point of communication and consultation between industry on the one hand, and the government and general public on the other.

Made in Nigeria: Oyo, MAN move to revive industries REMI FEYISIPO, Ibadan

yo State governm e n t h a s e xpressed its readiness to partner the Manufacturers Association of Nigeria (MAN) towards revamping the industrial sector of the state. The state called on the public to participate in partnering the government towards revamping most of its moribund industries which include manufacturing and agricultural outfits, among others. Segun Ogunwuyi, director general, Oyo State Investment and Public-Private Partnership (OYSIPPP), said this in Ibadan while playing host to the executive secretary of MAN at his office. Ogunwuyi, who was represented by Akinola Makinde, coordinating director

of the agency, said that the state has positioned itself in readiness for industrial growth by making available, all the needed variables like good road network and secured environment, opening up the agricultural sector. He called on the manufacturing association to partner with the administration for the progress of Oyo State. “We are delighted to inform you that Oyo State has made available all required variables that drive industrialisation of a state, be it good road network, security of lives and properties and empowerment of the citizens in small scale businesses and in agriculture. “We know what a potential investor wants in an environment and that is what this present administration has been putting in place since its inception. www.businessday.ng

There are ongoing road networks across the state that will make transportation of

goods and people less stressful. Workers can heave a sigh of relieve because of our free

L-R: Emmanuella Kadiri, copy sales manager, BusinessDay; Oghenevwoke Ighure, executive director, strategy innovation and partnerships, BusinessDay; Bamishe Joseph, one of the beneficiaries, and Araino Oke, assistant copy sales manager, BusinessDay, at the presentation of gift items to the winners of BusinessDay vendor/agent promo in 2019, in Lagos. Pic by David Apara https://www.facebook.com/businessdayng

@Businessdayng

Monday 02 March 2020

BUSINESS DAY

Start-Up Digest

In association with

Meet Abdulhakim Bashir, founder of start-up that uses AI to track shoplifting ODINAKA ANUDU

bdulhakim Bashir was not a popular name before October 2019. He came to the limelight after winning $10,000 at Gitex, the biggest global technology gathering in the Middle East, North Africa and South Asia. His story should serve as a confidence booster for Nigerian entrepreneurs who are thinking of dropping their ideas in the face of lack of support or encouragement. The Katsina State-born Bashir is the founder of Chiniki Guard, an artificial intelligence security solution for retail stores and supermarkets. The AI tool is designed to monitor, detect and alert shop owners about shoplifting and suspicious behaviour in real-time.

“We understand that over 80 percent of retail store shrinkage is caused either by dishonest employee theft or shoplifting,” he said on his website. “We envisioned how Artificial Intelligence might combat this rampant act to save retailers lost. Chiniki Guard consist of a control center inference app to stream videos, a mobile app and a dashboard,” he explained. He says that Chiniki Guard is a human activity recognition service that provides real-time update by analysing a video feed. Through a video analysis software, Bashir’s Chiniki Guard can easily classify the action a shopper is taking as suspicious and flag report it. Managers get notified immediately through a connected mobile app. Abdulhakim started coding in 2014 and became en-

Abdulhakim Bashir

grossed in machine learning and other technologies in 2017. And that was when he designed Chiniki, which was

meant to be an eCommerce platform. He studied at Hassan Usman Katsina Polytechnic

and got a job as a software developer at Kano Electricity Distribution Company while an undergraduate. This frustrated a number of graduates who had applied alongside him, with many concluding that he had a connection. But as he admitted in interviews, he was taken because the electricity company felt he was the best. In an inter view with Techpoint Africa, the then 22- year-old said got the job despite explaining to the electricity company that he was still in school. “Although I told them I was still in school, they saw I was the best hand they could get and promised to find a way to make it work,” he said. He told Techpoint Africa that Chiniki Guard was founded in 2018 as an action-recognition algorithm before diverting into theft detection. It was also basically founded to enable

educational institutions to detect examination malpractices. “Our solution is fully software although we had to incorporate hardware — PC and camera. The software is deployed as a desktop application which computes pose recognition, estimation, and prediction,” he had said. Like many Nigerians, life was not easy for the young entrepreneur as he found it difficult to convince a lot of people about the viability of his AI project. In an environment where many people are uncomfortable with disruptions, a lot of people never took him seriously. But the story is different today. After winning the award last October, the young entrepreneur expressed confidence in Nigeria but pointed out that the economy needed the full involvement of the private sector.

Funmi Afolari: Shaping Nigeria’s contemporary music industry Six finalists jostle for top spot Josephine Okojie

unmi Afolarin is a songwriter, recording artist and an African contemporary gospel

singer. She is arguably one of the most versatile and unique gospel artists in the country currently. Consistency, hard work, originality and God’s grace have been the main factors that have kept her music career in the last 17 years. The music entrepreneur recorded her first album titled ‘Iwo Ni Maa Sin’ meaning ‘I’ll Worship You’ in December 2013 and since then has made a mark in the Nigerian gospel music industry. “I have an album and a few singles currently and plans are ongoing to release another album in a couple of months following my next project ‘The glory Concert’,” she says. Her ministry is mainly centered on love for God and people. Funmi’s love for singing inspired her music business as a teenager in her father’s church. With support from family and friends, Funmi was able to quickly discover her musical prowess. She has performed and ministered in various ministries, concerts, seminars and conferences both locally and internationally since becoming a teenager and currently

has an alum and few singles to her credit. The young musician is having a live recording concert on the 8th of March to inspire people and bring them to Christ as she ministers using her life experiences and personal testimonies. Afterwards, she plans to launch the songs into an album, making it her second since starting her music careers. “I have been through so much in the last five years and the live recording songs would be purely testimonies of the

Funmi Afolari www.businessday.ng

young girl that God has helped and kept,” Funmi says. “Also, it’s an opportunity to remind the people that Gods not forgotten His children regardless of the pain and struggles. When life doesn’t make sense, God will always make sense,” she adds. Funmi says that her songs inspire and bring people to Christ as it ministers’ salvation. She notes that the Nigerian music industry is gradually taking over the global stage and this has continued to encourage youths to take up

careers as musicians. “Nigerian music is taking over the world and this is very encouraging. The recognition for Nigerian artist has become normal,” she says. “This is attributed to the hard work of a lot of musicians and corporate organisations that understand the role and effect of music and entertainment in the global space,” she adds. She says lack of adequate finance has remained the major hurdle to most music businesses in the country, adding that God has always provided last-minute finance in her case. Funmi urges the government to give more support to the creative industry through the provision of cheap credits to players while tackling issues of piracy which has continued to kill the intellectual property of talented Nigerian artists. She also advises the government to provide key infrastructural facilities like adequate power supply to reduce music production costs. “Most music producers do not depend on PHCN for power when music production is concerned and this cost is automatically taken on by the content owner.” On her advice to other musical entrepreneurs, she says, “Know that God is the author of vision, so always seek his face for direction. Talent is not enough. Keep practicing! Handwork is key.”

https://www.facebook.com/businessdayng

in EY Entrepreneur Awards

reparation for the 6th edition of EY Entrepreneur of the Year Awards 2020 for West Africa has entered the final stage, with six finalists shortlisted for the top spot in the Master and Emerging categories, following rigorous screening processes by an independent jury. Launched in West Africa in 2011, the award is designed to honour and celebrate entrepreneurs in West Africa who have combined ingenuity, hard work and perseverance to create sustained successful growing businesses. The programme has enjoyed international recognition for the past 34 years as the most celebrated global business award. Giving overview of the award, Henry Egbiki, EY country leader and regional managing partner for West Africa, says: “The EY Entrepreneur Of The Year award was instituted to recognise and celebrate unique sets of men and women in West Africa who use their entrepreneurial energy and passion to reshape our world with their innovation thus create economic and social values in the business world through creating job opportunities.” Sharing further insights about the awards, Ashish Bakhshi, head of markets and EOY leader (West Africa), says @Businessdayng

entrepreneurs are wonderful and remarkable business leaders who have broken unimaginable ground. “They are incredible individuals who are more of doers than preachers. This is the principal reason EY instituted the award program to honour and celebrate these extraordinary sets of individuals,” Bakhshi says. Today, the programme spans more than 150 cities in 60 countries, which together represent more than 90 percent of the global economy. This year, Michael Olasubomi Balogun will be bestowed with the Lifetime Achievement Award, who unarguably remains a legend in the country’s financial landscape and one of the most celebrated bankers in Africa. Cosmas Maduka, founder, president/CEO of Coscharis Group, and Igbuan Okaisabor, founder/CEO of Construction Kaiser were shortlisted in the Master Entrepreneur category. Some of the entrepreneurs in the Emerging Entrepreneur category are Toni Ogunbor, founder of Nosak Group of Companies; Godwin Ehigiamusoe, founder/MD of LAPO Microfinance Bank Limited; Olakunle Akeju, founder/ CEO of Petrogap Oil & Gas Limited,and Obi Ezeude, founder/president/CEO of Beloxxi Industries Limited.

Monday 02 March 2020

BUSINESS DAY

Start-Up Digest

Ene-Obong plans to disrupt $100bn industry with 54gene ODINAKA ANUDU Abasi Ene-Obong left his role as a management consultant in the pharmaceutical sector to move back to Nigeria to build Africa’s first biobank. It was founded by the young entrepreneur in July 2019 to unlock the African genome and improve the understanding of the world’s most genetically diverse population. Ene-Obong and his team are starting from the very beginning as there are no blueprints for biobank on the continent. 54gene partners with hospitals and research institutions in African countries and with pharmaceutical and biotechnology companies to address the challenge of limited diverse genomics data, which may hold the key to medical discoveries and new healthcare solutions. It targets ending the phenomenon of lack of diversity in DNA that is used in medicine and pharmaceutical research. Backed by investors including Y Combinator, Fifty Years Ventures, Better Ventures, and KdT Ventures, 54gene aims to equilibrate healthcare for people of African origin while advanc-

Ene-Obong

ing the quality of medical care worldwide. The business is looking radically to disrupt the

$100billion global pharmaceutical industry. He believes that only 2 or 3 percent of all genetic mate-

Ten Nigerian start-ups emerge finalists for the 2020 Next Einstein innovators challenge Josephine Okojie

en Nigerian startups have emerged finalists for the 2020 Next Einstein Challenge of Invention to Innovation competition in five categories to be held next month in Kenya. The 25 finalists were selected from about 260 ambitious African start-ups developing scalable solutions to local challenges in agriculture, integration and logistics, personalised and precision health among others. The finalists were selected by reviewing the potential for impact, technological readiness and the potential for commercialization, Winners in each category will be announced on 13th March 2020. “The finalists will pitch for a $25,000 cash prize in each category but also be

connected to investors in a one-of-a-kind ‘Sciencepreneur Investor Meetup,” said Nathalie Munyampenda, managing director of the Next Einstein Forum. “For the last six years, we have been working with young African innovators whose disruptive and transformative innovations in health, agriculture, and fintech are having a wider impact for African citizens,” Munyampenda said. She added that Next Einstein Forum is honoured to give the 25 sciencepreneurs a platform to connect with investors they need to scale impact. Among the 10 Nigerian listed start-ups are; AirSynQ, FrontierSS, GRICD, Hydrotriciton, Ifymoto, POKER, Powerstove Offgrid, Reeddi, Salubata, and Vinsighte. The ten of them with other selected finalists will be treated to a lab-style www.businessday.ng

bootcamp to be held before the NEF Global Gathering 2020 in Nairobi, Kenya next month. The bootcamp will involve pitch preparation and investment readiness sessions. At the end of the bootcamp, the young sciencepreneurs will gain knowledge of how to create and deliver value through their solutions as well as understanding funding options & valuations. The finalists include the creators of an overweight and obesity tracking database, portable solarpowered solution against post-harvest losses, ophthalmic devices emerging as the world’s first definitive treatment of glaucoma, an online blood bank connecting hospitals, and two innovations aiming to ease the burden of doing business in Africa: a cryptocurrency and industrial IoT solution.

rials used in pharmaceutical research comes from Africans. His target is to expand

the scope to several African countries. He wants more African countries to be included and eyes 200,000 samples by the end of 2020. This is not a very common industry in Nigeria but his entrance is beginning to redefine it. He received $4.5 million in funding after launching this platform in July 2019. “We aim to build genetic data sets that make landmark discoveries a reality,” his company says on its website. “Afr icans hous e the most genetically diverse DNA in comparison to all other world populations combined. In gathering insights from the African genome, we could power medical breakthroughs and discoveries that will change the entire landscape of healthcare, globally. We fully recognise the tremendous potential that this presents,” it says. 54Gene explains that most genomic data used for development research is from Europe, United Kingdom and North America with African genomic data only accounting for less than 3 percent—a phenomenon that is not good enough. “This is where we come in. We exist to close this

gap by increasing access to highly curated genomic data from African populations.” The firm has a 54gene Biobank, a state-of-theart biorepository which stores biological samples in the right conditions so that samples retain their integrity till when needed for research. The biobank is located in Nigeria, with the goal of serving as a resource for the global health community to ensure Africans benefit from cutting edge medical innovation, the firm says. “The purpose our biobank serves is to provide access to aggregated data, de-identified samples and bio-specimen mainly for secondary use by researchers. We are equally open to supporting both academic and development research,” it further says. “Our dedicated clinical and research teams are committed to using our vast genetic database to support development of therapeutics including drugs and vaccines for non-communicable and communicable diseases in various ways.” The entrepreneur has reached 20 hospitals, 9million patients and 300 field researchers.

TBWC holds 3rd business women’s conference in Niger Delta

he Business Women Connect (TBWC), a not-for-profit initiative, is set to hold the third edition of her annual business women’s conference on March 21st. The conference, with the theme, ‘Level Up- Unleash the Extraodinary You,’ is said to be the largest business women forum in the SouthSouth and is billed to hold at the KFT Event Place Warri, Delta State. The business women connect is an initiative which debuted three years ago with a mission to educate, inspire, motivate and build a network of an upwardly mobile community of female entrepreneurs in the Niger Delta. Doubra Emein, TBWC president, said the business women connect conference is a brand that has come to stay as it exists to meet a need in the Niger Delta business terrain and beyond. She said the group is building a strong women network aimed at inspiring women across the South-South region to unleash their potential. She says, “There is a big

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Doubra Emein

gap we have in our environment, as there are few and almost non-existing platforms or opportunities for the upwardly mobile woman in Delta state, as most business conferences tailored towards women happen in Lagos and Abuja.” “We believe there are enough enterprising, intelligent, modern women who will be interested in building themselves up and are willing to invest their time to learn how to not only improve and @Businessdayng

be better at their different businesses and jobs, but also learn how to find a balance between the work and life.” Speaking on the impact, TBWC executive director, Ufuoma Ogbo, explained that the conference, since inception, has so far impacted over 1,000 women and targets individuals, female entrepreneurs, working class women as well as all of those who want to start-out in entrepreneurship. Recalling one of the testimonials from the last conference, many of the participants now have a mind shift as to how to efficiently run their businesses and a lot have discovered purpose due to their contact with the annual inspirational event. According to Onome Akpobaro, one of the TBWC directors, there are preconference activities to sensitise women across the region, like the meet and greets the group, from Benin to Sapele, Asaba , Yenagoa, with the last one billed to take place in Port Harcourt as well as the Power Walk slated for the 14th of March.

Monday 02 March 2020

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

How to create an immortal legacy The Solid Wealth Messenger

Grace Agada

he Desire of every human being is to be recognized, honored and remembered. Especially for their contribution, effort and sacrifice. Thus, deep in every human being is the fear of being forgotten. And the desire to remain relevant for many generations. This desire is so core. That the real reason why most people prefer a Male child to a Female child is because. Male children Perpetuate a family name in ways Female children can’t. It is also the reason why children bear their ancestral names. But if a name is just an ordinary name no one aside family members want to perpetuate it. And after some time. Family members may see the need to drop the name. People perpetuate names that stand for something. They keep names that have impacted their lives. Names without relevance are discarded after a while. And today we see children abandoning their Father’s name. Some take on their Mother’s Name. Others their Step Father’s Name. And Some even see the need to discard an ordinary name. They do so because these names mean little or nothing to them. Names that carry weight are worn with pride. Children with such names cherish it. They are grateful for the name. And the doors it opens for them. Creating a lasting Legacy is thus not about a Name. But about the contribution, sacrifice, and Honor that is attached to a Name. Although we all want to be honored, respected and remembered. Only a few people will create a Name that will last forever. To create a Name that defeats the ravage of time. A person must do things that immortalize their Legacy. So, what then is an Immortal Legacy? An Immortal Legacy is a Legacy that cannot be murdered by death. Immortal Legacies are created through contribution, impact, and sacrifice. People with immortal Legacies are contributors to society. They include great men like Nelson Mandela. John. D Rockefeller. Martin Luther King Jr. JP. Morgan, Rothchild. And other Great Men who have hammered their existence. Into generational relevance. Today the world cannot tell its story without mentioning their names. Although not everyone can live for-

ever. Like these Great Men. Everyone has the option of choosing how long their Name survives. Creating an immortal Legacy is thus about creating a name that makes a dent in the world. It is about living a life of Impact, Contribution, and Value. So, how then can you create an Immortal Legacy? To create an immortal Legacy. A person needs to make certain strategic and significant contributions. That cement their name in the sands of time. Not all contributions are created equal. Certain contributions only last for a short while. Some are known by a few people. And yet some others can be erased, soiled or surpassed. Creating a Lasting Legacy is thus about. Standing for something that cannot be killed by death. There are three ways you can create this kind of legacy. The First way is through the Contribution of Value. The second way is through the Contribution of Public Service. And the third way is through the Contribution of Human Rights. Below I explain each of these contributions in detail. First, The contribution of Value. People who contribute Value are people who make the lives of other people better. They contribute Value by providing certain solutions. That ease the lives of other people. Value Contributors are all Business Owners. They provide solutions for other people’s problem. Value contributors are also the greatest distributors of wealth. They distribute wealth by creating jobs. Giving to the less privileged in the Society. And paying huge Taxes that lead to societal development. Business Owners are thus the wealthiest people in the world. Their wealth is a reward for the value they create. And proof they have impacted so many lives. The people who contribute the most value to the world are Founders of Successful Businesses. To create an immortal Legacy through the provision of Value. A business owner must transition their businesses from mor-

tal to immortal. Businesses like humans also die. And when there die. The Name of the Founder begins to dim. To create an immortal Business. Business owners must do four things. First, they must reinvent their businesses. And continuously make it relevant for future Consumers. Next, they must find a sustainable competitive advantage that differentiates them in the mind of Consumers. Next, they must create repeatable processes and systems. That makes Cashflow predictable and consistent. And finally, they must develop a Pipeline of Competent Successors. That will preserve their legacy. This is the only way to create a transgenerational business. And continuously be a big player in the world. Next, is the Contribution of Public Service. A person who offers public service is a person that is chosen by other people. To Lead them, Serve Them, and be responsible for their welfare. People who serve in public offices make certain key decisions. That improves or harm the lives of other people. When these decisions are positive and lead to positive transformation. They become significant and monumental on the walls of honor. But when there are negative and lead to the degradation of people. They also become significant. But on the walls of dishonor. People who serve in public offices thus carry the greatest Power in the world. Their decisions can make, break, harm or protect the lives of other people. The highest seat of power is the seat of the President or Monarch. Power is thus a reward for Public Service and Leadership. To create an immortal Legacy with Power. A person must make certain historic decisions. That lead to the significant transformation of people. These decisions must have the capacity to make history. Next is the Contribution of Human Rights. A person offers Human Rights Contribution when they voluntarily dedicate them-

‘

Creating a lasting Legacy is thus not about a Name. But about the contribution, sacrifice, and Honor that is attached to a Name. Although we all want to be honored, respected and remembered

Grace Agada is the First indigenous Family Business Longevity and Legacy Expert. With unique expertise in helping Self Made Business Men Transition from Vanishing Mortals to Men with Indestructible Name and Legacy. Grace’s philosophy is simple. Successful Family Business Men do a lot of good in the world. This good should not be forgotten neither should it end with the death of the family business leader. Her goal is to help Family business Men Unlock their capacity to Advance the world. Make strategic contributions that hammer their Name into existence. Prepare their Businesses for Generational Relevance. And Develop a Pipeline of Successors that preserves their legacy. Grace shares her Fresh Perspectives through the Business Day Newspaper. This Day Newspaper. Punch Newspaper. Vanguard Newspaper Premium Times Newspaper, and Leadership Newspaper. To learn more about how Grace can help you elongate the life of your business send an email to info@createsolidwealth. com for a special Program Preview Report.

Objectives • Solid Wealth Creation • Solid Wealth Preservation www.businessday.ng

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selves. To protect and defend the rights of other people. Especially those people who are poor and disadvantaged. Human rights contribution is thus about protecting the rights of other people. Right like the Right to Life. The Right to be Free. The Right to Good education. The right to Quality Healthcare and so on. People who dedicate themselves to fight for the rights of other people gain a lot of goodwill. The transformation they bring to the people. And the emancipation of the less privileged due to their effort. Makes them unforgettable. These people live in the hearts of other people for many generations. These are the three ways to create a Lasting Legacy. The world does not need a plethora of Men whose disappearance does not change the world. The world needs Men whose Names created the world. Men that cannot be taken out of relevance. And Men whose Names are a pride to wear. People who leave undying legacies are extraordinary people. They do more than just breathe, survive and breed. They leave a Name people wear as a badge of honor. And their indelible Name is proof they have dissolved into existence. Perhaps you want to create this kind of Legacy. We can help you. Through our “D.O.IL Business Longevity and Legacy Program”. We will help you identify and remove those factors that murder businesses. We will unlock opportunities that help you advance the world. And we will help you make strategic contributions that make your Legacy indestructible. Names by default die. The only way to keep them fresh is to make them unforgettable. Through the contributions you make. Are Your contributions building a Lasting Legacy?

@Businessdayng

Monday 02 March 2020

BUSINESS DAY

insurance today

In association with

E-mail: insurancetoday@businessdayonline.com

Industry recapitalisation to create supply side capacity for local content utilisation Modestus Anaesoronye

he Nigerian insurance industry will be in a better position to take up its risks particularly in oil and gas sector as provided in the local content Development Act. The industry at its current capital is only able to take about 30 percent of the risk emanating from the oil and gas sector, according to statistics from the industry trade groups. This development, according to the National Insurance Commission (NAICOM) has been due to lack of capacity, particularly funding, thus resulting in why a lot of the risks emanating from the local market are largely ceded abroad through reinsurance. Section 49 of the Nigerian Oil and Gas Industry Content Development Act, 2010 in Nigeria requires all investors in the oil and gas industry to insure all their insurable risks relating to the oil and gas business, operations or contracts with an insurance company, through an insurance broker registered in Nigeria under the provisions of the

L-R: Okanlawon Adelagun, executive director, Technical, Linkage Assurance Plc; Rotimi Edu, deputy president, Nigerian Council of Registered Insurance Brokers (NCRIB); Bola Onigbogi, President, NCRIB ; Daniel Braie, managing director/CEO, Linkage Assurance; Joyce Ojemudia, general manager, Marketing, Linkage Assurance and Fatai Adegbenro, executive Secretary/CEO, NCRIB, during the February Members Evening of the NCRIB hosted by Linkage Assurance Plc in Lagos

Insurance Act as amended. However, Section 50 of the same Act requires that where an operator desires to place insurance risk outside Nigeria, it can only be done with the written consent of the insurance sector regulator, the National Insurance Commission (NAICOM), which shall ensure that Nigerian local capacity has been fully ex-

hausted. The National Insurance Commission (NAICOM) had in a circular issued on Monday May 20, 2019 announced increase in the paid-up share capital of life companies from N2 billion to N8 billion; General Business from N3 billion to N10 billion; Composite Business from N5 billion to N18 billion;and Reinsurance

companies from N10 billion to N20 billion. According to the Commission, the minimum paid-up share capital requirement shall take effect from the commencement date of the circular (May 20, 2019) for new applications, while existing insurance and reinsurance companies shall be required to fully comply not later than

30th June 2020, before the recent extension in date to December 31 2020. Sunday Thomas, acting commissioner for Insurance had as director general, Nigerian Insurers Association (NIA) made observation that despite the local content laws and regulations established in Nigeria and Ghana, insurance companies in Anglophone West Africa are yet to fully take advantage of the opportunity to effectively position themselves as major players capable of leading foreign firms in the underwriting of oil and gas business. Thomas who authored an article “Local Content Insurance Regulation In Anglophone West Africa; published in an edition of Africa Re Quarterly Journal said the level of capital required for writing big risks in the oil and gas sector is often lacking, which sometimes limits the local insurance industry’s underwriting and retention capacity. “In fact, risks in the oil and gas industry are enormous and involve huge financial outlays and therefore, require sound technical capacity to accurately assess.” According to him, the issue of technical capacity of

indigenous insurance companies still remains a challenge. While some of the big companies have put in place constructive human capital development programmes that will leverage on the local content policies, the same may not be the case for most of the companies that are still fringe players.” Local Content is defined as ‘a set of deliberate orientation and actions to build domestic capacity relevant for service and product delivery comparable within that industry’ and ‘an opportunity to locally build a sustainable culture of service quality and capabilities exceeding customers’ expectations and comparable to international standards through key local personnel and management’ The local content regulations of the oil and gas industry seek to increase indigenous participation by prescribing thresholds for the use of local services and materials and promoting transfer of technology and skills. It is expected that the regulations will result in an increase in job creation and building necessary expertise in the local workforce that will make it internationally competitive.

Nigeria’s insecurity situation sending away foreign investors, says NCRIB Modestus Anaesoronye

he brokerage fraternity of the insurance sector, the Nigerian Council of Registered Insurance Brokers (NCRIB) has joined their voice to condemn the level of insecurity in the country, as well as it negative impact on economy and business. The body said that the

situation is sending away foreign investments that should have come into the country, while calling on authorities to take urgent steps to address this problem. Bola Onigbogi, president of NCRIB said during the Council’s Members Evening in Lagos that “as a critical player in the national economy, the onus is on the NCRIB to express grave discomfort about the increasing spate

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of insecurity in the country, in spite of government’s efforts to improve ease of doing business and reflate our national economy.” She noted that there is hardly a day that passes by without reported cases of kidnapping, terrorism and other criminal cases that is fast making our country dreadful to live in. This she stated has reached a preposterous di-

mension and is adversely affecting the pace of economic growth as genuine foreign investors are scared putting their monies into the economy. Since there is a correlation between insurance and economic growth. It is most auspicious for the NCRIB to join its voices to the need to call on government to more to combat security challenges in the country.

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“We are using this medium to call on federal government to overhaul its security apparatus while at the same time enhancing collaboration with governments and institutions both within and outside the country to put an end to this menace.” For instance, the National Orientation Agency (NOA)should be rejiged and repositioned to conscientize Nigerians continually

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on the need for them to be their brothers’ keepers by breaking down belief systems, be they religious or cultural, militating against peaceful coexistence and sanctity of human lives. Also, we implore government to join the league of developed Countries of the world who have resorted to using Information Communications Technology (ICTs) to combat crime.

Monday 02 March 2020

BUSINESS DAY

insurance today

In association with

E-mail: insurancetoday@businessdayonline.com

Why brokers, agents remain indispensable in insurance value chain …controls 80% of market share Modestus Anaesoronye

nsurance brokers and agents as intermediaries in the insurance value chain are indispensable, and accounts for why forward looking underwriter’s court and partner with them. The insurance brokers and agents account for about 80 percent of the total market share, with latest figures from Augusto & Co. report showing 54 percent for brokers and 26 percent for agents. The rating agency therefore in its analysis of gross premium income (GPI) distribution by channels, show that brokers and agents were far away followed by ‘direct business’ and bancassurance, with both contributing 7 percent each. E-channels also contributed mere 0.4 percent, again showing how poorly technology is serving the industry, when you compare it with other financial services sector play-

L-R: Tunji Oluyemi, managing patner, Tespauruth Consulting Limited; his wife, Roseline Oluyemi; his sister, Dayo Oluyemi-Kusa; his sister, Moyosore Oluyemi, and other family members at the funeral mass of their late father, Pa Simeon Abiodun Oluyemi at Our Lady of Fatima Catholic Church, Surulere Lagos

ers. While, other platforms jointly contributed 6 percent. Insurance is a technical subject, underscoring why somebody going into is usually advised to get the services of an insurance broker.

The insurance brokers by virtue of their profession understand the deal and can mediate for you to undertake an insurance contract successfully. Just like an accountant or lawyer who provides you with professional advice

based on years of training and experience, a qualified broker can do the same with your insurance. One interesting thing about using the services of a broker is the fact that, you the insured is not going to pay the broker for

his services, but is paid by the underwriting company that gets the business, says Tope Adaramola, assistant executive secretary of the Nigerian Council of Registered Insurance Brokers. Adaramola said using the insurance broker can

save you money, stress and time which would have been spent moving about to secure the insurance cover, and at the same time you are opportune to get professional advice on the right polices that best suit your situation. Like the experts put it, when arranging insurance, many people take shortcuts without seeking proper advice, understanding the fine print or considering whether they are getting value for money. Often they end up with cover they don’t need and - even worse - without the cover they really need. Using a broker doesn’t necessarily cost more. Often it costs less because brokers have knowledge of the insurance market and the ability to negotiate competitive premiums on behalf of their client. A broker will also explain your policy and any special situations you need to watch out for. Furthermore, a broker is obliged to advise you of fees charged for services provided to you.

Linkage Assurance CEO assures brokers of Company’s recapitalization plan Modestus Anaesoronye

he Managing Director/CEO of Linkage Assurance Plc, Daniel Braie has assured the brokerage fraternity that his Company will meet the new capital base of N10 billion. Braie said that Linkage is not looking outside for funding to meet the recapitalisation requirement, but that it has the internal capacity to raise the needed funds. Daniel Braie, who disclosed this during the February Members Evening of the Nigerian Council of Registered Insurance Brokers (NCRIB) held in Lagos, said that Linkage Assurance will conclude its recapitalization process on or before the end of second

quarter 2020. He told them that they are dealing with an underwriter that is financially strong and have the capacity to meet its obligations as and when due, disclosing that Linkage as at the end of 2019 has a shareholders fund of N28 billion. According to him, being the first underwriter to host the brokers this year 2020, having also achieved that feat in 2019 underscores the regard and valued partnership the Company has with the brokers. We believe that the brokers are our genuine partners and that is why we continue to be the first to host this programme. Linkage is also the first underwriting company to extend this partnership to other Area Committees of NCRIB www.businessday.ng

outside Lagos. NCRIB Area Committees hosted in 2019 are in Abuja, PortHarcourt, Kano, and we

are continuing, he said. Braie assured the brokers that Linkage will not take the partnership for

Daniel Braie

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granted, and so has put in place a seamless system to ensure that commissions and claims are processed speedily. From the way we have structured our operations, you don’t need to see the MD for your claims to be paid, and from anywhere we are in this world we can authorize payment, he assured the brokers. The NCRIB Members, who unanimously commended Linkage Assurance for their professionalism and response time, gave their endorsement, charging the company to continue its exemplary leadership role in the industry. Linkage Assurance Plc at the close of business in 2019 posted a Gross Written Premium (GWP) of N6.52 billion as against @Businessdayng

N5.39 billion during the same period in 2018, indicating a 21 percent increase. From the business generated in 2019, the company also recorded a Profit Before Tax (PBT) growth of 909 percent, moving from N135 million in 2018 to N1.36 billion during the review period. Profit After Tax (PAT) also grew to N1.3 Billion, a 553 percent increase from a loss position of N290 million during the same period in 2018. Underwriting profit rose by 153 percent to close at N409 million during the review period, as against loss position of N773 million the previous year, while investment also grew by 10 percent, moving from N2.46 billion in 2018 to N2.71 billion in 2019.

Monday 02 March 2020

BUSINESS DAY Harvard Business Review

MondayMorning

In association with

The mystery of the $2,000 Ikea shopping bag Silvia Bellezza and Jonah Berger

hy does the luxury brand Balenciaga sell a $2,000 purse modeled after a $1 blue Ikea shopping bag? We tend to think of status symbols starting out at the top tiers of society, among the glitterati and trendsetters, then trickling down to the rest of us. But a new trend seems to contradict this pattern. Instead of percolating through the middle, some signals seem to leapfrog directly from low culture to high. What might explain this different trajectory? As traditional luxury goods, such as the iconic Louis Vuitton monogrammed bag, become more attainable, the wealthy need alternative ways to signal their prestige and power. In this context, elites can experiment with lowbrow culture and downscale tastes without fear of losing status, while middle-class individuals, whose position is more tenuous, have to stick to more clear-cut status symbols. But there is a catch. When adopting low-end trends, elites combine them with high-end items to make sure the signal is still clear. Sarah Jessica Parker may wear a flea-market jacket,

but she does so in Louboutin heels. High-end brands can stay relevant by incorporating select downscale styles and trends in their collections. Indeed, several luxury brands already use this strategy. Brands such as Prada and Gucci have produced luxury versions of traditionally low-key

or unremarkable items, such as pool slides and leg warmers. Rather than revisiting downscale items, Louis Vuitton’s recent initiatives and collaborations seem to reveal a similar interest in edgy subcultures and kitsch artists. In recent years, the brand has launched a collection with Supreme, an American

skateboard brand, while collaborating with the artist Jeff Koons, known for his reproductions of kitschy, banal objects. Our research has shed light on how status symbols evolve in a world where luxury goods are becoming more mainstream. As the traditional markers of superiority lose their signaling value, high-

status consumers and brands may purposefully choose to mix and match different types of signals as an alternative strategy.

(Silvia Bellezza is a professor at Columbia Business School. Jonah Berger is a professor at the University of Pennsylvania’s Wharton School.)

Stop calling it ‘innovation’ Nadya Zhexembayeva

et me start with the obvious: Innovation is a buzzword. In fact, it’s been a buzzword for so long you could say we’ve developed a cult around it. Whether in the classroom, the newsroom or the boardroom, innovation is our global darling. There’s only one problem: We might love innovation, but most of our employees hate it. I first discovered this dirty little secret shortly after leaving my safe job as a business school professor to start my own consulting business, focusing on — you guessed it — helping companies learn how to innovate. Armed with the latest research, all fired up with ideas for ways to help my first client, I found myself face-toface with a line manager, who told me, point blank: “For you people, innovation is ‘all that.’ For us, it’s extra work with no results or — much worse —

lost jobs.” Since then, I’ve heard this idea posed in various ways at some point in every single project I’ve worked on. And the data bear out these fears. So here’s a thought: Stop calling it “innovation.” Instead

of scaring everyone off, how about finding language that in your specific context — your industry, or your country — speaks of continuity and benefit? When engaging internally with employees, Danfoss, a

global manufacturing company, has branded its innovation process around the simple, manageable word “idea.” While not everyone thinks they can be innovative, nearly everyone has at least one idea. Similarly, Knauf Insulation,

a leading construction materials company, puts “Reinvention Days” at the heart of its process, betting on a term that projects continuity and accessibility. Others choose words or phrases for their efforts, programs and functions that focus on the end benefits for employees, such as simplicity, organizational health or simply staying in business. The word “innovation” might speak to your external stakeholders, but when it comes to engaging your employees, it’s time to stop using it. Whatever term you choose, make it about your audience — not you, your public relations department or the next big Davos announcement. That way, real innovation might actually stand a chance.

(Nadya Zhexembayeva is the chief reinvention officer at WE EXIST Reinvention Agency, a boutique consultancy firm.)

Monday 02 March 2020

BUSINESS DAY

PHOTOSPLASH

BusinessDay Social Media Week in Lagos

In addressing the impact investing landscape, the BusinessDay Social Media Week panel session on Impact Investing & Funding of SDGs in Nigeria, brought in industry stakeholder to discuss the national challenges of impact investing. Speakers were Maryam Uwais, special adviser to President Muhammadu Buhari on Social Investment; Sam Nwanze, Chief Investment Officer, Heir Holdings; Adesuwa Ighile, special assistant to the regional director, Ford Foundation; Prof. Yinka David-West, academic director, Lagos Business School; Abasi Ene-Obong, founder/CEO 54GENE. LehlĂŠ Balde, a senior associate at BusinessDay Media, moderated the panel.

Frank Aigbogun, publisher, BusinessDay, giving the opening speech

LehlĂŠ Balde, senior associate, BusinessDay/moderator, giving the welcoming remark

Maria Glover, project lead, Impact Investors Foundation giving the keynote presentation

Maryam Uwais, special adviser to President Muhammadu Buhari on Social Investment; Sam Nwanze, chief investment officer, Heir Holdings;Adesuwa Ighile, special assistant to the regional director, Ford Foundation;Yinka David-West, academic director, Lagos Business School; Abasi Ene-Obong, founder/CEO 54GENE

Stage view of the BusinessDay panellists

A cross section of guests at the BusinessDay SMW, Lagos

Monday 02 March 2020

BUSINESS DAY

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

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Watchlist

As real returns turns negative where can investors hide? BALA AUGIE

igeria’s inflation accelerated to a 21 month high in January, the highest among Africa’s top

economies. The country doesn’t offer much incentives to investors in local debt looking to maximise returns as it has a negative real rate of return (the difference between inflation rate and bond yields) of (-1.40 percent). That compares to Ghana’s positive figure of (+11.20 percent), Kenya, (+6.60); Angola, (+6.80); South Africa, (+4.90 percent); Tanzania (10.70 percent), and Tunisia (+4 percent). An investment has a negative rate of return when it losses value over a measured period of time as rising inflation erodes value. “If you invest in treasury bills in Nigeria compared to Ghana, and you adjust for inflation in both countries, then the return will be negative in Nigeria and positive in Ghana,” said Wale Olusi, head of research at United Capital

that are positive so as to preserve capital,” Olusi added. Egypt has a real rate of returns of 8.80 percent as its local currency (pound) benefitted from the dividend of recent reforms as well as increasing stability which continues to buoy inflows from tourism. Ghana is one frontier market attracting attention of the continent as its currency, cedi, has strengthened up to 7.0 percent against the greenback, emerging as the best performer in 2020. Ghana’s strong performance was buoyed by the country’s attractive growth story, an above 10.0 percent real yields at the local bond market as well as a successful Eurobond issuance in Feb-2020. Nigeria’s inflation rate rose to 12.13 percent in January 2020, representing the highest rate in 21 months, on high food prices, thanks to border closure by the Federal Government that skyrocket the price of food stuff, according to the National Bureau of Statistics (NBS). The Central Bank of Nigeria (CBN)’s Monetary Policy Committee (MPC), in its first meeting in January, left the country’s bench-

to tighten monetary policy. “We also think pressure on the naira to depreciate will begin to build up towards end-2020, as the overvaluation picks up. We forecast a 50-bpts hike in policy rate to 14 percent in 2020 from 13.5 percent and believe there is upside risk to this,” said analysts at Renaissance Capital. While investors are attracted to the investment returns of some Africa countries, Nigeria continues to lose money due to lack of transformation policy on the part of government. The refusal of policy makers (the central bank) to devalue the currency and attract foreign investment at the height of a severe dollar scarcity in 2015 resulted in capital flight. Data from the National Bureau of Statistics show that investment into the country dropped 53.5 percent in 2015 to $9.8 billion from $20.7 billion in 2014. Also, the country is reeling from political risk brought on by the implacable and marauding Boko Haram Islamic sect that has claimed thousands of lives and displaced people and lack of reforms in the oil and gas industry.

exiting a recession four years ago. The economy expanded by 2.27 percent in the last quarter of 2019. Brent crude, the international benchmark for Nigeria’s oil, touched $50 per barrel, its lowest levels in like 2 years, over a slowdown in demand after the coronavirus outbreak ravaged, China, the world’s biggest buyer of the commodity. An oil prices below Nigeria’s budget benchmark won’t the too rosy for the West African nation, which depends on the commodity to rake in about 70 percent of its revenue and 85 of its foreign exchange earnings. The central bank’s stringent rules such as barring non-banking corporates as well as individual from the Open Market Operations (OMO) market, reduction in charges and commission, the hike in Cash Reserve Ratio (CRR), and the hike in minimum loans to deposit ratio (LDR) have cast a pall over Deposit Money Banks (DBM) future profitability. There has been investor apathy towards the country’s equity market as the Nigerian Stock Exchange (NSE) All Share Index (ASI)

P.E

SHORT TAKES N312m After a disappointing 2018, Fidson healthcare seems to have regained its mojo as it records an after-tax profit of N312 million in full-year 2019 for the period ended 31 December. Revenue dipped 13.5 percent to N14.06bn from N16.22bn in the same period in 2018. Efficient cost management saw its cost of sales decline 17.35percent to N8.19bn from N9.91bn

5 The stock market declined for the fifth-straight trading session on Friday to end its worst week after CBN’s CRR policy weighed on banking stocks and set off 2020’s longest bear-run. Nigerian equities fell for all five trading sessions last week to close 2.65 percent lower weekon-week, and end January on a very different tempo than it began the month. Bank stocks shed 5.17 percent to push Year-to-date return to 7.46 percent, down from around 10 percent at the beginning of the week, while analysts say the bearish sentiment will likely extend to trading this week. “Next week, we expect bearish pressures on the equities market to remain, as investors continue to selldown on banking counters,” said analysts at Lagos-based Chapel Hill Denham in a note to clients.

N23bn

Limited. Olusi said with a negative return, pension assets under management will continue to depreciate, and that policy makers have to reduce inflation otherwise the entire country will suffer. “We should invest in assets

mark policy rate at 13.5 percent to tame uptick in inflationary pressures and support price stability. Analysts at Renaissance Capital said that they expect inflation to average 12.7 percent and an increasingly overvalued naira to put pressure on the central bank

The International Monetary Fund (IMF) has cut its growth forecast for Nigeria this year to 2 percent from 2.5 percent, reflecting fears the coronavirus outbreak in China will hit demand for oil. Nigeria has been grappling with low growth since

returned -2.33 percent. Johnson Chukwu, managing director and CEO at Cowry Asset Mangment Limited is of the view that a negative real rate of return could lead to investor divesting from local currency instrument to foreign currency instrument.

Interswitch Limited has listed its N23bn callable senior unsecured bond with a tenor of seven years at a fixed rate of 15percent, embedding a call option that can only be exercised from the second year, are payable in full at maturity A callable bond is a bond that the issuer may redeem before it reaches the stated maturity date. In essence, a callable bond allows the issuing company to pay off their debt early. According to the company, this is part of its N30bn debt issuance programme through a special purpose vehicle, Interswitch Africa One Plc.

BusinessDay MARKETS INTELLIGENCE Team Lead: BALA AUGIE, IFEANYI JOHN; Graphics: FIFEN FAMOUS

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team balaaugie@yahoo.co.uk; augiebala@gmail. www.businessday.ng

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Live @ The Exchanges Nigeria stock investors lost N1.2trn in February …equities hit new low as Coronavirus rattles markets Stories by Iheanyi Nwachukwu

igeria’s stock market reached a new low at the close of last trading session in the month of February 2020. While the domestic equities market sustained its lacklustre performance in February, amidst continued risk-off sentiments and the absence of positive market catalysts, investors lost N1.2trillion. Also, sustained weak sentiments toward the equities market bellwethers weighed on the index’s performance. The All Share Index (ASI) closed the review month of February at 26,216.46 points from the month open level of 28,843.53 points, while the value of listed stocks decreased to N13.657trillion from month open high of 14.857trillion. With 55 countries confirm-

L-R: Sidi Alhassan, head of department Financial Standards and Corporate Governance, Securities and Exchange Commission; Hafsat Rufai, head of operations Lagos Zonal office SEC; Isyaku Tilde, acting executive commissioner operations SEC, and Abbas Abdulkdir, head of department Securities and Investment Services SEC, during a meeting between the SEC and Issuers on Transaction Cost in Lagos.

ing cases of the Coronavirus at the end of this week, the global market recorded its worst weekly performance since the global recession in 2008. In addition to Nigeria, the ravaging impact of the Coronavirus is seen across

major global market analysts tracked. For instance, London Stock Exchange (LSE) was down this week by -9.78percent; Shanghai Stock Exchange (SSE) (-5.24percent); and Nigerian Stock Exchange (NSE) (-4.28).

Market watchers had expected that increased influx of audited financial reports and dividend pronouncements will provide incentives for investors to lock in positions in high dividend yielding stocks.

With no proven cure and the imminent spread of the virus to other countries, analysts at Lagos-based Vetiva see no deviation from this bearish pattern next week. It implies the bearish trend will filter into new month

SEC says new initiatives to reduce time to market

he Securities and Exchange Commission (SEC) has embarked on a number of initiatives to address time to market and promote ease of doing business. This was stated last Thursday in Lagos by the Acting Executive Commissioner Operations, Isyaku Tilde during a meeting with issuers. He noted that the aim of the engagement was to obtain the view of the Issues on transaction costs and time to market to aid the Commission in understanding what steps to take to improve the process adding that the Commission was looking to automate its processes. Tilde said the Commission has introduced the initiatives in the capital market because

it is committed to the Present administration’s ideals of promoting the ease of doing business. These initiatives Tilde said, includes the introduction of a framework to facilitate electronic offerings of securities; the checklist review regime which minimises the time spent reviewing transaction documents and which is expected to facilitate the introduction of the deemed approval regime; the introduction of an option to the filing of fourth quarter returns subject to filing the financial statements within two months of the end of the financial year; and Rules in respect of gift distributions at General Meeting and prohibition of meetings with select investors before a General

Meeting. According to him, “we also have other initiatives like the ongoing review of the code of conduct for shareholders’ associations, all these are geared towards ensuring that we address the issue of time to market. There is also ongoing engagement with the exchanges on addressing the issue of ease of doing business and minimising duplication of efforts with the regulator and the Exchange in a bid to reduce time to market”. Tilde confirmed the ongoing engagements with PENCOM, CBN and other agencies on several issues including margin loans, especially now that the finance act has provided tax incentives for security lending.

Peterside identifies solution for market rebound

tedo Peterside, an entrepreneur and founder, Stanbic IBTC has identified macroeconomic stability, especially low inflation rate regime as a major panacea towards attracting all types of investors into the Nigeria’s capital market. Besides, Peterside who absolved stockbrokers of the blame for persistent selling pressure with decrease of share values on the Nigerian Stock Exchange (NSE), described as punitive, the increase in the minimum Loan to Deposit Ratio (LDR) from 60 percent to 65 percent by the Central Bank of Nigeria (CBN). Speaking after he was conferred with Honourary Fellow-

ship by the Chartered Institute of Stockbrokers (CIS) during the induction of 62 newly qualified stockbrokers into associate members in Lagos at the weekend, Peterside explained that fear of devaluation of the Naira in the wake of 12 percent inflation rate with potential for further increase had elicited flight for safety, as local and foreign investors are taking short term bet on foreign currency as a hedging strategy. The consummate banker and renowned boardroom expert urged the CBN to target a single digit inflation rate of about five percent for enhanced conducive investment environment, re-build investor confidence and help stockbrokers to www.businessday.ng

overcome market burn out. “The problem of the capital market is not the fault of stockbrokers but that of macroeconomic stability framework. In Nigeria, the inflation rate is currently 12 percent, compared to two percent in the United States of America. The inflation rate in Nigeria provides incentives for devaluation of the Naira and many investors fear devaluation. “The fear of devaluation in itself is pushing many investors towards buying foreign currency as a short term bet to speculate exchange rate. The Central Bank of Nigeria (CBN) has increased the Loan to Deposit Ratio (LDR) which requires banks to make loan or stop collecting deposit. https://www.facebook.com/businessdayng

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(March 2020) sessions, despite that the market offers opportunity for bargain hunting in some value counter that reached new lows. At -2.33percent, the market’s year-to-date (ytd) return touched its first negative this year. In the month of February, the record negative return increased to -9.11percent, while in the week under review, the negative return rose to -4.28percent. All NSE Sectoral Indexes closed the review month in the red. The NSE 30 which tracks the top 30 companies in terms of market capitalisation and liquidity decreased by -9.95percent in February; NSE Banking (-15.59), NSE Consumer Goods (-18percent), NSE Industrial Goods (-1.28percent), NSE Insurance (-11.89percent), NSE Oil & Gas (-6.97 percent), and NSE Pension (-9.66percent).

Monday 2 March 2020

BUSINESS DAY

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Monday 02 March 2020

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 28 February 2020

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Company

Market cap(nm)

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PRICES FOR MAIN BOARD SECURITIES (Equities)

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Change

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Monday 02 March 2020

BUSINESS DAY

news

Verod Capital acquires 100% stake in Law Union & Rock Insurance Modestus Anaesoronye

erod Capital Management Limited, an Anglophone investment firm, has acquired 100 percent stake in Law Union & Rock Insurance plc. The firm will also recapitalise the company to over N10 billion to enable it comply with the ongoing recapitalisation exercise in the insurance industry. This is coming following the signing on February 27, 2020, a Transaction Implementation Agreement (TIA) between Verod Capital Management Limited and the majority shareholders of Law Union & Rock Insurance. Mayowa Adeduro, managing director/CEO of Law Union & Rock, who confirmed the development to Business-

Day, says the crucial phase of the company’s recapitalisation exercise has been crossed with this agreement. According to Adeduro, the regulatory authorities have been duly informed, as “we had subsequently informed NAICOM, SEC and NSE with this development.” Mayowa notes that the TIA gives legal backing to Verod Capital to buy 100 percent stake in LUR, recapitalise the company to a minimum N10 billion and also delist its share from NSE through Scheme of Arrangement. Verod Capital is an Anglophone investment company with substantial interest in Nigeria and West Africa, and its current holdings include CSCS, Emzor Pharmacy, Metropolitan Life (now Tangerine Life Ass), ARM Life, Greenspring College Ikoyi, and other ventures.

TNP acquires Adebiyi Tax & Legal, positions for better services

Lagos-based firm, The New Practice (TNP), has announced the acquisition of Adebiyi Tax & Legal (ATL), Nigeria’s foremost tax litigation practice, with effect from March 1, 2020. In addition to its impressive track record of resolving tax disputes on behalf of its numerous clients, which include multinationals and local blue-chips, ATL has obtained several landmark tax judgments that have effectively saved clients billions of naira worth of tax liabilities. “With this acquisition and our recent collaboration with Anderson Global, we are better positioned to provide best-in-class tax dispute resolution services to clients,” TNP’s practice manager said about the development.

Founded in 2007, TNP provides a broad range of commercially oriented services in a number of disciplines. These include capital markets, commercial dispute resolution, corporate finance, infrastructure, construction, real estate, energy & natural resources, mergers & acquisition, private equity, e-commerce, fintech, and business advisory. BusinessDay recalls that Andersen Global, an international association of legally separate, independent member firms comprised of tax and legal professionals around the world, in 2019 entered into a collaboration with The New Practice (TNP), increasing the global organisation’s footprint in Africa and strengthening its presence in Nigeria.

B&I hosts inaugural roundtable with FinTechs, regulators

anwo & Ighodalo (B&I), a leading fullservice law firm in Nigeria, held the inaugural edition of its Fintech Roundtable February 20, 2020 at its Lagos office. The roundtable, tagged ‘Collaborating to Thrive: A Roundtable Discussion with Nigerian FinTechs and Regulators on Licensing Challenges’, provided a platform for stakeholders in the FinTech ecosystem to deliberate with key regulators on licensing challenges affecting FinTechs operating in Nigeria. Ken Etim, B&I’s managing partner, in his opening remarks, commented on the disruptive impact which

Nigerian FinTechs have introduced in the recent years. He said as a firm, B&I is well positioned to provide quality advisory services to FinTech companies, and plans to keep serving as a bridge for better collaboration between FinTechs and regulators. Emomotimi Agama, head of registration, exchanges, market infrastructure and innovation department, Securities and Exchange Commission (SEC), and Olubukola Akinwunmi, assistant director, payment system management department, Central Bank of Nigeria (CBN), were the key regulators who addressed the licensing challenges. www.businessday.ng

Controversy over ALSCON to linger as BPE, preferred bidder engage in fresh counter claims Onyinye Nwachukwu, Abuja

ontroversies around the sale of the Aluminium Smelter Company of Nigeria (ALSCON), which have locked down that very important Federal Government asset for 16 years, will apparently linger for a while as the Bureau of Public Enterprises (BPE) and preferred bidder - BFIG of United States of America -engage in fresh counter claims. The fresh controversy bothers around alleged financial inducement, unfaithful implementation of Share Purchase Agreement, among others According to reports, ALSCON plant was designed to produce 187 tons per year (t/y), with capacities to process about 375,000 t/yr of alumina and 80,000t/yr of coke, 20.150 t/yr of pitch, and 193,000 t/yr of aluminium as billets, ingots or slabs, with 85 percent export.

The government intention for the plant built by FEEROSTAAL was also to enhance Nigeria’s technological breakthrough, save the country from huge foreign exchange loss through the import of ingots by aluminium firms, and also help the country earn more FX through export of ingots. After its maiden shutdown in 1999, ALSCON was resuscitated in 2006 and privatised in circumstances many say was controversial. With a price of $410 million, BFIG had emerged the preferred bidder, but in a shocking move, the BPE handed the firm to RUSAL Aluminium of Russia - a decision that led to about 16 years of intensive legal tussle over the ownership of ALSCON. The BPE had claimed that the BFIG does not have the financial capacity to pay for the Smelter Company, which has the capacity of providing about 8,500 direct jobs and 35,000 indirect jobs to Ni-

gerians if it was functioning. But speaking with journalists in Abuja, BFIG president, Reuben Jaja, faulted BPE claims and alleged that it deliberately frustrated his company’s attempts to take over ALSCON. Jaja said the privatisation body rather altered the contents of the original 58-page Share Purchase Agreement (SPA), reducing that document to just 16 pages, and in the process cut out most vital aspects including an important provision that addresses gas purchase agreement. He faulted BPE’s claim that BFIG was presented with SPA on more than one occasion, but failed to make payment. “That’s another lie. In 2012, after more than four months of the Supreme Court’s judgment, the BPE DG at the time agreed to give BFIG the same 58-page SPA given to UC RUSAL in 2006 to sign. The document contained almost all what BFIG agreed to as bidders at

a special technical conference of all parties to the bid in 2004, including BPE and all the bidders. “In the meeting, it was agreed that whoever emerges winners will be invited by the BPE to negotiate the SPA, after which 15 working days will be allowed for the winner to make payment. Immediately, BFIG received the SPA, it did not waste time to sign it. This was in October 2012. In the transmittal letter to BPE, BFIG requested from BPE to provide its account coordinates to deposit the $41 million initial payment. “One month passed, BPE did not give any response. We wrote them a reminder. Still no response between October 2012, when BFIG returned the completed SPA and January 2013. Later, they wrote to apologise that they were organising so we can go and inspect the property and conduct a technical audit, so that we know what we were buying. Continues on www.businessday.ng

L-R: Adewunmi Ogunsanya, chairman, MultiChoice Nigeria; Wangi Mba-Uzoukwu, channel director, Africa Magic; Kholeka Maringa, executive head, DStv Media Sales, and John Ugbe, CEO, MultiChoice Nigeria, at the seventh edition of the AMVCA Nominees/Sponsors Cocktail in Lagos.

Manufacturing PMI slows 2 straight months on weak consumer demand HOPE MOSES-ASHIKE

he manufacturing Purchasing Managers Index (PMI) has been on a slow expansion trajectory for the past two months as a result of continuing weak consumer demand. The manufacturing PMI slowed to 58.9 points in February 2020, from 59.2 points in January 2020 and 60.8 points in December 2019, according to the PMI report released on Friday by the Central Bank of Nigeria (CBN). The PMI measures the confidence of the manufacturers in the economy. A composite PMI above 50

points indicates that the manufacturing/non-manufacturing economy is generally expanding, 50 points indicates no change, and below 50 points indicates that it is generally contracting. “Today, the challenge that we have is that in the month of December, the lower interest environment encouraged a lot of manufacturers to borrow and produce but unfortunately, consumer demand has remained weak,” Johnson Chukwu, managing director/CEO, Cowry Asset Management Limited, said. Chukwu said many manufacturers that produced are not able to sell. A lot of products they produced are still

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stored in their warehouses. The PMI report revealed that production level, new orders, supplier delivery time, employment level and raw materials inventories grew at a slower rate in February 2020. Akintunde Olusegun, financial market analyst at Polaris Bank Limited, said the continued decline in PMI can be attributed to the general slowdown in the economy year to date. The real sector is the most hit by the dwindling purchasing power of consumers/weak consumption (as a result of flat income growth and inflation), un-even distribution of bank loans (bank @Businessdayng

loans are skewed more towards blue chips) and poor infrastructure, coupled with structural and regulatory constraints. “What we are witnessing is lower demand for input for manufacturing activities given the fact that the consumer demand has remained weak and that is what is reflecting in decreasing index, though still in expansionary territory,” Chukwu told BusinessDay by phone. It simply means the manufacturers were not as optimistic as they were in December, but there is still some level of optimism as they are enjoying lower interest rates.

Monday 02 March 2020

BUSINESS DAY

Monday 02 March 2020

BUSINESS DAY

news Nigeria bourse set to make history as... Continued from page 1

well as an Extraordinary General Meeting (EGM) holds in Lagos tomorrow, March 3, 2020, where members will respectively pass requisite resolutions for demutualisation of the Exchange and also pass the resolutions for the appointment of inaugural board members of Nigerian Exchange Group plc. The “Demutualisation of the Nigerian Stock Exchange Act 2018” at the National Assembly facilitates the conversion and re-registration of the NSE from a company limited by guarantee to a public company limited by shares in order to adopt and efficiently implement the global practice of demutualisation of stock exchanges. A demutualised exchange comes with benefits and opportunities to its members and other stakeholders. It changes the structure of the current owners; makes dealing member firms become shareholders; and brings in a new era of corporate governance on the exchange. The financial advisers are Chapel Hill Denham Advisory Limited and Rand Merchant Bank Nigeria Limited. Na t i o n a l c o u n c i l members’ views O n the E xchang e’s quest to demutualise, Oscar N. Onyema, chief executive officer, NSE, said the effort at seeing the demutualisation to completion was fuelled by the commitment to develop a more agile Exchange that is better able to support Nigeria’s economic growth. “We are confident that post-demutualisation, the NSE will be better equipped to diversify our operations and evolve into a more competitive, robust and liberalised stock market,” he said. Abimbola Ogunbanjo, president, National Council of the NSE, said the council “considers the terms of the scheme to be fair and the optimal approach to achieving the demutualisation of our Exchange”. Proposed and approved share allocation between dealing and ordinary members The NSE currently has 432 members comprising 255 dealing members and 177 ordinary members. The National Council of the Exchange unanimously proposed and approved a share allocation of 78 percent and 22 percent, respectively, between deal-

ing and ordinary members based on the distribution rationale. A total of 1.964 billion ordinary shares – representing circa 98 percent of the Issued Shares of the NSE and the balance of the Issued Shares following the reservation of the Claims Review Shares – will be apportioned between dealing and ordinary members. Accordingly, each dealing member shall receive 6.007 million ordinary shares of 50 kobo each in Nigerian Exchange Group plc credited as fully paid; and each ordinary member shall receive 2.441 million ordinary shares of 50 kobo each in Nigerian Exchange Group plc credited as fully paid. The Exchange reported a net asset value of N25.6 billion as at December 30, 2018, and this has been factored into the valuation that has been undertaken. Securities dealers can’t wait to see it happen The Association of Securities Dealing Houses of Nigeria (ASHON) had embarked on series of initiatives to prepare for demutualisation of The Nigerian Stock Exchange. ASHON reconstituted its Governing Council in line with the tradition of seamless change of baton for enhanced professionalism as the wind of demutualisation is on the horizon, its chairman, Oyinyechukwu Ezeagu, had noted. “We represent firms that will transit from members to shareholders of the Exchange. We are gearing up to this new responsibility and the benefits to flow from the laudable venture. Our members are being repositioned to operate under the demutualised Exchange. ASHON’s members are currently the owners of The Nigerian Stock Exchange,” Ezeagu said. He said ASHON had embarked on strategic restructuring to bolster the members’ image, consolidate a formidable team and review internal processes, among others. “The process of demutualisation of the NSE is approaching a climax. It is important that we prepare ourselves for the change in status which comes with some responsibilities and new realities. All our members representing us both at the Advisory Committee and the NSE Council have been working tirelessly to defend our collective interests in the demutualisation process,” he said. Garba Kurfi, managing director, APT Securities and Funds Limited, reck-

L-R: Adedeji Ajadi, registrar and chief executive, Chartered Institute of Stockbrokers (CIS); Rabiu Olowo, Lagos State commissioner for finance; Adedapo Adekoje, president, CIS; Atedo Peterside, founder, Investment Banking and Trust Company (IBTC); his wife, Dudun; Emeka Anyaoku, former secretary-general, Commonwealth; Omotunde Amolegbe, 1st vice president, CIS, and Oluwole Adeosun, 2nd vice president, at the investiture of Peterside as Honourary Fellow of CIS in Lagos.

ons that a demutualised Exchange would boost economic activities and activate idle capital in the market. “It is a good thing and all of us are going to be happy at the end of the day because it is going to unlock more capital for the market. For instance, if I place shares as collateral, I can trade and make money. We are pleased this is coming after so much delay, this will change the economy’s perspective as well,” said Kurfi, who is also a renowned stockbroker. “The issue of demutualisation started many years ago but we are still talking about it in 2020. It is already a history in Nairobi-Kenya. However, it is better late than never,” he said. Demutualisation of the NSE has been subject of discussion for years The demutualisation of the Exchange has been the subject of discussion in the Nigerian capital markets for a number of years. Approval-in-Principle for the demutualisation of the NSE was granted by The Exchange’s Council in June 2002. The subsequent global financial crisis (in 2007/2008) was a militating factor against the demutualisation process. At that time, there were no formal rules or guidelines that would govern the process. A 15-member Committee on the Nigerian Capital Markets (the Dotun Suleiman Committee) was inaugurated by the Securities & Exchange Commission (SEC) in September 2008 to make recommendations for the development of the Nigerian capital markets. The Suleiman Committee recommended, amongst others, that the demutualisation proposed by the Council of the NSE be supervised by the SEC.

In September 2011, another 21-member subcommittee of the Capital Markets Committee (the demutualisation sub-committee) was inaugurated by the SEC and given the remit to examine the operations of the Exchange and make recommendations for the demutualisation. The demutualisation sub-committee recommended that the SEC provide a robust enabling framework on demutualisation. This recommendation culminated in the commission’s announcement of the Rules on Demutualisation of Securities Exchanges in Nigeria on April 12, 2015 (Demutualisation Rules). The Demutualisation Rules were issued pursuant to Section 313 of the Investments and Securities Act, 2007. The executive management of the NSE announced on October 10, 2015 that advisers – financial, legal and tax – had been appointed in respect of the process for the demutualisation of the NSE, thus ‘kick-starting’ the formal process that will result in the Exchange’s demutualisation. The Council of the Exchange subsequently also established a demutualisation committee that would – in conjunction with the executive management of the Exchange – oversee all matters in connection with the demutualisation process as well as review actions proposed in respect thereto. The Council of the Exchange has proposed that the matter of demutualisation be formally discussed at the proposed EGM, with the intent that members of the NSE will approve the demutualisation as well as empower the Council and the executive management

to proceed to conclude the overall terms of the demutualisation. The specific terms of the demutualisation – which will be the basis on which The Exchange is to be demutualised – will be proposed for the approval of the members. Members of the NSE had approved for the Exchange to embark on the demutualisation scheme at an Extraordinary General Meeting (EGM) in March 2017. This was followed by the signing of the Demutualisation of The Nigerian Stock Exchange Bill into law in July 2018. In December 2019, the SEC in a No Objection letter gave its consent to the NSE’s planned conversion from a not-for-profit entity limited by guarantee into a profitmaking, public limited liability company owned by shareholders. The Exchange will be converted to a company limited by shares On demutualisation, the Exchange will be converted from a company limited by guarantee to a company limited by shares, consequent upon which The Exchange will be registered, under the name Nigerian Exchange Group plc. The Memorandum and Articles of Association of the re-registered Exchange shall also be amended to indicate the new name, Nigerian Exchange Group plc. In addition to other steps that will come earlier, the NSE will on March 26, 2020 register plc (HoldCo) shares with SEC while on March 30, 2020, it will allot HoldCo shares and file allotment registration at Corporate Affairs Commission (CAC). The said share allocation follows extensive consultations with respective stakeholder groups and the careful consideration of the

contributions of members to the development of the NSE. Prior to the allotment of the scheme shares, 2 percent of the issued share capital will be reserved for purposes of allotment to parties who are adjudged as being entitled to shares in the demutualised Exchange, pursuant to the provisions of the Demutualisation Act 2018. Niger ian E xchange Group plc will be a public limited company retaining incorporation date of September 15, 1960 and registration certificate number RC 2321 registered under the laws of the Federal Republic of Nigeria. Upon re-registration, Nigerian Exchange Group plc will become a nonoperating holding company, with interests in Nigerian Exchange Limited and all the other subsidiaries currently owned by the NSE. On transfer of assets and winding up, all the assets, liabilities and undertakings including real property and intellectual property rights of the Exchange – with the exception of the securities exchange licence and all assets and appurtenances in relation to the securities trading business of The NSE – shall be retained by Nigerian Exchange Group plc. Subsequently, NSE Consult Limited, NSE Nominees Limited and Coral Properties Limited – existing subsidiaries of The NSE – will be voluntarily wound up and the assets of NSE Consult transferred to Nigerian Exchange Group plc pursuant to section 457 of the Companies and Allied Matters Act, 2004. The Exchange has a 99.8 percent holding in NSE Consult Limited, a 99.9 percent holding in Coral

Monday 02 March 2020

BUSINESS DAY

news Investors brace for further sell-off on... Continued from page 1

from Milan Feb. 25 and was

not quarantined until after 48 hours. Following the spread of the deadly coronavirus to Lagos, Nigeria’s commercial hub and biggest city, investors went risk off and financial markets slumped, Friday, as the equities and bond markets witnessed record sell-offs. Analysts expect the outlook for the market would depend on how resilient the oil market would prove to be and the national response in controlling the virus outbreak. “Broad market sentiment would still be negative but we are not likely to see a steep decline on Monday if there are no further complications regarding the index virus case,” said Gbolahan Ologunro, equity analyst at Lagos-based CSL Stockbrokers Ltd. Oil price fell to $49.67 as at 7:54pm on Sunday, from about $50 per barrel on Friday, while the number of people who had contact with Nigeria’s index coronavirus case keeps rising, hitting over 100 as at Sunday. After Nigeria’s health minister confirmed the index case, banking stocks fell by the most in over four years on Friday as equities hit their lowest level in the year.

Thirteen banking stocks declined while one remained flat, pushing the sector’s index lower by 6.52 percent lower compared to 7.01 percent decline on January 15, 2016. Meanwhile, the broader market lost 2.21 percent Friday, the biggest daily loss in nine months. Flour Mills and Vitafoam gained while a record number of six stocks shed 10 percent, the maximum allowable in a day. Each of the top 10 decliners lost a minimum of 9.8 percent. The bond market was not spared as average yields on government bonds rose by 5 basis points to 9.2176 percent on Friday compared to 9.17 percent in the previous day’s trade, according to data from FMDQ. “The stock and bond sell-off is as a result of the knee-jerk reaction by foreign investors to the arrival of the coronavirus disease in Nigeria,” said Wale Okunrinboye, head of investment research at Sigma Pensions Ltd. “Theworrynowiswhathappens if the sell-off shifts to the currency market as it could see the naira devalued in seconds,” one fx dealer told BusinessDay. The naira weakened against the dollar to N365.25 per dollar Friday from N365.22 Thursday at the Investors and Exporters window.

The last thing Nigeria needs is the economic growth scare it is getting from the coronavirus outbreak. The IMF already downgraded Nigeria’s economic growth forecasts to 2 percent from 2.5 percent in 2020 and if not properly handled the disease scare could pave the way for steeper downgrades in the short term. Nigerian authorities are taking measures to stop the virus spreading, but the risks remain. “If it continues to spread, the virus outbreak and subsequent slump in demand from China present major risks to the Nigerianeconomy,”LukmanOtunuga, a research analyst at FXTM, said in a note to investors Friday. Crude oil sector accounts for less than 10 percent of GDP but remains the biggest source of foreign exchange for the nation, over 70 percent of export sales andhalfofgovernmentrevenues. “Falling oil prices would reduce foreign exchange reserves and ultimately complicate the CBN’s efforts to defend the naira, meaning potentially heightened pressures on inflation and consumption with an eventual impact on growth,” Otunuga said. Lower oil prices will also impact the 2020 budget which was based on 2.18 million bpd production at an oil price benchmark of $57 per barrel. According to Otunuga,

the situation may prompt a greater focus on monetary and fiscal policy to shield the economy from external risks. “The CBN meets in March but the economy remains under inflationary pressure so it is unlikely we’ll see an interest rate cut. Instead, the central bank may implement more unconventional tools to stimulate the economy,” he said. It’s not all doom and gloom for Nigeria. There is still a possibility that the virus outbreak will be brought under control, meaning a return to full power for Chinese and Asian growth and a relief to health authorities and policymakers in Nigeria and other countries. Nigeria’s health authorities have experience managing infectious-disease outbreaks after their successful handling of the Ebola outbreak in West Africa in 2014-15, in which more than 11,000 people died. Twenty cases of that disease were confirmed in Nigeria, of which there were eight fatalities. The government is working to ensure an outbreak in Nigeria is “controlled and contained quickly”,the ministry said. A Coronavirus Preparedness Group, led by the Nigeria Centre forDiseaseControl,hasactivated its national Emergency OperationsCentreandwillworkclosely with Lagos health authorities to respond to the case, it said.

gies to catalyse sustainable finance as well as commence charting the path to improve climate-related prudential banking ratios,” Mancini said. Doyin Salami, vice chairman, Financial Centre for Sustainability, Lagos, said the Green Tagging Project as an initiative of UNEP Inquiry is quite commendable, as it is expected to transform the way banks who are the lubricators of the engine of growth in any economy think and support projects that assist in maintaining a healthy, low-carbon, resilient and sustainable business environment and economy in the long run. On its part, FC4S Lagos shall continue to partner with key international and domestic market stakeholders to promote similar initiatives in continuation of its avowed commitment to inspire a greener Nigeria.

Justine Leigh-Bell, deputy CEO/director, market development, Climate Bonds Initiative, UK, said Nigeria continues to take strides in developing its green finance market, setting the path for other African nations to follow. Building from the very successful Nigerian Green Bond Market Development Programme which was championed by FMDQ, FSD Africa and Climate Bonds Initiative, the launch of the Green Tagging Project for banks under the FC4S Lagos initiative will be an opportunity for Nigerian banks to take leadership in offering the local market a range of different green financial products that will allow them to manage their exposure to climate risks thereby contributing to a low-carbon, resilient Nigerian economy.

Babajide Sanwo-Olu (m), Lagos State governor, applying chlorine solution to his hands, during an inspection visit to the Emergency Operations Centre and Biosecurity Unit at Mainland Infectious Disease Hospital Yaba, yesterday. With him: Akin Abayomi (l), commissioner for health, Lagos State, and Abimbola Bowale (r), medical director, Mainland Hospital.

FMDQ, FC4S Lagos, UNEP, others kick off... Continued from page 2

cused on encouraging critical players within the Nigerian financial markets, primarily the banking institutions, to support climate-friendly developmental activities through the decarbonisation of their loan portfolios amongst others. Climate Bonds Initiative, UK, technical partners to the Green Tagging Project, shall over the next eight months provide the requisite technical assistance to enable the participating banks identify, tag, track the performance of green assets and migrate them to the capital markets, if required. The participating banks in the current pilot phase cut across different categories including international (Stanbic IBTC Bank

plc) and national (Sterling Bank plc and Wema Bank plc) banking categories. Speaking on this development, Marcos Mancini, head, international cooperation at the United Nations Environment Programme Inquiry, highlighted that financial regulators through international platforms like the Network to Green the Financial System (NGFS), the Sustainable Insurance Forum (SIF) and others, have come to realise that climate change can affect the stability of one’s financial system. “We, therefore, welcome this opportunity to continue working closely with FC4S Lagos, to further understand the composition of green and brown assets in banking credit portfolios and to design stratewww.businessday.ng

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Nigeria bourse set to make history as... Continued from page 2

panies and their drivers. For example, a driver on any of the e-hailing platforms who earned N1,000 before the okada/keke ban now earns about N2,000, a 100 percent revenue increase resulting from the high demand for rides, checks by BusinessDay show. “Since the ban, my revenue has more than doubled, and unlike my expectation that the hike in price will lead to fewer trips, I actually get people requesting even when I’m completing another trip,” an Uber driver who simply identified himself as John told BusinessDay. Lagos private car owners Many private car owners in Lagos have leveraged the ban to start commercial taxi business, especially in areas where the ban has drastically affected commuting. They ply mainly short-distance, inner routes previously serviced by okada and keke but charge much higher than the usual fare. B u s i n e s s D a y ’s t o u r around Lagos saw these private car owners at different locations providing transportation services to commuters on short-distance routes. In Apapa GRA where okada and keke drivers used to be kings, private car owners have taken over, charging N100 to convey passengers to different destinations such as Waterside, Point Road, Liverpool, Airways, etc – routes where keke operators charged N50 before the ban. And they are getting a lot of patronage from Lagosians who were sceptical about patronising them before the ban. Some Lagos residents also consider the e-hailing companies too expensive. “We are now rushing for the private cars because they are not many on the road and their fares are far better than those taxis you book online,” Agnes Okeke, a middle-aged woman, told BusinessDay at CMS bus-stop on Lagos Island. Losers Ride haling companies/ riders Top on the list of losers in the Lagos State okada/keke ban policy are motorcycle (ride) hailing companies like Metro Africa Xpress (MAX. ng), Gokada and ORide, BusinessDay checks show. Despite arguments in some quarters that these ride hailing companies who had just invested billions of naira into the transport industry with the hopes of high returns should have been exempted from the ban, the Lagos State government said the ban was without exception. The ban happened after the ride hailing companies attracted investments from Japanese and Chinese investors to shift the continent’s motorcycle-taxi markets to on-demand mobility. @Businessdayng

Gokada raised $5.3 million in May 2019. Max.ng raised a $7 million Series A round in June of the same year, while OPay, the mother company of ORide, raised $120 million in November last year to enable it expand its business which includes its ride-hailing arm. The ride hailing operators had faulted the position of the Lagos State government and urged it to rather commence the regularisation of the sector as against outright ban. Adetayo Bamiduro, cofounder and CEO of MAX. ng, noted that they had since inception complied with the Lagos State rules guiding commercial motorbike operations in the state. Victor Daminabo, pilot operations manager at Gokada, said they were also fully compliant with the provisions of the law prohibiting the operations of motorcycles without rider and passenger helmets, amongst others. The group expressed fears that the directive by the Lagos State government to ban commercial motorcycles and tricycles from operating in the state might lead to over 3,000 job losses for drivers and full-time staff of the companies and also affect the massive investment already made by both local and foreign investors in the industry. But these arguments did not cut it for the Lagos State government. With the ban, the companies have been forced to either change their business plan or move their motorcycles to other cities in Nigeria where the ban policy is not force. Commuters In announcing the ban, the Lagos State government said it would make the city more secure and safe for residents. While this may be so, the reality on ground is that some Lagosians who do not have cars to move about feel they have been thrown from frying pan into the heart of the fire as they now find it ever more difficult to move around the city where traffic congestion is the norm. “Okada was always my best means of getting to work early due to Lagos traffic, but now that there is a ban, I’m forced to take a bus. The prices are not even friendly,” 28-year-old Eke John, who works with a consulting firm in Lekki, told BusinessDay at Yaba bus-stop. While the available public buses are not sufficient to cater for the more than 20 million residents of Lagos, the bus fare surged by over 100 percent after the ban as Lagosians were left to struggle for the few buses. “The drivers are obeying the law of the market: the higher the demand, the higher the price,” Thomas lmafidon, a resident, said when BusinessDay accosted him at Oyingbo bus-stop.

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UNAIDS calls for zero discrimination Coronavirus: NCDC issues new advisory Stakeholders’ decry poor utilisation of UBE fund in Lagos to travellers, businesses, others against women, girls Anthonia Obokoh

n Zero Discrimination Day, which is commemorated every year on March 1, the Joint United Nations Programme on HIV/ AIDS (UNAIDS) has called for an end to discrimination against women and girls, and for equal rights, opportunities and treatment. Despite progress in some areas, in 2020 coercive practices, discriminatory legislation and gender-based violence are just some of the human rights violations that are continuing to have a disproportionate impact on the lives of women and girls around the world. UNAIDS is highlighting areas where change is urgently needed: equal participation in political life; human rights and laws that empower; economic justice - equal pay for equal work; ending gender-based violence; provide health care without stigma or barriers; equal and free access to primary and secondary education, and climate justice. “Feminism, human

rights and zero discrimination are values shared across the world,” said Winnie Byanyima, executive director of UNAIDS, saying, “They express our humanity, our recognition that we share a vision for a better future, and they are central to ending AIDS.” Globally, at least one in three women and girls have experienced violence in their lives, with adolescent girls experiencing higher rates of intimate partner violence than adult women overall. This figure hides deep disparities, with more than 50% of women in some countries reporting violence just in the past 12 months. Although some countries have made progress towards greater gender equality, discrimination against women and girls still exists everywhere. We know that without equal opportunities early on, without access to education, inequality will persist. Yet, nearly one in three adolescent girls aged between 10 and 19 years from the poorest households globally has never been to school.

Godsgift Onyedinefu, Abuja

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ollowing the confirmation of the first Covid-19 (Coronavirus) case in Nigeria on February 27, the Nigeria Centre for Disease Control (NCDC) weekend issued a new advisory to Nigerians to curtail the spread of the disease. According to the fourth advisory, travellers to Nigeria without symptoms on departure but become unwell in transit are advised to self-report to the Port Health Services on arrival, while travellers from countries with ongoing local transmission, but who show no symptoms on arrival should self-isolate at home for 14 days after arrival. Travellers from countries with ongoing local transmission who feel ill with fever, cough or difficulty breathing within 14 days of arrival in Nigeria, are advised to observe self-isolation immediately by staying indoors, avoiding self-medication and contact with people or call the NCDC 24/7 toll-

free line immediately on 080097000010. Travellers from Nigeria to China and other affected countries are advised to avoid contact with sick people. The NCDC strongly advised that all non-essential travel to countries with ongoing local transmission be postponed, until the outbreak is contained. According to the NCDC, the current situation in the country does not warrant a shutdown of daily activities, as additional measures may be instituted if transmission is sustained in Nigeria. But, businesses and schools are however advised to circulate NCDC’s public health advisory and related materials on COVID-19 to all employees, clients, visitors, staff, students and parents; Encourage sick employees and students to stay at home; Ensure routine cleaning of high contact areas such as toilets, door handles, telephones etc., and provide facilities and emphasise the importance of hand washing.

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SEYI JOHN SALAU

oncerned about the implementation level of the 2016/2017 Lagos State Universal Basic Education (L-SUBEB) Action Plans in some selected local government area of the state, stakeholders have called on government to pay more emphasis on the monitoring and implementation of intervention programmes meant to improve basic education. They decry the poor utilisation of funds dedicated for UBE projects in Lagos, considering the overall huge cost burden on government and tax payers. A total of N4.65 billion was allocated for UBE action plan for the year 2016 and 2017. While N2.08 billion was allocated for 2016, 2017 allocation was put at N2.57 billion for 156 schools. A further breakdown of the allocation shows that the projects were broken into four critical areas, which are 5,529 perimeter fencing, 3448 furniture to be supplied to schools, 35 constructions

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(classrooms) and rehabilitation of five schools. Stakeholders comprising of Civil Society Organisations (CSOs), School Based Management Committees (SBMC), Parents Forum (PF), and some independent monitors engaged by Human Development Initiatives (HDI), a non-governmental organisation (NGO) met recently in Lagos to review the report of the monitoring and implementation of year 2016&2017 L-SUBEB action plans in selected nine local governments of Lagos State. Olufunso Owasanoye, the executive director, HDI, said the essence of the review and stakeholders’ engagement was to ensure proper implementation of UBE funds for better education outcomes in Lagos. According to Owasanoye, the main reason for monitoring UBE projects is to ensure all school-aged children in Lagos State receive quality basic education. However, she noted that despite the huge amount spent on basic education in Lagos, there was little to show for it.

Monday 02 March 2020

BUSINESS DAY

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Coronation Merchant Bank partners IFC for N14.4 billion trade finance Hope Moses-Ashike

oronation Merchant Bank has partnered International Finance Corporation (IFC) to launch a N14.4-billion Trade Finance Guarantee Facility to boost financing for local businesses and enhancement of inter-continental trade. IFC is a sister organisation of the World Bank and member of the World Bank Group. The organisation is the largest global development institution focused on the private sector in emerging markets. It works with more than 2,000 businesses worldwide, using their capital, expertise, and influence to create markets and opportunities where they are needed most. In 2019, IFC delivered more than $19 billion in longterm financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. The partnership with Coronation Merchant Bank marks a major milestone for the Nigerian financial sector as it heralds the return of IFC to Nigeria. Since the last five years, IFC has not done any new enrolment under the GTFP in Nigeria following a break in the Nigerian market in 2015. The decision to partner Coronation Merchant Bank

is an attestation of the growth and development recorded in the Nigerian financial sector over the last few years. The gesture sends a positive signal to investors and other international financiers while positioning Coronation Merchant Bank as a foremost institution in Global Trade, experts say. According to Vittorio Di Bello, IFC regional industry head, Financial Institutions Group for Europe and Central Asia, “Increasing access to trade finance for local businesses is an important mechanism to support the development of the private sector in emerging markets. We expect this financing to help boost inter-continental trade and spur economic growth for the region”. Speaking at the launch of the event, Banjo Adegbohungbe, acting managing director of Coronation Merchant Bank, says empowering businesses that drive intercontinental trade remains pivotal to the sustenance of growth and development in emerging economies across the world. International trade remains crucial to the economic make-up of Nigeria yet contributes little to our national GDP, Adegbohungbe states, but we are determined to help change this narrative by boosting access to trade financing in Nigeria.

Dangote’s new NASCON plant to boost Apapa economy

s the multibillion naira NASCON Allied Industries new plant is set to take off, the management of the company has assured Apapa, the host community, of economic buoyance and employment opportunities for the people. This is as the Alayabiagba community in AjeromiIfelodun Local Government Area, Apapa in Lagos, welcomes the new salt plant located in their area, and the people pledge their assistance to see that the plant operates successfully. NASCON Allied Industries is part of the foremost indigenous conglomerate of Dangote Industries Limited. Chairman of AjeromiIfelodun Local Government Area, Abdulfatai Ayoola, in his remarks at NASCON Community Sensitisation Forum held in Alayabiagba,

… seeks partnerships described the new plant as a huge blessing to the community, saying it would boost economic activities within the environs. Ayoola stated that the local government under his administration would partner and provide every support within its powers towards ensuring the new plant settled fast in the community. He stated, “We promise you every support that you need to make the plant take off and succeed. It will be of mutual benefit for everyone for the plant to succeed as the multiplier effect will change the economic fortunes of the community.” The local government area boss tasked the company to remember the community in terms of corporate social responsibility and other facilities needed to enhance the lives of the

citizens. Paul Farrer, managing director, NASCON, represented by the chief financial officer, Aderemi Saka, in her remarks thanked the community for welcoming the company into their midst and promised that its location in the area would be beneficial to all stakeholders. As a company that produces family oriented products such as salt and seasonings, NASCON’s plant location within the community will add flavour and taste to their activities as these are products used every day in families, she said. She urged the community to see the new plant as a partner in progress and ensure that the relationship was nurtured for growth through constant engagement and consultations on

issues. In his remarks, Jude Amaechi, head, human safety and environment, NASCON, said the new plant was meant for the production of salt, which is a necessary ingredient in every home. The plant complies with the best global standards in terms of safety and there will be zero emissions, he said, saying it will build social economic activities. Responding, Baale of Alayabiagba community, Adesina Ojora, commended the management of NASCON for series of engagement with the leadership of the community prior to the general engagement. He said the major request he was making was to have employment slots for the community so that the youths could be gainfully employed, and promised to give every support to the new plant.

Social Media Week: Piggyvest speaks on necessary business of Wealth Creation in this Digital Age

n the second day of the ongoing 2020 Social Media Week, Piggyvest hosted a panel session that discussed ‘Wealth Creation in This Digital Age.’ The panel was moderated by Piggyvest’s vice president, Products, Layo Ogunbawo, and had as panellists: Sola Adesakin CEO, Smart Stewards, Ayo Bankole (Lagos SME Booth Camp Convener), Kayode Oyewole and Odunayo Eweniyi, co-founder and partner, Venture Platform of Piggyvest. At the session, Eweniyi emphasised monetising the digital space as a means to wealth creation, and in her words “Your product, skill, or service needs to find just one unifying factor that everyone is excited about to grow digitally.” Adesakin spoke about the four types of wealth we should all be interested in financial wealth, fit wealth, time wealth and social wealth. She also shared useful insights on the three M’s of money – make money, manage money, and multiply money.

On the other hand, CTO AppConnect, Ojimaojo Udale-Ameh, unveiled new updates to the Piggyvest app at the event. These updates were made with insight and are designed to build on the pre-existing yet exciting functionalities Piggyvest users are accustomed to. On the list of what it means to be a millennial today is financial consciousness - what to do with money, when to spend it, what to spend it on, and particularly how to make more. Wealth creation is an ongoing conversation that would continue for as long as financial independence remains a primal goal for almost everyone to reach. SMW Lagos - a platform Piggyvest is glad to partner with - is a weeklong conference that hosts thousands of attendees and panellists with diverse skills and preoccupations from across Nigeria and around the world with a mission to spotlight Africa’s brightest individuals and organisations while creating opportunities for the continent’s most innovative minds. www.businessday.ng

Catholic faithful, during a procession of the Catholic Bishop Conference of Nigeria’s Prayer and Penance for Peace and Security in Nigeria in Abuja, yesterday.

Italian: Lafarge says production on course as Covid-19 contacts hit 39

gun State government and Lafarge Africa have confirmed that contacts in respect of the recorded single case of Coronavirus (Covid-19) have hit 39 from the initial reported 28. This included the driver who picked the infected Italian from a hotel in Ikeja and those who served him food and drink. Contrary to reports going round in the media that the production lines of Lafarge Africa plc, Ewekoro, have been closed following the visit of the Coronavirus-infected Italian to the company’s guest house, the management of Lafarge and Ogun State government have debunked the closure of the cement production lines. The Ogun government and Lafarge Africa confirmed this development at

the Lafarge facility during an on-the-spot-assessment by the host state government, Nigeria Centre for Disease Control (NCDC), World Health Organisation (WHO) teams and the industrial director of Lafarge plc. Tomi Coker, Ogun commissioner for health, commended Lafarge Africa for the quick and proactive measures taken so far, saying it was imperative for the state and Federal Governments to swing into action to contain the spread of the deadly disease. The commissioner said the state government had activated an Emergency Operation Committee (EOC) to manage any development that may arise from the reported cases of Coronavirus. “We are on top of the situation. There is no cause for alarm. Our health educators are busy with advocacy

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efforts on the field. We are sensitising our health officers too on preventive measures to adopt. “We have all the required interventions to contain the situation. Members of the public should remain calm,” she said. On its part, the company said its production lines were not shut as the guest house where the Italian was lodged was 5km to the manufacturing plants in Ewekoro. Segun Soyoye, industrial director, Lafarge plc, said the Italian came to Lafarge facilities at Ewekoro to inspect some installations of machines bought from a Swedish firm. Soyoye said the Italian did not go behind Lafarge guest house at Ishofin Estate before he was evacuated having developed abnormal temperatures that suggested @Businessdayng

he had been infected with Covid-19. “The Italian came for a business visit. He was in Lagos on Monday and slept at Airport Hotel, Ikeja. Our driver took him there, and when we observed abnormal temperatures and symptoms, we quickly instituted an Emergency Response Team, which is led by the company CEO; we have to find a way of analysing and identifying not only the Italian but also the other contacts. “The contacts are now 39 and we have quarantined them, the house and clinic as well as the vehicles. We don’t take chances; that is why they are put there. “Today (Saturday) is Day 3; they will be there for 14 days. We will continue to observe them; we have their database, showing their biodata and other information.

Monday 02 March 2020

BUSINESS DAY

FINANCIAL TIMES

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Trump expands travel restrictions after first US coronavirus death President announces new measures after criticism he was downplaying outbreak James Politi

S president Donald Trump announced new travel restrictions due to the coronavirus outbreak, banning entry to foreign nationals who recently visited Iran, as America recorded its first death from the disease. Mr Trump unveiled the new steps on Saturday after coming under pressure to more aggressively tackle the outbreak, following a severe market sell-off and criticism that he was not taking the coronavirus seriously enough. The Trump administration is also telling Americans not to travel to regions of South Korea and Italy which have suffered the greatest contagion from the infection, and will introduce health screenings for visitors from those areas. US officials are also considering new restrictions at its southern border with Mexico. “It’s a tough one but a lot of progress has been made”, Mr Trump told reporters. “Our country is prepared for any circumstance.” Mr Trump spoke just minutes after officials in Washington state confirmed the first fatality in the US due to the coronavirus outbreak — a man in his 50s who had not travelled

President Donald Trump speaks as Vice-President Mike Pence looks on during a news conference at the White House on Saturday. Department of Health in Washington State has reported the first death in the US related to the coronavirus. © Getty

to affected countries and is considered a case of “community” spread of the disease.* Officials in Oregon and California have also confirmed new cases of coronavirus over the past 24 hours, raising fears that the disease was spreading in the US, especially on the West Coast. There are currently 22 patients who contracted coronavirus in the US, in addition to travellers brought back to the US with the disease from

China and the Diamond Princess cruise ships. Mr Trump said he would be discussing efforts to find a vaccine against coronavirus at a meeting with pharmaceutical companies on Monday. Mike Pence, the vicepresident, said an agreement had been reached with 3M, the US manufacturer, to provide a constant supply of masks for use by health practitioners.

Amid concerns about the economic impact of the outbreak, Mr Trump urged the Federal Reserve to ease monetary policy, after the US central bank said on Friday it would “act as appropriate” to support the economy. “The Fed has a very important role, especially psychological . . . our Fed should be a leader,” Mr Trump said. Mr Trump has attracted criticism for labelling the coronavirus a “new

hoax” perpetrated by Democrats to damage him politically as he heads into his re-election campaign. On Saturday, he said he was not referring to the disease as a hoax, but to Democratic criticism of his response. “This is very serious”, the president said, but “there is no reason to panic at all”. Mr Trump also pointed to improvements in tackling the crisis in China, which has suffered the worst outbreak so far. “China seems to be making tremendous progress, their numbers are way down,” Mr Trump said. After Mr Pence was put in charge of the Trump administration’s efforts to tackle the coronavirus crisis earlier this week, the White House sought to centralise its messaging around the outbreak. This has raised concerns that technical experts would be prevented from offering a realistic picture of the crisis. But Anthony Fauci, a senior US health official standing beside Mr Trump at the press briefing, who cancelled a series of TV appearances to be replaced by Mr Pence on Sunday, said he had “not been muzzled”. *In his press conference, President Trump said the patient who had died from coronavirus in the US was a woman. Washington State officials later confirmed the patient was a man in his 50s.

Biden’s victory sets up Super Tuesday showdown with Sanders Win in South Carolina primary gives lease of life to campaign that had been running out of cash Demetri Sevastopulo

he South Carolina primary has resurrected Joe Biden’s presidential campaign, giving the former vice-president his first victory in the 2020 Democratic race. But the test of whether he can catch Bernie Sanders comes in three days’ time, when 14 states vote on Super Tuesday. African Americans, who make up 60 per cent of Democratic voters in the state, carried Mr Biden to a resounding victory, with 48 per cent of the vote, compared with 20 per cent for Mr Sanders. That gave him at least 33 of the 54 delegates up for grabs in the state. The win rescued Mr Biden, who had run very low on cash after his poor results in Iowa and New Hampshire. While he came second in Nevada, South Carolina vindicated his claim that the racially diverse state — which is more representative of the national Democratic electorate — would be the “firewall” that would show his real strength. “The press and pundits had declared this candidacy dead. Because of you, the heart of the Democratic

party, we haven’t just won, we won big,” Mr Biden said. “We are very much alive.” Mr Biden thanked his “buddy” Jim Clyburn, the South Carolina African-American lawmaker whose endorsement was a big factor for voters, according to entrance polls. “This is a thumping win so Biden will probably slingshot his way into Super Tuesday,” said Larry Sabato, a University of Virginia politics expert, who said Super Tuesday might make the results moot, but he “has a fighting chance now”. He faces questions about whethwww.businessday.ng

er he can generate enough cash and momentum to stop Mr Sanders, who raised $46m in February and has a double-digit lead in national polls. Mr Biden has barely campaigned or run ads in the Super Tuesday states in recent weeks. He is hoping for success in North Carolina, helped by Mr Clyburn, and in Virginia. He may also do well in Alabama, which has a large black electorate. Mr Sanders leads him by 24 points in California, the most important Super Tuesday state with

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its 415 delegates. Mr Biden has only 11 per cent, raising the risk that he might not meet the 15 per cent threshold to win any delegates. The other wild card for Mr Biden and the moderates is whether Michael Bloomberg will be a big factor on Super Tuesday. The former New York City mayor skipped the first four races to focus on March 3, when one-third of the total delegates will be awarded. After spending hundreds of millions of dollars, his poll numbers are uneven. In Texas, Mr Bloomberg is in third place with 20 per cent, while in California he is a distant fourth. However, he has the financial resources to remain in the race for as long as he wants. “The key is the Fab Four on the centre-left: Biden, Bloomberg, Buttigieg and Klobuchar. If all four stay in, say hello to Bernie Sanders as the Democratic nominee,” said Charlie Cook, a political analyst. “Even Bloomberg, for all of his resources, can’t stop Sanders if Bernie is pulling 40 per cent or more of the delegates and the rest splintered.” In another hurdle for Mr Biden, Californians have been casting early votes for a month, so he may not @Businessdayng

receive a big boost from his South Carolina success. But he is polling better in Texas, which on Tuesday awards 228 of the 1,991 delegates needed to win the nomination. Pete Buttigieg, the former South Bend mayor, did poorly in South Carolina due to low support from black voters, raising questions about his campaign. Amy Klobuchar, the moderate Minnesota senator, came sixth. Mr Sanders has also benefited from Elizabeth Warren, his fellow progressive, failing to win any delegates since Iowa. But the Massachusetts senator raised a lot of cash after she pummelled Mr Bloomberg in the Nevada debate, giving her the resources to continue for a while. She is polling better in California and Texas, and is hoping to win her home state on Tuesday. While Mr Biden had a spring in his step on Saturday, he faces pressure to inject more vitality into his campaign. In an interview before the primary, Mr Clyburn told the Financial Times he was frustrated by the lack of energy, which he blamed on Mr Biden focusing on Mr Trump instead of his rivals. “I think that was a tremendous mistake”.

Monday 02 March 2020

BUSINESS DAY

FINANCIAL TIMES

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How the coronavirus shattered market complacency Shrugging off risks at the start of the year has proven costly Robin Wigglesworth, Katie Martin and Tommy Stubbington

he past week was a wake-up call for investors who had assumed the smooth ascent of global stock markets would stretch into 2020. The resolution of at least some tensions over global trade between the US and China at the end of last year had set expectations for a decent, if unspectacular year of global economic performance and stock market returns — supported by easy monetary policy. Even a flare-up in geopolitical stress with Iran in January had failed to dent prices for long. Warnings over the potential spread of the coronavirus last month had generated only mild pullbacks. But last weekend, when Italy quarantined 10 towns in an effort to limit a breakout there, many traders started to consider for the first time that a heavy market sell-off could be just around the corner. “When it was mostly in Wuhan and China, there was a hope that it could be contained,” said one senior bond trader. “But over the weekend everyone was talking to each other about it, and everyone knew the market opening on Monday would be grim.” So it proved. Global equities slumped by nearly 3 per cent on Monday, government bond yields shuddered lower and the price of gold rushed higher as

A medical worker outside Molinette hospital in Turin on Thursday. When Italy quarantined 10 towns in an effort to limit a breakout there,

investors belatedly scrambled for safety. Unusually, declines continued every day. Over the week, the FTSE AllWorld lost almost 13 per cent, wiping out six months of gains, and lopping nearly $6tn off the value of global equities. In nominal dollar terms, that makes the last week the worst for stock market wealth destruction ever recorded. The Nasdaq lost $4.6tn in the entire post-dotcom bubble collapse in 2000-02. The flipside was a mighty rally in haven assets. The US government bond market — investors’ favoured retreat at times of distress — saw the yield of both 10year and 30-year US government debt hit record lows.

James Athey, a fund manager at Aberdeen Standard Investments, said the scale of the shake-out reflects both the severity of the virus’s economic impact and the lavish valuations that had become commonplace in key stock markets. Since January, he had been loading up on safer government bonds, fearing that equity markets were locked in a “mad utopian vision” of uninterrupted economic growth and low interest rates, and ignoring the dangers that the coronavirus posed. “Central banks have created this world. It had become a market where there was too much pointing in the same direction,” he said. “Everyone has had the

same trades on, and they are all wrong.” Luca Paolini, chief strategist at Pictet Asset Management, said equities were “finally reflecting a more realistic probability of global recession”, adding: “The risk of an outbreak of the virus in the US was a game-changer because US stocks are so massively overbought and very expensive.” Some investors had predicted the sell-off. Peter Oppenheimer, Goldman Sachs’ chief global equity strategist, had last week warned that the combination of stretched valuations and the impact of the coronavirus meant that a “near-term correction is looking much more probable”, and spent much of this week on

the phone with skittish clients. On Wednesday, Mr Oppenheimer told the Financial Times that the sell-off could deepen as investors grappled with the potential implications of the coronavirus spreading even further. “This is a disruption, and unlikely to derail the underlying trend of growth. But markets could easily overshoot, and start pricing in a far worse scenario,” he said. Throughout the week, analysts ripped up their forecasts and started pencilling in gloomier predictions for global economic growth and corporate profits. By Friday, 31 of 36 economists polled by Bloomberg had cut their forecasts for 2020, for an average global growth prediction of 2.8 per cent. That would be the most sluggish pace since the financial crisis. China’s growth rate is expected to fall to 5.5 per cent, the most sluggish pace since 1990, according to Bank of America. As a result, traders are now heaping pressure on central banks to ride to the rescue again. Fed funds futures — a kind of derivative used to bet on US interest rates — imply that the Federal Reserve is now expected to trim rates next month. Indeed, it indicates that traders think there is a chance of a larger-than-usual cut of half a percentage point. However, Mr Oppenheimer frets this may not be enough to assuage investors. “Markets are almost forcing the Fed’s hand, but I’m not sure it will help, as it’s now being priced in,” he said.

Billionaire Chris Hohn threatens to sue coal-financing banks TCI fund chief tells Barclays, HSBC and Standard Chartered to phase out loans for fossil-fuel projects Leslie Hook and Chris Flood

arclays, HSBC and Standard Chartered could all face a legal challenge from the charity co-founded by billionaire hedge fund manager Christopher Hohn, who has promised to take action if the three banks do not stop lending money to coal-mining companies. Sir Christopher, founder of $28bn activist hedge fund company TCI, has written to the chairmen of Barclays, HSBC and Standard Chartered urging them to phase out financing for fossil fuels such as coal. “Banks must stop the financing of new coal projects as a matter of urgency,” said Sir Christopher, who wrote the letters in his capacity as co-founder of the Children’s Investment Fund Foundation.

Barclays, Standard Chartered and HSBC have together provided $23.9bn in financing since 2017 to enable the expansion of coal power, according to a report from BankTrack, a Dutch charity. The letters ask the three banks to publicly disclose their coal loan exposures and to reevaluate the risks of financing fossil-fuels projects. “Coal loans are high risk and likely to become non-performing,” said Sir Christopher, whose charity CIFF provides donations of $150m to climate groups each year, drawing an analogy to the subprime mortgages that sparked the financial crisis. TCI does not own any shares in Barclays, HSBC or Standard Chartered so it is unclear whether Sir Christopher’s letters will have any influence on the banks’

coal policies. But in an exclusive interview on Friday with the Financial Times, Sir Christopher also revealed that he was prepared to mount legal challenges against the boards of the three banks for neglecting their fiduciary duty to their shareholders by continuing to participate in risky coal-lending activities. “Failing to phase out coal financing exposes banks to an increasing risk of economic loss, reputational harm and litigation. Chairmen and boards of directors could be sued for breaching their fiduciary duty. My reputation as an activist is well known and we are able to fund litigation,” said Sir Christopher. Standard Chartered said it had already disclosed its coal exposure that stood at $302m. “We will transition our clients away from thermal coal by 2030,”

said Standard Chartered. Barclays said it would “continue to discuss our efforts to help tackle climate change with stakeholders”. HSBC did not respond to a request for comment. The Bank of England, European Central Bank and Network for Greening the Financial System (NGFS), an association of regulators that includes China’s central bank, have also received letters from Sir Christopher asking them to instruct commercial banks to increase the risk weighting of coal loans. This would require commercial banks to set aside significantly more capital to offset potential defaults and would make all coal loans uneconomic. “Regulators cannot allow banks to hide coal loans and the totally unrealistic risk weightings being used. Using a 250 per cent

risk weighting would make new and existing coal loans uneconomic,” said Sir Christopher. Mark Carney and Christine Lagarde have urged companies and central banks to speed up climate risk assessment and disclosure. Mr Carney, governor of the Bank of England, said at an event in London last week that the voluntary reporting standards agreed by the Task Force on Climate-Related Financial Disclosures should become a mandatory requirement for companies. Ms Lagarde president of the European Central Bank, noted that only five of 26 biggest eurozone banks provided even partial information about the climate change risks arising from their financial activities. “None of them provide full disclosure,” said Ms Lagarde.

53 BUSINESS DAY

Monday 02 March 2020

ANALYSIS

Ukraine: Rudy Giuliani, the rabbi and Trump’s impeachment The president’s lawyer backed a scheme to resettle refugees from eastern Ukraine. But cash is drying up after fallout from the case Joshua Chaffin and Roman Olearchyk

he rabbi gazes out of the window at a half-finished worksite, drums his fingers against his desk, and then bursts into song. “If I were a rich man!” he sings in a deep baritone fit for a grand synagogue — or the Broadway stage. “Ya-da Dee-dee Ya-da Dee-dee Da-da-dumb! I’d build a big tall house . . . Right in the middle of a . . . field!” The site, in a 15-acre pasture about an hour’s drive from Kyiv, is where Moshe Reuven Azman, one of Ukraine’s most prominent rabbis, has been building his dream: Anatevka, a modern village built to house Jewish refugees displaced by fighting in the eastern part of the country between government forces and Russia-backed separatists. Anatevka has come a long way in five years. It features a school, a dormitory, apartments for about 150 residents, a rustic synagogue built from pine logs, a woodworking shop, a football pitch and a nearly-completed rehabilitation centre for the infirm. Yellow American school buses, donated from Brooklyn, are parked on the grounds. Mr Azman, the chief rabbi for Kyiv — and possibly Ukraine, depending on who you ask — borrowed Anatevka’s name from the nearby shtetl, or village, depicted a century ago by Yiddish writer Sholem Aleichem in his stories about the trials of Tevye, a Jewish dairyman in the Pale of Settlement in imperial Russia. These were the basis for the musical Fiddler on the Roof. The Ukrainian village, Hnativka, is just across the road. “It’s my dream! We are in a dream!” Rabbi Azman says, showing off the half-finished Anatevka, which features a logo borrowed from Fiddler on the Roof. But the dream of Anatevka has lately turned into a nightmare, thanks to Rabbi Azman’s close ties to Rudy Giuliani and what he calls “the American scandal”. That is, the recent US presidential impeachment proceedings in which Mr Giuliani — in his capacity as President Donald Trump’s personal lawyer — was shown to be criss-crossing Ukraine in search of possible evidence of corruption involving his boss’s political rival, former US vice-president Joe Biden. Mr Giuliani has not faced any charges but has drawn intense scrutiny for conduct that Democratic lawmakers argue was part of a plan to improperly leverage US foreign policy to benefit the

president’s political fortunes. The 53-year-old rabbi met Mr Giuliani years earlier, on his first visit to Ukraine. He later made him Anatevka’s honorary mayor, even presenting him with a symbolic key the size of a tennis racket. The two Soviet émigrés, Lev Parnas and Igor Fruman, who served as Mr Giuliani’s fixers in Ukraine — and have since been indicted on US campaign finance violations — are listed as board members for the American Friends of Anatevka charity. Its registered address is an accountant’s storefront in Brooklyn. Their familiarity with the rabbi was captured in a video that emerged at the height of the impeachment saga and has since gone viral. It shows Mr Giuliani and his friends in the lobby of the Trump International Hotel in Washington, DC, in 2018. Mr Fruman, holding out a phone, urges Mr Giuliani, to wish his friend “Moshe” a happy birthday. “Moshe, how are ya, baby?” Mr Giuliani asks in his Brooklyn twang. Then, last May, when Mr Giuliani was pushing — unsuccessfully — for a meeting with Volodymyr Zelensky, Ukraine’s newly elected president, he met Rabbi Azman for two hours in Paris. Mr Azman insists the men enjoy a genuine friendship, and suggests that he courted Mr Giuliani because he thought it would boost fundraising. But, even with fresh donations of $1.5m — that the rabbi touted on Facebook — the flow of cash he has relied on to build Anatevka

has been constrained as wealthy philanthropists, particularly in the US, have become more fearful of being drawn into the controversy. “They’re afraid,” Rabbi Azman complains. “If you have a big company — it doesn’t matter if you’re a Democrat or a Republican — you don’t want to be involved in scandal.” To some degree, the rabbi believes he is also being punished for his unabashed support for Mr Trump. “There were no presidents who helped and loved Israel as Donald Trump does,” he told an Israeli publication in August. “I pray for him every Saturday.” The Anatevka saga is a reminder of the powerful but fraught role that a handful of rabbis have come to play in Ukraine, a place that was one of the bloodiest killing fields of the Holocaust but is now undergoing a Jewish revival. Its territory boasts some 5,000 mass graves from the second world war. One is Babyn Yar, a ravine in Kyiv where some 34,000 Jews were massacred by the Nazis and their local helpers in just two days in September 1941 in one of the most horrific events of the so-called “Holocaust of bullets”. Later, the Nazis would switch to the gas chamber, a more industrial method of murder. Improbably, Jewish life has returned to Ukraine, with thriving communities boasting tens of thousands of members in cities such as Kyiv, the capital, and the central city of Dnipro. The country is also the only one outside

Israel that has briefly boasted both a Jewish head of state and a Jewish head of government after Mr Zelensky, a comic and actor, was last year elected president with 73 per cent support while Volodymyr Groysman was prime minister. “I think God wanted a laugh!” Rabbi Azman quips. The community has been rebuilt, in part, with the largesse of a select group of Jewish businessmen, or oligarchs, who took control of Ukraine’s industry after the collapse of the Soviet Union. Their patronage and political connections have aided the work of rabbis such as Mr Azman but also present risks in a country caught up in a swirl of political intrigue with a reputation for corruption and money laundering. A chief donor to Menorah, a stunning Jewish cultural and community centre in Dnipro that is one of the world’s largest, is Igor Kolomoisky, an oligarch whose PrivatBank was taken over by the state in 2016 after regulators found a $5.5bn hole in its balance sheet. Mr Kolomoisky and his aides have denied wrongdoing. Nonetheless, this complicates life for a rabbi in search of funding. “A rabbi who needs to fundraise is a little bit [of a] zombie,” says one Jewish official in Ukraine who, like others, describes Rabbi Azman as bighearted and charismatic but also a bit naive. Further confusing matters, the community itself is riven with factions and rivalries and sometimes competing interests, according to a longtime observer

of Ukrainian politics. “What you have to understand about the Ukrainian Jewish community is [that the power struggles within it] are vicious,” this person says. “You have five different people at any time claiming to speak for the community.” Rabbi Azman has a playful manner that belies the hardship of his youth. He grew up in the Soviet Union and studied Torah at an underground religious school whose older members at first suspected he might be a KGB informant. That experience makes him scoff at speculation that he might somehow harbour sympathy for Russia’s authoritarian government or be serving as a go-between for the Trump administration. He left Leningrad for Israel in 1987 and then spent time in Toronto before moving to Kyiv in 1995. One of his greatest achievements was the reconstruction of the historic Brodsky Synagogue in the city centre. It was shut down by the Soviets in 1926, ransacked by the Nazis and then turned into a puppet theatre until it was reborn as a synagogue in 2000. Much of the funding came from Vadim Rabinovich, an oligarch with political ambitions who hosted Mr Giuliani’s first trip to Ukraine in 2003. During that visit, Mr Giuliani commemorated a Kyiv memorial to terrorism victims, sponsored by Mr Rabinovich, who had built strong links to New York’s Orthodox Jewish community Continues on page 54

Monday 02 March 2020

BUSINESS DAY

NATIONAL NEWS

Italy unveils €3.6bn stimulus to tackle coronavirus

Global leaders weigh up ways to ease supply disruptions while containing outbreak Davide Ghiglione

taly will inject €3.6bn into its economy to mitigate the impact of the largest outbreak of coronavirus in Europe as policymakers around the world consider the consequences of transport and supply disruptions resulting from efforts to contain the disease. Roberto Gualtieri, Italy’s economy minister, said on Sunday the government would introduce tax credits for companies that reported a 25 per cent drop in revenues, as well as tax cuts and extra cash for the health system. The package will amount to 0.2 per cent of GDP, he told La Repubblica, and would come in addition to €900m worth of measures unveiled on Friday for the most severely hit regions. Rome will simultaneously seek authorisation from Brussels to increase the budget deficit for this year, the Treasury said over the weekend. The eurozone’s third-largest economy, which was on the brink of recession before the disease, needs “shock therapy”, said Giuseppe Conte, Italy’s prime minister, on Sunday in an interview with il Fatto Quotidiano newspaper. The move comes as investors and policymakers anticipate more harm to the global economy than previously thought. Global markets shed four-months of gains last week over concerns the response to the spread of the new disease

will hit economic activity and companies profit more heavily than initially anticipated. Data released on Saturday showed that China’s manufacturing sector suffered the steepest decline in activity on record in February, leading some economists to warn that the country could report an economic contraction in the second quarter. Official figures suggest that the virus, also known as Covid-19, is now spreading faster outside China, where it originated. Beijing reported 573 new confirmed cases and 35 deaths on Sunday, bringing the total number of confirmed cases on the mainland to 79,824. On Friday, Federal Reserve

chair Jay Powell signalled that the US central bank was considering cutting interest rates in response to the “evolving risks” to the US economy posed by the spread of coronavirus. South Korea, which with 3,736 cases has suffered the largest outbreak outside China, has also announced new stimulus measures to help buffer the fallout for Asia’s fourth-biggest economy after a series of stoppages at the country’s factories prompted concerns over damage to the global technology supply chain. The death toll in the country rose to 18 on Sunday and authorities reported that a 45-day-old infant was among the new infections, South Ko-

rea’s youngest case. With more than 1,100 confirmed cases and 29 dead, Italy is home to one of the largest coronavirus outbreak outside Asia. The country has placed 11 towns — and their 50,000 residents — under lockdown in the wealthy north until the end of next week, closed schools and universities, and cancelled football matches and fashion shows. France has become the second-hardest hit country in Europe with 100 cases and two deaths recorded. After a cabinet meeting on Saturday, the government banned all indoor gatherings of more than 5,000 people and outdoor meetings. The Paris half marathon and

the last day of Paris agricultural fair were both halted. Meanwhile in Berlin, finance Minister Olaf Scholz said on Sunday that the German government had the financial firepower to fund an economic stimulus programme should it become necessary. The country confirmed 76 cases in nine different states. Four out of five infections were mild or come even totally without symptoms, the health minister said. Iran which has recorded the highest death toll due to coronavirus, said at the weekend that casualties had risen to 54, from 43 on Friday. This is out of a total of 978 cases officially reported — a figure that increased from 593.

Ukraine: Rudy Giuliani, the rabbi and Trump’s impeachment town of Shpola. “I didn’t know what to do with them — it was during his two terms as mayor the middle of the forest,” Rabbi of the city visited the synagogue. Azman says. He wanted something more “He was young and I was young,” Rabbi Azman says, “I permanent. Searching on the internet, he found an empty blessed him.” He declined to say much parcel of land that happened more about the relationship, but to be near the actual shtetl that adds that visitors across the po- inspired Sholem Aleichem. It litical spectrum have paid their also featured a destroyed Jewish respects at Brodsky, including cemetery, whose gravestones Chelsea Clinton, the daughter had been used as building maof the former US president. A terials in a nearby town, and thank-you note she penned to a tomb to a renowned Hasidic Rabbi Azman is one of several rabbi, the Chornobyl tzadik. “I’d renovated the [Brodsky] framed on his wall. The Anatevka project began in temple but I’d never built from 2014 as the fighting tore through scratch before,” Rabbi Azman eastern Ukraine, a region with says. “I gave the downpayment about 20,000 Jews. Many fled the to the contractor and I said: violence. “One day the rabbi in ‘Build!’ And I prayed.” First came a dormitory, and [the city of ] Lugansk called me and said: a few buses are com- then a school and eventualing to you’,” Rabbi Azman recalls. ly a synagogue, whose Torah He managed to resettle some crowns — a decorative piece in Israel and others in Kyiv. A that adorns the scroll — were further 300, were housed at a provided by Marcy Kaptur, an Jewish summer camp in the Ohio Congresswoman. “She’s a Continued from page 53

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Democrat!” the rabbi jokes. “I checked!” He declined to discuss Anatevka’s financials or disclose its donors — except to say it had been easy before the scandal to find people to support the cause of Ukrainian refugees. One benefactor was Mr Fruman, whose name graces a plaque outside one of Anatevka’s buildings. Before becoming caught up in the impeachment scandal, he was regarded in Ukraine as a businessman of moderate prominence — the owner of a car dealership and the Buddha Bar, a Kyiv club. Some suggest that Rabbi Azman may have viewed Mr Fruman, who also lived in Florida, as a way to raise money in America — while for Mr Fruman, his association with the rabbi was another means to try to enhance his business and political connections. Whatever the source of Anatevka’s funding, it appears to have been put to good use. On

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a recent afternoon, dozens of students filed in and out of bright and well-equipped classrooms, each decorated in a different theme — nature, Great Britain and so forth. “I found it on Ukrainian Monster.com,” says Noah Lloyd, a former Peace Corps member from Los Angeles, who took a job at Anatevka in September teaching English. Far from shunning Anatevka, some non-Jews in the surrounding area have sent their children to its school, according to the rabbi. Stepping outside, the rabbi points out a half-built music school and the foundations that have been poured for three additional apartment buildings. “This will be an orphanage,” he declares, amid a whirring of buzz-saws, adding: “I’d like to buy all the land around here . . . If I were a rich man!” The plan is for Anatevka to one day become self-sufficient as a tourism destination and pro@Businessdayng

ducer of artisanal crafts. Its wood shop is manned by two craftsmen who in 2014 fled the shelling in eastern Ukraine. “It’s hard to understand how frightening it is,” Sergey Yarelchenko, 56, recalls, explaining how his religious faith has been rekindled since he arrived in Anatevka — and how he had no intention of going back. In addition to working on Anatevka’s synagogue, Mr Yarelchenko also helped turn out the oversized “key to the city” that Rabbi Azman presented to Mr Giuliani. “We didn’t know that we’d be making the key that led to an international scandal,” his colleague, Slava, 52, adds with a smile. Rabbi Azman says the recent fundraising will only help to cover school costs for the next year. Then he declares: “We need to finish Anatevka . . . We need millions of dollars. We have to build!” For now Anatevkans will have to do so with their rabbi — but no mayor.

BD Money

Monday 02 March 2020

BUSINESS DAY

MARKET

PERSONAL FINANCE

Cover Story

ECONOMY

CBN mops up N480bn via OMO as investors rush long tenor bill

Coronavirus is likely to affect price of these items

Nigeria economic outlook threatened by coronavirus outbreak

Investors interests for higher yield was elevated on Thursday as they rush the longer tenor Open Market Operation (OMO) bill at an attractive stop rate of 13 percent.

As Nigerians adopt preventive measures against the contagious Coronavirus following a confirmed case in Lagos, Nigeria’s commercial hub the demand and price of some items are likely to hit the roof, checks by BusinessDay shows.

Here’s why your next of kin should know about all your financial assets With the sporadic increase in Unclaimed Dividend as well as the mounting deposits of deceased persons, it has become pertinent that investors, account holders and savers...

The dramatic and fast-moving consequences of the coronavirus COVID-19 outbreak threaten an otherwise resilient outlook for Nigeria’s economy, following GDP results for Q4 showing an expansion of 2.55 percent

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Monday 02 March 2020

BUSINESS DAY

Markets CBN mops up N480bn via OMO as investors rush long tenor bill HOPE MOSES-ASHIKE

nvestors interests for higher yield was elevated on Thursday as they rush the longer tenor Open Market Operation (OMO) bill at an attractive stop rate of 13 percent. The Central Bank of Nigeria (CBN) offered N400 billion to investors who participated in the OMO auction on Thursday but sold a total of N480 billion. “OMO investors interest has always been skewed towards the longest duration that offers the most attractive yield,” Akintunde Olusegun, financial market analyst at Polaris Bank Limited, said. He told BusinessDay that the lure to lock in for one year at an attractive yield accounts for the interest in 362-days OMO bill. A breakdown of the OMO auction result show that the CBN offered N350 billion for the 362-day tenor instrument but sold a total of N476.42 billion at 13 percent, after investors demanded between 12.7 percent and 13 percent stop rate. The offer which matures February 23, 2021, was oversubscribed to the tune of N534.92 billion. Investors could only subscribe N1.36 billion out of N30 billion offered for the short term (180-day tenor) bill at a demand rate of 11.56 percent. However, the CBN sold only N0.47 billion out of the total offer, which matures on August 25 2020, at the demanded stop rate. The short term bill 89-day tenor was undersubscribed to the tune of N8.95 billion at a bid rate of 11.44 percent for a N20 billion OMO instrument. The Apex bank sold a total of N3.11 billion at the demanded stop rate. The offer is expected to mature on May 26, 2020. The during the week that just ended, OMO maturities worth N927.75 billion and Treasury bill maturities worth N104.12 billion hit the market, which surpassed the outflows from OMO bills auction worth N480 billion and NT-bills auction worth

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We expect the money market rates to cool off next week,” analysts at FSDH said. Overnight rate increased by 13.92 basis points to close at 16.42 percent on Friday as against 2.50 percent on Thursday

N104.12 billion. “We expect the money market rates to cool off next week,” analysts at FSDH said. Overnight rate increased by 13.92 basis points to close at 16.42 percent on Friday as against 2.50 percent on Thursday. Also, the Open-Buy-Back (OBB) rate also increased by 13.50 basis points to close at 15.50 percent on the same day from 2.00 percent on the previous day. In spite of the liquidity glut, the money market rates increased significantly on Friday by an average of 1371 basis points due to funding provision for retail foreign exchange debt estimated at N270 billion. In the OMO market, Guy Czartoryski, head, research Coronation Asset Management said the first key test of 2020 has been passed, namely US$1.71 billion of Foreign Portfolio Investment entered via the Nigerian Autonomous Foreign Exchange Fixing

(NAFEX) market in January, almost certainly destined for the OMO market A substantial part of the CBN’s FX reserves can be attributed to the FPI hence, the need to maintain foreign interest in the OMO market in 2020. He said the next test is February. Does FPI continue to enter the OMO market in spite of oil prices (Brent) at US$54.00/bbl and concerns over the global spread of the coronavirus? Czartoryski quarried. Nigeria’s external reserves have declined to $36.32 billion as at February 27, 2020 from $40.0 billion in July 2019, data from the CBN revealed. OMO yields of Africa’s largest economy look comparable to risk-free yields of local currencies in other markets, notably Ghana and Egypt when it comes to competing for global local-currency capital flows, Czartoryski said.

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

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@Businessdayng

Monday 02 March 2020

BUSINESS DAY

Personal Finance

Coronavirus is likely to affect price of these items ENDURANCE OKAFOR

s Nigerians adopt preventive measures against the contagious Coronavirus following a confirmed case in Lagos, Nigeria’s commercial hub the demand and price of some items are likely to hit the roof, checks by BusinessDay shows. The most populous nation in Africa became the first country in the sub-Saharan region to report a case of Coronavirus after an Italian tested positive on Thursday. The Italian citizen who works in Nigeria returned to the country on February 25 from Milan, Italy but fell ill a day after his arrival and was transferred to Lagos State Biosecurity Facilities for isolation and testing. The Virology Laboratory of the Lagos University Teaching Hospital confirmed that Nigeria’s most populous city now has COVID-19 after the foreigner was confirmed to have had the virus. Akin Abayomi, commissioner for health, Lagos State has however assured that the state government have been strengthening measures to ensure that any outbreak in Lagos is controlled and contained quickly in collaboration with the multi-sectoral Coronavirus Preparedness Group, led by the Nigeria Centre for Disease Control (NCDC). “We have immediately activated the State Emergency Operations Centre to respond to this case and implement firm control measures,” Abayomi said while responding to the case. To prevent the deadly virus which has symptoms like a low-grade fever, cough, fatigue, headaches and, less frequently, diarrhoea health experts have advised the use of some items and as such, the price of the products are likely to witness a surge due to increase in demand. Hand-washing soaps and gloves In the absence of a cure, the best way to prevent transmission of the novel coronavirus is thorough washing of hands with soap and water, according to

the Centers for Disease Control and Prevention. “Wash your hands often with soap and water for at least 20 seconds, especially after touching surfaces, shaking hands with people, going to the bathroom; before eating; and after blowing your nose, coughing, or sneezing,” Alero Robert, Lagosbased public health consultant. The price of antibacterial soaps and other hand washing products are projected to increase as the regular washing of hands to prevent the spread of the virus will lead to an increase in demand for the products. Hand sanitizers Health experts have recommended the regular usage of hand sanitizer as a preventive measure against the virus. According to the experts, if a person touches surfaces like doorknobs, car or bus handle, elevator buttons and other surfaces that have been contaminated www.businessday.ng

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Wash your hands often with soap and water for at least 20 seconds, especially after touching surfaces, shaking hands with people, going to the bathroom; before eating; and after blowing your nose, coughing, or sneezing

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with the virus and such a person uses the same hand to touch his/her eyes, nose or mouth, without sanitizing it, such a person can become infected. The demand for the hygienic product is expected to, therefore, increase as Nigerians are taking position to ensure they don’t fall victim of the virus. “All our hand sanitizers were bought by about 20 people this morning. The people that did not get placed orders for it. For now, we are not sure if we will be able to restock by Monday as the demand is high,” Tomisi Akinyemi, a pharmacist at HealthPlus Limited, Ikeja said. Medical mask If worn correctly, the medical mask can serve as a preventive measure for Coronavirus, health experts have said. As a result, the price of the product will likely increase due to the expected surge in demand. A week after the outbreak of Coronavirus in China, the medical mask became scarce as the country’s citizen went out in their numbers to buy the product. China is the world’s largest producer of the medical mask, with a reported daily capacity of 20 million pieces, but by the estimate of its manufacturers, domestic demand alone has been around 50 to 60 million per day. Industry sources have recommended that one medical mask should be used for at most one day but in a situation where masks are feeling gross, it should be replaced and disposed of. Other Diverse products like, health personnel protective equipment, hand-held infrared thermometer, among others, to help check the virus. With the confirmed case, Nigeria became the third country in Africa to record the virus after Egypt and Algeria. The first Coronavirus case reported in Nigeria brings the number of people infected globally to about 84,000 and according to the National Health Commission report on Friday; at least 44 new coronavirus deaths have been recorded in China, the source of the virus, bringing it to 2,788 fatalities nationwide. Coronavirus has killed more than 2,800 people worldwide. @Businessdayng

Monday 02 March 2020

BUSINESS DAY

Monday 02 March 2020

BUSINESS DAY

Economy

Cover Story Nigeria economic outlook threatened by coronavirus outbreak

T Here’s why your next of kin should know about all your financial assets MICHAEL ANI

ith the sporadic increase in Unclaimed Dividend as well as the mounting deposits of deceased persons, it has become pertinent that investors, account holders and savers, are better enlightened on the benefits of fully disclosing their wealth and financial assets to their loved ones and/or next of kins. The benefit of this cannot be overemphasized as it aids the continuous transmission of wealth from generation to generation. A next of kin refers to a person’s closest living blood relative. The next-of-kin relationship is important in determining inheritance rights if a person dies without a will and has no spouse and/or children. Nobody on earth prays for death to happen prematurely, but it is a sure thing for everyone and investors should be better oriented to draw up their will and/or provide updated information’s of their next of kin, who would claim their assets when they are no more. But disclosing of financial assets and

wealth has not been the case for most Nigerians evident in the high unclaimed dividend by shareholders who invested monies in equities. There are also those who saved on various platforms to yield returns and when they are gone, their families and relatives are unaware of the huge investment they had sitting dormant. Many of these investors are not properly acquitted of the importance of not just providing the right information’s of whosoever they want to take hold of their monies and monies worth when they are gone, but also letting their loved ones know the amount of investment and the number of asset classes in which they are has Investment analysts have decried the huge pile of unclaimed dividend sitting in the coffers of the Securities and Exchange Commission; and despite the introduction of e-dividend and the recently introduced Integrated Shares Finder (ISF) as a financial advisory product built to help investors locate their missing shares, the numbers are still very high. Latest numbers from SEC shows that unclaimed dividends in December 2019 stood at N130billion, up from N103.1 billion in December 2016. www.businessday.ng

According to SEC regulations, dividends are declared every year and investors whose companies declared profits have up until 15 months to claim such dividends from registrars else would be returned to the public company. But many shareholders are not aware of the true status of their shareholding in many companies listed on the exchanges. On one hand, the reason for this could

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Nobody on earth prays for death to happen prematurely, but it is a sure thing for everyone and investors should be better oriented to draw up their will and/or provide updated information’s of their next of kin, who would claim their assets when they are no more

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be as a result of the fact that the investor of the shareholder might not be alive to claim these dividends and their families are not even aware of their investments to get them traced, according to Johnson Chukwu, managing director and chief executive officer at investment firm, Cowry Asset Management LTD. On the other hand, many of them don’t know the location of their shares, the number of their holdings, value of the shares; benefit accrued in terms of unclaimed dividend or bonus shares.” “The registrars don’t have direct interface with shareholders as they deal directly with stockbrokers,” Chukwu said. In a paper titled “Service with integrity – a promise that must be kept,” delivered by Segun Ajibola, Professor of Economics, Babcock University and immediate past President, Chartered Institute of Bankers of Nigeria (CIRBN), he decried the mounting deposits of deceased persons sitting with commercial banks. Ajibola noted that many of owners of these accounts are no longer alive and their next of kin are not even aware the account holder has such an amount. He said to tackle such issues, financial regulators and operators should force account holders to update the information of their next of kin at least three months. This he said would enable banks to have current details of the account holder in the wake of phone theft, lost documents and many others.

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he dramatic and fast-moving consequences of the coronavirus COVID-19 outbreak threaten an otherwise resilient outlook for Nigeria’s economy, following GDP results for Q4 showing an expansion of 2.55 percent. The growth was the highest seen since 2015 and above the International Monetary Fund’s (IMF) 2.1 percent forecast. The economy is supported by the Central Bank of Nigeria’s (CBN) policies to boost credit growth like hiking the loan-to-deposit ratio and other monetary policy tools. On top of that, Oil production increased to two million barrels per day amid recovering global Oil prices versus 1.0 million bpd in Q3. However, since then, risks to the economy have multiplied. Like many other economies at the time of writing, Nigeria is vulnerable to the spread of the COVID-19 virus in economic and health terms because one of its main trading partners is the epidemic’s epicenter China. For the time being, the sizable manufacturing sector in China has been slowed by large-scale workforce disruptions and it is expected that GDP growth for the quarter will be pressured amid a fall in business confidence.

While it is too early to tell the precise extent of the slowdown, the impact on the supply chain and trading with China’s trading partners is already evident. Nigeria’s crude Oil exports to China fell in February amid weaker Oil prices as the outlook for global Oil demand weakens. Nigeria’s Q1 GDP remains exposed to external uncertainties in the form of weaker

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Oil prices, the coronavirus COVID-10 outbreak, slowing growth in China and the global economy. Focusing on the global coronavirus outbreak, so far there are over 83,000 confirmed cases with over 2800 deaths. The World Health Organisation (WHO) has identified Nigeria as one of its top 13 priority countries because of the direct links and travel volume to-and-from China. It is positive that Nigeria’s authorities are taking measures to stop the virus spreading, but the risks remain. Since the onset of the virus outbreak early in the year, Oil prices have slipped over 15 percent amid demand-side concerns, the USD has appreciated against G10 and emerging market currencies against a background of risk aversion and Gold has jumped to fresh seven-year highs. If it continues to spread, the virus outbreak and subsequent slump in demand from China present major risks to the Nigerian economy. Crude Oil revenues account for less than 10 percent of GDP but remain the biggest source of foreign exchange for the nation, 90 percent of export sales over 50 percent of government revenues. Falling Oil prices would reduce foreign exchange reserves and ultimately complicate the CBN’s efforts to defend the Naira,

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meaning potentially heightened pressures on inflation and consumption with an eventual impact on growth. Lower Oil prices also impact the 2020 budget which was based on 2.18 million bpd at an Oil price benchmark of $57 per barrel. Moreover, China is one of Nigeria’s biggest trading partners with total trade flows in Q3 2019 worth over $3.2 billion. It is important for the economy for the virus outbreak to be brought under control because if trade flows decline on the back of slowing growth in China, the impacts are likely to be felt in Nigeria. The situation may prompt a greater focus on monetary and fiscal policy to shield the economy from external risks. The CBN meet in March but the economy remains under inflationary pressure so it is unlikely we’ll see an interest rate cut. Instead, the central bank may implement more unconventional tools to stimulate the economy. Finally, it is even more clear that diversification is the key to reducing Nigeria’s reliance on Oil revenues and reducing the risks to growth. On the upside, there is still a possibility that the virus outbreak will be brought under control, meaning a return to full power for China and Asia and a relief to health authorities and policy makers in Nigeria and other countries.

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Monday 02 March 2020

BUSINESS DAY

Companies

Here’s how global companies are reacting amid Coronavirus spread OLUFIKAYO OWOEYE

n December 2019, the World Health Organisation’s (WHO) China office heard the first reports of a previously unknown virus. It had triggered a number of pneumonia cases in Wuhan, the capital of Hubei province in Central China, with a population of over 11 million. The virus, which has been renamed Coronavirus Disease 2019 or COVID-19 (it was formerly known as the 2019-nCoV acute respiratory disease) by the WHO, has infected 76,936 people in mainland China, with further 2,051 cases reported from 30 other countries. On Thursday, 27th February, the virus’ index case was reported in Nigeria, the victim, an Italian citizen who works in Nigeria and returned from Milan, Italy to Lagos, Nigeria. The virus has continued to reduce economic activities in affected regions, deepening toils on world economies with the U.S. markets plunging sharply on Thurs-

day, in the worst four-day loss since 2008 financial crisis, also companies are forced to protect their employees from spreading the virus by canceling conferences, and meetups. Tech-giant, Facebook on Thursday canceled its annual F8 developers conference, the biggest annual event for the U.S. tech

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giant, over fears about the possible spread of the novel coronavirus. Nestle, the world’s largest food company, said Thursday it has asked all 291,000 of its employees not to travel internationally for business until the middle of March. “Domestic travel should be replaced by alternative methods of communication where

The virus has continued to reduce economic activities in affected regions, deepening toils on world economies with the U.S. markets plunging sharply on Thursday

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possible,” a company spokesperson added. Consumer goods giant, Unilever said it has been restricting travel to and from northern Italy and other affected countries. Beyond that the guidance is “businesscritical travel only,” a company spokesperson said. PwC is asking employees to defer or cancel trips to Japan and is encouraging them to use the company’s $1,000 annual backup child-care benefit in case of school or daycare closures. Siemens said it “urgently recommends employees to replace nonessential travel to affected regions with phone calls or video conferences, and Coca-Cola said it has asked office workers in China, Singapore, South Korea and Italy to work from home. Restrictions are further pilling pressures on airline top line and the travel industry. According to Global Business Travel Association, the industry faces a monthly hit of more than $46 billion from the coronavirus impact.

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Monday 02 March 2020

BUSINESS DAY

Economy

These Charts show impact of coronavirus

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Monday 02 March 2020

BUSINESS DAY

Market Wrap-up Here’s how the market performed last week

total turnover of 1.547 billion shares worth N24.263 billion in 21,646 deals were traded last week by investors on the floor of the Exchange, in contrast to a total of 1.499 billion shares valued at N17.907 billion that exchanged hands last week in 18,515 deals. The Financial Services industry (measured by volume) led the activity chart with 1.267 billion shares valued at N17.205 billion traded in 15,149 deals; thus contributing 81.91% and 70.91% to the total equity turnover volume and value respectively. The Conglomerates followed with 84.990 million shares worth N180.885

million in 654 deals. The third place was Consumer Goods industry, with a turnover of 65.965 million shares worth N3.918 billion in 2,235 deals. The NSE All-Share Index and Market Capitalization both depreciated by 4.28% to close the week at 26,216.46 and N13.658 trillion respectively. Six equities appreciated in price during the week, lower than twentyfour equities in the previous week. Fifty-eight equities depreciated in price, higher than twenty-eight equities in the previous week, while ninety-nine (99) equities remained unchanged, lower than one hundred and eleven equities recorded in the preceding week.

Chart of the week

WeekAhead Ahead Week

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

The National Bureau of Statistics (NBS) published GDP data, showing that Nigeria’s economic growth momentum remained broadly positive in Q4-2019, as GDP grew by 2.6percent year-on-year as against 2.3percent year-on-year Q3-19, the highest quarterly figure since Q3-2015. For 2019FY, economic activities expanded by 2.3% y/y (vs. 1.2% y/y in 2018FY). While the non-oil sector (2.3%y/y vs. 1.9% y/y in Q3-19) continued to show resilience, the oil sector expanded, albeit at a slower pace of (+6.4% y/y) when compared to the prior quarter (+6.5% y/y). For Q1-20, we project a marginal growth in the oil sector, on account of (1) high base from the corresponding period in the prior year and (2) our expectation of compliance with OPEC’s production allocation to Nigeria. Thus, crude oil production is projected at 2.03mb/d, which translates to a growth estimate of 0.8% y/y. The non-oil sector growth is expected to remain positive, albeit at a slower pace of 2.1% y/y. Overall, we project growth of 2.1% y/y for Q1-2020. EQUITIES Nigerian stocks suffered their biggest weekly loss since April 2019 with investors exiting on increasing regulatory risk in the banking sector, a slump in oil prices, and as the first case of the Coronavirus was reported in the country. Consequently, the benchmark index declined by 4.3% w/w to 26,216.46 points, driven primarily by selloffs in GUARANTY (-14.8%), MTNN (-5.2%) and NB (-16.4%), and bringing the YTD return (-4.3%) deep into negative territory for the first time in 2020. Month-to-date, the market returned -8.1%, the worst monthly loss since January 2016. Analysing the performance by sectors, the Banking (-11.8%), Insurance (-8.2%), Consumer Goods (-3.8%), and Oil & Gas (-2.1%) indices all declined. www.businessday.ng

A total turnover of 1.547 billion shares worth N24.263 billion in 21,646 deals were traded this week by investors on the floor of the Exchange, in contrast to a total of 1.499 billion shares valued at N17.907 billion that exchanged hands last week in 18,515 deals. The Financial Services industry (measured by volume) led the activity chart with 1.267 billion shares valued at N17.205 billion traded in 15,149 deals; thus contributing 81.91 percent and 70.91 percent to the total equity turnover volume and value respectively. The Conglomerates followed with 84.990 million shares worth N180.885 million in 654 deals. The third place was Consumer Goods industry, with a turnover of 65.965 million shares worth N3.918 billion in 2,235 deals.

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Monday 02 March 2020

BUSINESS DAY

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Company IN FOCUS

BUSINESS DAY Monday 02 March 2020 www.businessday.ng

Africa Prudential: 2020 to test resilience as interest income decline slows growth SEGUN ADAMS

frica Prudential plc, a listed share registration and digital technology services provider, in 2019 was looking to beat its previous year profit mark which stood just shy of N2bn. The year however turned out to be exceptionally different for companies in the country with a number of unexpected moves made by the government and regulators which had implications for businesses. One of such moves impacted yields on treasury bills and other money market instruments and weighed on Africa Prudential’s earnings capabilities, the company said in its 2019 full-year earnings report. Africa Prudential specializes in creating client-company registers of shareholders, maintaining the register, dividend and interest payment, issuing of shares and debenture certificates, attending to shareholders enquiries, and handling of scrip and right issues. Asides revenue from contracts with customers, the firm earns income from investment in fixed income instrument which is its biggest revenue segment in fact. This saw the 13 percent decline in interest income, blamed on interest decline, halt two straight years of impressive bottom-line growth for Africa Prudential as it pared profit thus missing a landmark profit level. “2019 was a challenging year in the money and capital market as businesses struggled to deliver positive results due to the drastic reduction in interest rates on treasury bills and other money market instruments,” said Obong Idiong, the Managing Director/CEO of Africa Prudential. The decline in market rates followed moves by the Central Bank of Nigeria (CBN) to restrict participation in OMO market to banks and non-local financial institutions. As a result, there was heavy demand on treasury bills and bonds resulting in yields on short-term bonds crashing from double-digit levels to as low as four percent at some point. However Africa Prudential was “able to increase revenue from contracts through a strategic increase in our retainership fee by 21 percent,” the company said.

Analysis of Africa Prudential financials shows that contracts from Fees from corporate actions declined by 18.54 percent to N333.73mn, Register maintenance fell by 6.53 percent to N201.158mn while other fees rose 28.4 percent to N58.03 million. Other income dropped to more than a fourth to N56.04mn. Credit loss reversal was N245.99mn compared to credit loss expenses of N153.83mn in the year before. There was no impairment on goodwill recorded in the year compared to N98.69mn in 2018. For 2019 however, Africa Prudential noted an increase in both personnel and operating expenses while non-cash expenses apart from amortization rose. As a result, the company’s earnings before interest and tax (EBIT) dipped by 24 percent to N2.49bn. Although profit declined by 13.92 percent to N1.68bn in the year, a dividend of 70 Kobo per 50 Kobo ordinary share was proposed. For the period under review, the company saw its total assets value reduced as a result of a reduction in Cash and Cash equivalent, equity instruments holdings, and trade and other receivables. Returns on Average Assets (ROAA) fell to 8 percent in 2019 from 9 percent in the year before. ROAA measures the profitability of a firm’s assets or how efficient the assets are utilized to return a profit. The company’s performance in the year showed a 5 percent point fall in the company’s Returns on Average Equity (ROAE) to 20 percent meaning Africa Prudential created less income for each naira of stockholders’

equity. However, the company’s asset turnover rose to 5.1x from 4.8x while its Profit Before Tax margin improved to 61 percent from 53 percent, suggesting higher PBT from every unit of income earned. Africa Prudential’s Earnings Before Interest and Tax (EBIT) margin however declined. So far in the year, the company’s shares have gained 17.5 percent to N4.7 per share, outperforming the broader market down 2.33 percent on Friday. Africa Prudential’s dividend yield stands at 14.89 percent while the company has returned 9.1 percent in the last year according to data obtained from Bloomberg on Friday. Company’s Outlook for 2020 Africa Prudential said it remains dedicated to delivering

quality registrar business to its clients whilst slowly transition into digital technology. In 2019, Africa Prudential’s Innovation Lab introduced a number of innovative products to the market, some of which include a new version of EasyCoop an enterprise resource solution for cooperative societies and EasyMall a cooperative market place. “We have also continuously strived to improve how we currently serve our clients as evident in the recent upgrade of our Customer Experience Center and introduction of new customer channels,” the company said, adding that its Digital Transformation journey was on course as it upped its game in the creation, delivery and capture of value. “For us at Africa Prudential, the future is digital technology-

driven which is why we are integrating all our processes into a seamless system that offers world-class solutions to our customers and creating new revenue lines. In the long-run, this would reduce our huge exposure to capital market activities which has been on a decline of late. Our company would continue to innovate not only to improve capital market interactions but also to improve our top line in order to deliver superior value to all stakeholders.” Company history Africa Prudential Plc was originally incorporated as UBA Registrars Ltd in March 2006. The Company subsequently changed its name to Africa Prudential Registrars Plc in August 2011 and was listed on the Nigerian Stock Exchange in January 2013. To expand its business portfolio, the Company acquired UAC Registrars Ltd in June 2013. Again, the Company changed its name to Africa Prudential Plc following a special resolution passed by the Members in General Meeting on 28 March 2017 to enhance its market competitiveness and diversified business interests. Africa Prudential Plc carries on the business of registrar and investor relation service in accordance with its Memorandum and Articles of Association. As part of its strategy to remain No. 1 in terms of automation and innovation, the Company continues to develop unique software to aid the administration of Cooperative Societies in Nigeria and other business solutions.

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