Businessday 02 may 2018 by BusinessDay

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Banks take N438bn haircut on WhysignalsdealrebirthwithofGE shareholder equity over IFRS 9 Nigeria’s rail system INSIGHT

BY OUR REPORTER

LOLADE AKINMURELE

new financial reporting standard that forces banks to make new provisions for loans that were hitherto not recognised, is taking its toll on lenders’ shareholder equity, even though they look well buffered to weather a storm. The new rule, as prescribed by the International Financial Reporting Standards (IFRS), peeled N438 billion off the retained

earnings or regulatory reserves (components of shareholder equity) of the seven banks that have published financial statements for the first quarter of 2018, according to data compiled by BusinessDay. Sha re h o l d e r s’ e q u i t y i s equal to a firm’s total assets minus its total liabilities and represents the net value of a company, or the amount that would be returned to shareholders if all the company’s assets were liquidated and all

its debts repaid. For banks more shareholders’ equity is ideal because even though it may lower return on equity (RoE) , it means a bigger margin of safety in the event losses develop in the loan book; more equity to absorb bad debts that aren’t repaid either due to poor underwriting or a general economic recession like Nigeria has witnessed lately. The seven banks are Access bank, Zenith, Guaranty Trust, First Bank holdings, United Bank

for Africa, Stanbic Ibtc and First City Monumental bank. The implementation of IFRS 9 was tipped to see local banks cut down the size of their credit to the private sector, as they struggle to protect their books from the impact of making provisions for bad and doubtful loans. Zenith restated its equity opening balance downward by 16.8 percent (N138 billion) to N683.4 billion in Q1, on implementation of the IFRS 9 which

here is celebration in government following the ground breaking interim concession agreement reached with the consortium of firms led by the US based General Electric for the revamp of the nation’s Western and Eastern narrow gauge rail system. And it will be costing Nigeria not one kobo as the initial investment of between $45-100 million will be covered by the Continues on page 38

Continues on page 4

Rise and fall of Erin Energy: The Kase Lawal connection

L-R: Kufre Ekanem, corporate affairs advisor, Nigerian Breweries; Franco Maria Maggi, marketing director, Nigerian Breweries; Uaboi Agbebaku, company secretary and legal adviser, Nigerian Breweries, and Grace Omo-Lamai, human resource director, Nigerian Breweries, at the launch of Tiger Lager Beer at Muri Okunola Park, Lagos.

DIPO OLADEHINDE

Kase Lawal

DUFIL snaps up May & Baker’s food production line in N775m deal ...Page 34

he bankruptcy of Houston based Erin Energy is not only the straw that broke the camel’s back but also the beginning of more legal woes for the company formally known as Camac Energy as it’s at the verge of losing its Continues on page 38

May Day: The worst is over for Nigeria Osinbajo says P. 4

Reason FG banned production of syrups containing codeine LAIDE AKINBOADE-ORIERE

isturbed by the high rate of addiction to codeine in Nigeria, Federal Government on Tuesday, ordered the National Agency for Food Continues on page 38

2 BUSINESS DAY NEWS

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May Day: Stop mindless killings of Nigerians now, Labour tells FG … as Ambode urges realistic demands JOSHUA BASSEY

rganised labour says the Federal Government has a responsibility to immediately stop the mindless killings of Nigerians and destruction of properties across the land by “marauders of death,” or it will deem that there is no government in Nigeria. Labour warned that allowing the citizens to resort to selfhelp would spell doom for the country, even as it condemned the political gladiators who were seen focusing more on the 2019 elections rather than seek ways to heal the wounds of a bereaving nation. This comes as Governor Akinwuunmi Ambode of Lagos State, on his part, charged labour to join forces with government for nation building and to always be realistic in their demands. “There will always be a place for agitations and struggle, and it is a fact that only those who dare struggle may win. Yet, these agitations and struggles must be focused on realistic and reasonable goals that are pursued in the ap-

preciation of the competing interests that government has to continually balance. “We have continued to partner with the Leaders of the Trade Union Congress (TUC) and the Nigeria Labour Congress (NLC) and we will continue to consider all the requests of labour as we work together for the peace, progress and prosperity of all workers in Lagos State, all Lagosians and our state,” Ambode said, while addressing workers at Agege Stadium, yesterday. Speaking on behalf of thousands of workers who gathered at the National Stadium, Lagos, to mark the Workers’ Day, Joe Ajaero, president of United Labour Congress (ULC), condemned the massacre of Nigerians, including workers in different parts of the country, particularly in Benue, Plateau, Taraba, Kaduna, Nasarawa, and urged the government to immediately arrest the carnage. Ajaero said, “We are worried that Nigerian political leaders instead of tackling the escalating level of insecurity in the country, which has consumed thousands of Nigerian workers, prefer to focus on

campaign for 2019 elections. Very sadly, our nation has become a slaughter slab.” According to Ajaero, Nigerians are fast losing hope on the ability of the Federal Government to protect them. The labour said the security lapses that have led to the slaughtering of thousands across the land, must be stopped, warning that it must not get to a level where the citizens would resort to self-help. “We speak to President Mohammadu Buhari; we know that you have the capacity to deal with this situation and stem the tide of deaths. We urge you to muster the necessary political will to mobilise our security apparatchik to put a stop this madness. Nigerians are fast losing hope and the reactions are deepening and creating divides all around. “This is the time to act. The security chiefs seem to have been overwhelmed by these gory events and ought to be relieved of their jobs bringing in new hands that are capable of delivering Nigerians from the clutches of these evil marauders and purveyor of death,” Ajaero said.

Wednesday 02 May 2018

N1.7bn grant from Global Malaria Fund to improve Deltans’ health needs MERCY ENOCH, Asaba

ollowing the recent grant of N1.7 billion from the Global Malaria Fund to the state, the Delta State government says the state and her partners remain committed to the eradication of malaria, saying the grant will significantly reduce malaria and improve the health needs of the people. The chairman, Delta State Primary Health Care Development Agency (DSPHCDA), Isioma Okobah, said the state was committed to eradicating malaria and other diseases in line with the health policies as contained in the SMART agenda of the Okowa-led ad-

ministration. Okobah, who spoke in Asaba as Deltans join the rest of the world to mark World Malaria Day, said the theme of the year “Ready to Beat Malaria” with the slogan ‘Together We Can,’ was apt as it highlighted the collective responsibility of all towards a malaria free world. She disclosed that the African region was the worst hit of the Malaria scourge, saying over N12 billion annually was lost to malaria treatment, adding that the above sum could be channelled into road construction if preventive measures were taken. She revealed that the state government through the over 400 primary health centres was

providing free malaria testing and treatment to ensure every Deltan had access to malaria treatment. The World Malaria Day was established in May 2007 to provide education and understanding of the disease and also to spread information on the implementation of National Malaria Control strategies, prevention and treatment of malaria. The DSPHCDA celebrated this year’s World Malaria Day with a road show from the Konwea Plaza to the Ogbeogogono Modern Market where over 500 persons were tested and treated for malaria and terminated at the New Secretariat Complex, Asaba.

Edo LGAs declare 44% rise in IGR, as JAAC shares N2.8bn March allocation

do State Joint Account and Allocation Committee (JAAC) has declared a total of N2.8 billion as allocation that accrued to the 18 local government areas in the state from the Federation Account for the month of March. The Internally Generated Revenue (IGR) from the 18 LGAs in the state rose by 44 percent to N187,076,193.66. Chairman, Esan SouthEast Local Government Area, Victor Emuakhagbon, disclosed this at the end of JAAC

meeting presided over by Governor Godwin Obaseki at the Government House in Benin City, Edo State. According to Emuakhagbon, “The total receipt for the month of March and shared in April was N2, 784, 590, 281. 12. Teachers’ salaries was N1, 103,807,046.71; deduction for pension was N264, 115,845.36; while total distributable fund shared by the 18 local government councils stands at N1, 124,183,069.76.” He said, “Internally Generated Revenue (IGR) from

the 18 local government councils increased by 44 percent with current total figures standing at N187,076,193.66.” He said the increase in IGR followed the resolve by the council bosses to support the state governor’s drive to promote wealth creation and deliver dividends of democracy to the people. “With this renewed vigour, we would be able to provide support for the funding of the 2018 budget to improve the standard of living of the people,” he said.

Wednesday 02 May 2018

BUSINESS DAY

4 BUSINESS DAY NEWS

Wednesday 02 May 2018

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Day: The worst Stock investors book over N1.3trn gains in four months May is over for Nigeria -

... CCNN, Unity Bank, Caverton surpass 85% returns Osinbajo says January 2, 2018. Chief Economist at Moscow-based include Beta Glass Plc (54.5perIHEANYI NWACHUKWU

n four months to April 30, Nigerian stock investors reaped in excess of N1.33trillion as capital appreciation from listed equities. Crude oil price at $75 per barrel on Monday continued its role as biggest catalyst for the rally in Nigerian stocks. After an impressive 42 percent rally last year, many analysts have remained bullish that the Nigerian equity market space still offers pool of untapped potential for value hunters. “Our outlook for the market in the near term remains largely positive. We anticipate more impressive first-quarter (Q1) 2018 earnings results and expect investors to react accordingly. In the coming week, we anticipate bargain hunting in mid cap stocks to buoy performance”, said Afrinvest in its recent stock recommendation. Analysts premised their positives on findings that most stocks currently trading on Nigerian Stock Exchange (NSE) are priced below their book value, while many others trade at prices below analysts’ recommended target price (TP). In first four months of 2018, returns from Nigerian equities market stood positive at 7.91percent; while the market’s benchmark performance indicator –the All Share Index closed at 41,268.01 points from 38,264.79 points as at

Likewise, the value of listed equities rose to a record high of N14.95trillion as at April 30 from N13.62trillion on January 2, 2018; representing an increase of about N1.33trillion. BusinessDay trend watch reveals many stocks that have helped sustain the record N1.33trillion gain. They include Cement Company of Northern Nigeria Plc (115.3percent), Unity Bank Plc (88.7percent), Skye Bank Plc (68percent), Caverton Offshore Support Group Plc (86percent), NEM Insurance Plc (68.7percent), Wema Bank Plc (61.5percent) and FCMB Group Plc (66.9percent) – all these stocks surpassed the NSE ASI recording returns in excess of 60 percent. The recent rise in oil prices implies further accretion to the Central Banks dollar reserves and Nigeria’s Excess Crude Account (ECA), into which the difference between the market price of oil and the budget benchmark is saved to provide a cushion when oil prices fall or extra cash is needed for capital expenditure. This trend means well for expected earnings of many listed companies. “In Frontier, we think Nigeria will grow at 3percent versus IMF expectations of 2percent. We outline our currency views – base line is Egypt, Russia, Nigeria, staying roughly stable (and all good value)”, said Charlie Robertson, Global

Renaissance Capital in their April 30 macro outlook for Frontier/ Emerging Markets. Ahead of this feat, many market operators and research analysts had expected equities to still hold the upper hand against fixed income securities. Inflation rate for the month of March 2018 moderated to 13.3percent year-on-year (y/y). With the expectation of further decline, analysts expect yields on Fixed Income securities to ease further going forward. Aigboje Higo, Managing Director, Capital Bancorp Plc who led the company’s team at an economic review and outlook for 2018 noted ample opportunities for improved returns in some stocks in the banking sector, consumer goods sector and the industrial goods sector of the equities market. Though Capital Bancorp is cautiously bullish in this first half (H1) of 2018 than in the second half (H2) of 2018, they believe the current prices of stocks still give room for ample upside and significant return to investors, advising that investment in the stock market be made mainly on fundamental analysis and not on the back of a band wagon effect which could fizzle out at any moment and keep the investor trapped in a wrong stock. Others stocks in our watch list that have impressed the market with returns in excess of 50 percent

Banks take N438bn...

L-R: Bobboi Bala Kaigama, president of Trade Union Congress (TUC); Yemi Osinbajo, vice president of Nigeria; Ayuba Wabba, president of Nigeria Labour Congress (NLC), and Chris Ngige, minister of labour and employment, during the 2018 May Day celebration in Abuja, yesterday.

Continued from page 1

took effect January 1, 2018. The lender passed the charge solely through retained earnings and did not share it with regulatory reserve, causing its Capital Adequacy Ratio (CAR) to slump by 710 basis points to 19.9 percent, since regulatory capital is typically excluded in the computation of CAR. A N28.8 billion drawdown from regulatory reserves and N44.6 billion in retained earnings, made up for the N73 billion hit taken by Access bank on adoption of the new rule. In the three month period of 2018, Access bank’s equity declined by 11.8 percent to N454.4 billion. Capital adequacy ratio, however, was at 19.3 percent, 430basis points higher than the regulatory minimum, in a sign of strong capital buffers. Guaranty Trust Bank (GTB) took a charge of N131.7 billion, by tapping N52.3 billion from regulatory risk reserve and N79.7 billion through retained earnings. This brought the lender’s 2018 opening equity value down by 21.6 percent from N625.2billion in FY’17 to N490.3 billion in January 1, 2018. However, GTB’s equity improved to N535.1 billion following the capitalization of Q1’18 profits. Although GTBs capital adequacy ratio (CAR) took a hit, moderating by 110bps to 24.6 percent in Q1’18, it remains sufficiently above the regulatory required minimum of 15 percent. First bank holdings (FBNH), the second largest bank by assets, saw a N36.1 billion haircut and it was

cent), Eterna Plc (54.4percent), Learn Africa Plc (53.4percent), and Oando Plc (52.8percent). “Kayode Tinuoye-led researchers at United Capital Plc had also said that strong returns can be achieved in 2018. “With a benign inflation outlook and lower debt burdens, consumers and businesses appear energized. Therefore, we expected the consumer goods sector to be the immediate beneficiary of these fundamentals,” United Capital analysts had said. The cumulative transactions at the Nigerian bourse from January to March 2018 increased by 48.29percent to N878.97 billion as against N454.48 billion recorded in corresponding period of 2017. Domestic investors who accounted for 56.56percent of total transaction from January to March outshined foreign investors who accounted for 43.44percent. Trading figures from major custodians and market operators on their Foreign Portfolio Investment (FPI) flows show foreign transactions reached a high of N381.82billion as against N211.06billion in the corresponding period of 2017. Foreign inflow stood at N206.35billion while outflow was N175.47billion. Domestic transactions increased to N497.15billion in the first three months of 2018, from N243.42billion in the corresponding period of 2017.

taken through the bank’s retained earnings. FBNH’s capital adequacy ratio improved by 0.2 pts to 18 percent and its total comprehensive income of N17.7 billion provided buffers in the quarter, as total equity only moderated by 2.7 percent to N659.8 billion. For United Bank for Africa (UBA), the IFRS adoption saw the bank restate its opening equity balance downwards by N34.0 billion. However, UBA’s equity increased marginally by 1.5 percent year to date to N537.6 billion at the end of Q1’18, as the bank consolidated its total comprehensive income of N35.0 billion for the period. Stanbic Ibtc holding’s IFRS 9 adjustment to equity was not material, as it only shaved off N10.2 billion from retained earnings opening balance as at January 1 2018. This explains the minimal impact on CAR observed in the pe-

riod, as the ratio improved to 24.7 percent compared to 23.5 percent reported in 2017. First City Monument bank took a shave worth N15.2 billion, having made a 6.6 percent equity adjustment to N176.5 billion in the first quarter, in line with the IFRS 9 implementation. The lender’s Capital adequacy ratio however remains sufficiently above the regulatory minimum at 18.1 percent. The banking index was up 0.43 percent on the last trading day on Monday, according to Bloomberg data. IFRS 9, which was approved by the International Accounting Standards Board (IASB) in 2008, became operational on January 1, 2018. It requires commercial lenders to change their impairment model from backward looking to forward looking. The implementation of IFRS 9,

means banks would now have to make provisions for excess credit loss rather than incurred loss. The new policy wants them to take into account their operating environments in making bad debt provisions. “The application of these new rules means loans that had escaped classification as non performing loans (NPLs) may now be classified which would sour bad loan books,” said Kunle Ezun, research economist at Ecobank Nigeria Limited. Renaissance Capital, an investment banking firm, in a note this month said banks could see their Cost of Risk (CoR) come in marginally higher at the end of their 2018 financial year as a result of the adoption of the new standard. The CoR is the banks’ loan loss provisioning divided by the total loan portfolio expressed as a percentage. A higher CoR means impairment charges will be high.

...unveils plans to restructure security architecture KEHINDE AKINTOLA, Abuja

ice President Yemi Osinbajo on Tuesday reiterated the present administration’s resolve towards reinforcing the country’s macroeconomic policies to achieve sustainable economic stability and growth. Osinbajo’s assurance came on the heel of concerns raised by organized labour over the need to eliminate serious structural issues undermining its economic diversification policy and inclusive growth. Vice President Yemi Osinbajo, at the 2018 May Day celebration with the theme: ‘Labour relations in economic recession: An appraisal’, assured that the worst time is over for Nigeria. “You are amongst the most committed taxpayers because your taxes are deducted at the source. Hence, nobody can deny you the right to interrogate government and how public funds are expended at all times. You remain amongst the few organizations that have risen above primordial sentiments. “Great Nigerian workers, we believe that for Nigeria, the worst is over. Accordingly, we will do everything within our powers to sustain the current economic recovery efforts. We will continue to reinforce our macroeconomic policies to achieve sustainable economic stability and growth. We will also continue to ensure the growth comes along with more jobs and a fair and just distribution of the national wealth,” the Vice President assured. While reflecting on the prevailing security challenges across the country, Osinbajo noted that the President and Security Council have been engaging in rigorous stock-taking with a view to restructuring our security architecture to meet the challenges of the mindless killings in some parts of the country, including marauding herdsmen, cattle rustlers and bandits. He also pledged commitment towards protecting lives of all Nigerian citizens irrespective of tribe, tongue and religion, noting that “our diversities are our strength. We must reject every attempt to divide us; our focus must be on developing our economy, providing opportunities in industry, manufacturing, technology for our young people.” The Vice President who applauded the resilience of Nigerian worked amidst the current socioeconomic challenges, tasked the Tripartite Committee saddled with the responsibility of negotiating the new national minimum wage, to fast track the process for onward presentation for National Assembly’s approval. Organized labour on Tuesday admonished Federal Government on the need to eliminate serious structural issues undermining its economic diversification policy and inclusive growth. Ayuba Wabba, President of Nigeria Labour Congress (NLC) gave the charge during the 2018 May Day celebration with the theme: “Labour relations in economic recession: An appraisal.”

•Continues online at www.businessdayonline.com

Wednesday 02 May 2018

BUSINESS DAY

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Wednesday 02 May 2018

NEWS AMCON not willing to inject funds into Aero, Arik – aviation unions IFEOMA OKEKE

viation unions have accused Asset Management Company of Nigeria (AMCON) of not willing to inject funds into the two airlines it took over in the industry. The unions also expressed hope that the conditions of service of government workers in the sector would be addressed very soon, especially with the recent increase in the price of crude oil in the international market. Ahmadu Illitrus, president of Air Transport Senior Staff Services of Nigeria (ATSSSAN), disclosed these Tuesday at the Murtala Muhammed Airport (MMA), Lagos, during a rally organised for workers in the sector to mark the Workers Day. Illitrus lamented that since the takeover of Aero, the current management in Aero led by AMCON intentionally starved the airline of funds. He explained that all steps taken by the chief executive

officer in Aero, Ado Sanusi, to ensure that redundancy issues in the airline were addressed met brick wall. He explained that the unions were reluctant to ground operations at the airline because such action might work against the interest of the workers. He explained further that the unions would continue to negotiate with the management of the airline in order to ensure that the interest of its members was adequately taken care of. He added that the airline might be back and to its former viable status soon with the impending arrival of more aircraft to beef up its operations. He said: “Aero has some prospects, but the management of AMCON is not willing to inject some money into the airline. The unions are in precarious situation, but we don’t want to shutdown the airline. “An additional aircraft would be added to the fleet of the airline very soon. Once the aircraft ar-

rives and another one joins the fleet, I can tell you that we will not be talking about redundancy in the airline again. The managing director is making his utmost best to ensure that the airline return better. “ On Arik Air, he observed that AMCON took over the airline because of poor corporate governance, but decried that the total debts incurred by AMCON national wide was N181 billion of which 90 percent was in aviation. On the improved conditions of service to workers, he assured the workers that the government would by September this year address the issue. Besides, he emphasised that the unions would in the next few weeks embark on seven days warning strike to ensure that the ex-workers of the airlines were paid their severance packages. He declared that all efforts to ensure that the former workers were paid did not yield the result, but said that the strike would compelled the government to do the needful.

L-R: Ibidapo Martins, chief marketing officer, Sterling Bank plc; Titi Ladipo, human resources manager, Fareast Mercantile Limited; Grama Narasimhan, executive director, retail and consumer banking, Sterling Bank plc, and Olufemi Festus, head, human resources, Sterling Assurance plc, during the launch of Specta online lending platform powered by Sterling Bank in Lagos.

CIPM repositions to meet millennials workplace demand SEYI JOHN SALAU

hartered Institute of Personnel Management (CIPM), the body saddled with Human Resource (HR) practice in Nigeria, says it is well positioned to meet workplace demands of millennials leveraging technology in preparedness for the work of the future. The institute at its 49th annual general meeting held in Lagos, says it is continuously positioned to deliver bespoke learning programmes to equip members in confronting current and emerging business challenges, as it thrive to deliver optimum shareholders’ value. Udom Inoyo, president/ chairman of Council, CIPM, says he strongly believes the CIPM is a brand that should be embraced by all, especially millennials who are the future of the workforce in any given economy. “We needed an institute that embraces technology and caters for the needs of the millennial, who are taking keen interest in the people space. To ensure a proper change management process as we worked to deliver on these dimensions, we enhanced our communication to all stakeholders,” Inoyo said. According to Inoyo, CIPM has been inaugurated as a member of the National Employment Council charged with the responsibility to holistically address the unemployment crisis in the nation. “As a member of this council, CIPM now has an opportunity to contribute to matters of national discourse and the implementation of policies on employment generation and skills development in the nation as stipulated under the revised National Employment Policy,” Inoyo says. Ajibola Ponnle, registrar/ CEO, CIPM, says the institute will continue to upgrade its facilities and revamp its products and services to make CIPM attractive and meet the yearnings of members to drive inclusion within the general public leveraging technology and strategic partnerships.

Surviving harsh economy: Okowa wants students to go beyond certificate acquisition MERCY ENOCH, Asaba

overnor Ifeanyi Okowa of Delta State has maintained his position over acquisition of entrepreneurial skills by students across the country, saying certificate on its own may not guarantee today’s university graduates the elusive whitecollar job. Okowa said youths today need entrepreneurial and technical skills to become self-employed and job creators, hence, he urged them to acquire entrepreneurial skills so as to survive in today’s economy. Speaking at the fourth edition of the students’ sensitisation programme, ‘Even A Professor Needs A Skill,’ organised by two of his aides - Ovie Success Ossai and Ezekiel Okoh - in Abraka.

Okowa, represented by his chief of staff, Tam Birisbe, noted that the essence of the programme was to prepare undergraduates in the state to acquire additional skills relevant for their survival in the society and making them entrepreneurs and job creators, as they graduate from school rather than wait endlessly for white-collar jobs. He said: “In the 60s in Nigeria, if you were a university graduate, the day you start working, the companies that sell cars will come to your office and give you the keys to a Peugeot and Volkswagen cars for you to test drive for three or four days and if you like the car, they will sell it to you. “You had the opportunity of taking a loan then and paying it off in three years. These things do not happen anymore. These days if you wait

for a job from the government or a company after graduation, you will end up waiting for up to 10 years and it will never come. “This awareness seminar is a laudable one as it prepares you for the reality of tomorrow. It should inspire students to start pursuing developing skills and not just passionate about obtaining a degree only, as making a living is not only about having a certificate.” In his opening address, Victor Peretomode, a professor and vice chancellor, Delta State University, charged youths to key into the entrepreneurial and job creation schemes of the state government, stressing, “Today, there is a high level of employment because everyone is waiting for the government to employ them.” According to Peretomode,

Imperatives of Commonwealth’s war on ocean plastics

the management in DELSU now runs a skill acquisition centre where indigenes of the university host community, numbering 75 and others are beneficiaries from the training, adding that the best performing students will be giving starter packs at the end of the programme. The organisers, Ossai and Okoh said the objectives of the programme were to give students a new orientation from laying emphasis on certificate for employment to looking inward to developing and acquire skills while in school; growing a new generation of student entrepreneurs before they graduate; bringing to the door step of students various government incentives available for entrepreneurs and reduce the pressure on the government to provide jobs.

May

ecently, the Commonwealth of Nations adopted the Blue Charter, an ocean governance blueprint detailing the principles on how its member nations would contend with different factors that contribute to ocean pollution. A significant concern for the Commonwealth was providing the needed technical, research and resources assistance required by her member nations with emerging economies. In support of the charter, UK Prime Minister Theresa May has pledged £61.4 million. May said, “Let us begin by making this a more sustainable Commonwealth. That’s why, this week, I want us to agree a landmark Blue Charter, which sets out the principles to sustainably protect our oceans.” However, with globalisation bringing about the exchange of products across countries, the need for packaging that is both durable and inexpensive has led to the exponential increase in the production of plastic materials in the last centuries. With over 300 million tons of plastics produced yearly and less than 10 percent recycled, plastic pollution has become a topical issue across the world, primarily as it affects the water body. Currently, Lagos generates over 13,000 tons of municipal waste daily, with plastic accounting for two-thirds of all recyclable material collected. A lack of infrastructure for the effective management of waste and improper disposal habits cause most plastic waste to end up in the Atlantic Ocean. The UN figures show 8 million tons of plastic - bottles, packaging and other waste - enter the ocean annually killing marine life and entering the human food chain. Locally, John Irvine, Visionscape Sanitation Solutions CEO, is tasked with leading infrastructural development projects across emerging markets. As part of the Group’s commitment to social impact investments, its business strategy is deeply rooted in building a sustainable business that does well. “We aggressively push our recycling initiatives and efforts

Irvine

throughout our operations, and as a Group has made significant global investments in assets and infrastructure that converts those materials into renewable resources from polymer manufacturing to waste to energy projects,” Irvine said in an interview. The company began the construction of an engineered landfill and Eco Park in Epe, Lagos, about 18 months ago. The Epe landfill lies on the northern bank of the Lagos lagoon. It was opened in 2009 to serve as a backup landfill for three other main state-run dumpsites that have since surpassed their capacities. The Eco Park, the first of its kind in West Africa, will feature several facilities including a materials recovery facility for processing several types of waste. The on-site materials recovery facility will integrate the informal waste miners (scavengers) into the system to continue with waste segregation activities under better working conditions. The group operates a closed loop system with subsidiaries in the UK, Northern Ireland, Belgium, and the Middle East. Over the years, concerned international organisations and governments have proffered solutions, allocated budgets and devised strategies to combat the ocean pollution problem. Efforts have seemed like the proverbial drop in the ocean, as more sea animals die and get washed onshore with plastic debris inside them. “These territories are the most affected oceans across the globe, and unfortunately with some of the least developed solutions to the pollution problems. With economic growth and increasing consumerism, the reliance on plastics remains high as packaged products get imported in droves,” he said. Ocean plastic pollution is a global problem that requires localised solutions, especially in the countries bordered by oceans. The Blue Charter will include 16 principles and values, including environmental protection, good governance, justice and peace, human rights and gender equality, and recognition of the needs of vulnerable nations and young people.

Kwara workers are dependable allies - Governor Ahmed SIKIRAT SHEHU, Ilorin

wara State governor, Abdulfatah Ahmed, has described workers in the state as dependable allies in entrenching good governance and efficient service delivery. The governor, in his May Day message to the workers signed by his chief press secretary, Abdulwahab Oba, said workers remain indispensable companions in his administration’s quest to building a prosperous

Kwara for all. He said the government could not have achieved remarkable achievements in various sectors of the economy without the contributions and support of the workforce. Governor Ahmed, who congratulated the workers on the occasion of May Day, assured them that the present administration would continue to prioritise their welfare through improved working condition with a view to enhancing their productivity.

Wednesday 02 May 2018

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Obaseki faults centralised security, Oando kicks off 2018 with N4.2bn profit in Q1 as Edo engages 3,600 youths for intelligence gathering ENDURANCE OKAFOR

do State governor, Godwin Obaseki, has faulted the centralised security arrangement in the country, arguing that the current structure does not “make sense from a political and economic standpoint.” The governor made the submission as the state government finalised plans to engage 200 youths from each local government area in the state, to provide local security intelligence, as part of effort to sustain the security of lives and property. Speaking to participants of the 2018 Senior Executive Course 40, National Institutes for Policy and Strategic Studies, Kuru, who were on a study tour to the state, Obaseki said the state hopes to benefit from the insights from the team’s visit to reinforce the state’s security architecture. According to Obaseki, “Why not have one strong federal police system and allow the states and even local government areas to also have some policing arrangements. And if you are concerned or worried about abuse, the central police system should be well equipped and funded that it can demobilise any of the state or sub-national police systems that may want to cross the line. “We need to strengthen the

judiciary and make them lot more efficient so that they can perform their role. For us as a state, we realise that without a strong court system, we cannot have social stability and you will not have economic growth. “So, we have invested in the judiciary as much as we have invested in other arms of government. We are building new courthouses, which shows the premium we give to security and in Edo, people are conscious that there is rule of law and when you break the law, you will pay the price.” He said the state had peculiar challenges because of its location, noting, “If you look at the structure and location of the state, you will see that we are vulnerable security-wise, because we are a logistics hub, and this makes security a bit more challenging. “We cannot understand and articulate the issue of our security outside our economic and political contexts and I believe that should be the starting point. Because if we, as a country, do not begin to restructure particularly the economic arrangements and begin to invest a lot more in public growth for the benefit of the country, and if we are not able to begin to achieve a level of economic growth, security will continue to be a major challenge.”

ando Plc has recorded after tax profits of N4.2 billion in its Q1 2018 results, despite the ongoing SEC led forensic audit into the affairs of the company. Oando has cashed into the favourable micro and macro business environment characterised by an increase in national oil production, exchange rate stability, as well as an increase in global oil prices which averaged $66 per barrel in the first quarter of the year, $3 more than the projected average of $63 for 2018 and 2019. An analysis of Oando’s financials shows that the company’s turnover grew by 9 percent to N150.5 billion from N138.4 billion (Q1 2017); gross profit increased by 108 percent, N27.9 billion compared to N13.4 billion (Q1 2017); and profit-after-tax increased by 145 percent, N4.2 billion compared to N1.7 billion (Q1 2017). These numbers are reflective of Oando’s increase in production by 4 percent, 3.6MMboe (average 39,556 boe/day) from 3.4MMboe (average 38,125 boe/ day) in comparative period of Q1 2017 due to the reopening of the Trans Forcados pipeline. In its upstream business, Oando recorded a net profit of N8.6 billion ($23.8 million) compared with N5.8 billion ($16.2

million) in the comparative period of Q1 2017. According to the company’s statement, the increase in net income between the quarters was primarily due to higher revenues as a result of a general increase in the price of oil and gas commodities (Q1 2018: Oil -$65.49/bbl, Gas – $1.54/mcf, NGL – $13.59/ boe, compared to Q1 2017: Oil – $51.74/bbl, Gas – $1.39/mcf, NGL-$9.62/boe). Speaking on the results, Wale Tinubu, Group Chief Executive, Oando said: “Our Q1 performance was characterised by a stable operating environment, continued incline in crude oil prices, and the highest level of compliance by member countries’ of the OPEC Accord. Considering the background of current industry trends, the Company is committed to maximizing throughput rates to ensure a positive financial performance in the ensuing quarters of 2018.” Oando isn’t the only company who benefited from the increase in commodity prices and improved operating environment. Exxon Mobil recorded a 16 percent increase in profit to $4.65 billion. Seplat declared a N6.2bn profit in the first quarter of 2018 compared to a loss of N5.8billion in comparative period of 2017. Seplat’s commendable recovery was due largely to undisrupted exports via the TransForcados System (TFS). This is now the

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third consecutive quarter that the firm is posting profits. Royal Dutch Shell posted a 42 percent increase in profits to $5.3 billion, $1.6 billion more than in Q1 2017, and the company’s highest earnings since Q3 2014 when oil price averaged $102 per barrel. A review of other activities pertaining to Oando in 2018 is further evidence that the year has indeed started favourably for the company. In January, Oando reached a peace accord with Dahiru Mangal by officially confirming him as a substantial shareholder of the company and successfully addressing and clarifying all the issues raised by Mangal in his petition to the Securities and Exchange Commission (‘SEC’). In the company’s official statement on the peace accord the Group Chief Executive, Wale Tinubu said: “...Shareholders must be confident in the operations of the company they are invested in; this can only occur through active participation.’’ More recently, the SEC gave a directive to lift the 175 day old technical suspension placed on free trading of the company’s shares. This was a welcome relief for both the company and its shareholders, all of whom had been negatively impacted by the SEC directive. The technical suspension prevented the true value of the company’s shares from being reflected.

Diplomatic tugof-war: Nigeria’s ambassador in DRC suffers eviction STEPHEN ONYEKWELU

igeria’s ambassador in the Democratic Republic of Congo was evicted from his residence in the elitist district of Gombe, Kinshasa, the capital city, where most diplomats live. Dolly Makambo, the bourgmestre of Gombe, equivalent of a local government chairman, on April 14 evicted the ambassador from his residence on number 438 L’Avenue Roi Baudouin in the Gombe district, Kinshasa. The parcel of land has been under dispute for many years between the Nigerian embassy and the Congolese Jean-Claude Okito. “The local government chairman has gone on to evict the ambassador from his residence, this is very irregular. It is an embassy. Therefore, there is a laid down procedure to be followed in order to evict an ambassador. This is grave diplomatic incident,” Serge Lukanga, Nigeria’s legal representative, told Radio Okapi, a radio network that operates in the DRC. Lukanga stated that the piece of land had belonged to the Nigerian embassy for the past 20 years, and regretted that there was a judicial order to evict the Nigerian ambassador.

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Only 5 of 23 LGAs in Benue free from attacks by herdsmen – governor

overnor Samuel Ortom of Benue State said on Monday that only five of the 23 local government areas of the state were free from attacks by herdsmen. Ortom stated this during his first official interaction with newsmen since he returned from his vacation from the People’s Republic of China two days ago. He regretted the continued onslaught against the state by the killer- herdsmen and called for vigilance from the people. He, however, assured that president Muhammadu Buhari, was working round the clock with his security chiefs to end the attacks. According to him, the Chief Of Army Staff (COAS) would soon visit the state to address some of the challenges and assured that “very soon they would become a thing of the past.” He said the transfer of his security aides was also cancelled and explained that all political leaders in the country had the right to choose their security details. Ortom also condemned

the burning down of over 300 houses by the Nigerian Army in Naka as well as the killing of a soldier by hoodlums in the area. He said neither the killing of the soldier nor the arson that followed the killing could be justified in law. He, however, disclosed that the five suspects linked to the soldiers’ death were handed over to the police and wondered why the soldiers still went on to burn houses. Ortom said the arrested people were nabbed by the Gwer West Council chairman and traditional rulers. According to him, the action of the council chairman and traditional rulers underscored heir disgust at the unlawful behaviour of killing the soldier by taking the laws into their hands. “This is a clear demonstration that they were not in support of the killing of the soldier,” he said. He said he had reported the invasion of Naka town by soldiers to the Army chief, who promised to deal decisively with any Army personnel who would be found culpable. He disclosed that until

the report of the COAS was out and the outcome made public, the state government would have nothing to do. He warned against reprisals no matter the level of provocation. “Reprisal of any kind will not be accepted by my government and blood shed should not take place in the state no matter the situation. ”When you allow lawlessness to prevail, you are calling for anarchy and when anarchy is allowed to prevail it will unleash a lot of havoc in the society,” he said. He promised not to interfere in the prosecution of his Livestock Guards Commander, Aliyu Tershaku, who is under military detention for acts connected to the Book Haram terror group as well as recent killings in the state. “I have never intervened in the arrest and prosecution of any of my appointees who is suspected to have committed murder and in Tershaku’s case too I will not be different. I will allow law enforcement agencies to do their work,” he said.

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World Bank intervention contributes to Yobe recovery plan — Gaidam

obe State government on Monday said the interventions by the World Bank Fadama lll Additional Funding ll funded programme has contributed to the reconstruction and rehabilitation of Internally Displaced Persons in the state. Governor Ibrahim Gaidam gave the testimony in Damaturu while receiving the National Fadama Supervision Mission to the state. The governor, who was represented by the Commissioner for Agriculture, Mustapha Gajerima, said the intervention had assisted

IDPs in reclaiming their lives. “The Fadama lll intervention has greatly keyed into the Resettlement, Reconstruction and Rehabilitation policy of the state government,’’ he said. Ben Herbert, team leader of the mission, described as a worthy investment the prompt payment of counterpart funds to the World Bank by the Yobe government. He said the intervention focused on food security, livelihood, support and rural infrastructural development. “The intervention was to improve the lives of the people and communities

affected by the insurgency. We appreciate the enormous interest shown by the Yobe government through the payment of counterpart funds and, the interest shown by the beneficiaries in the ownership of the programmes,’’ he said. Ben rated Fadama lll in Yobe as achieving 90 percent of the targeted intervention programme. The state project coordinator, Musa Garba, said the programme aimed at adding value to the lives of the people and communities affected by the insurgency in the state.

Police in Katsina arrest suspected armed robbery kingpin, others

he Katsina State Po l i c e Co m ma n d has apprehended a notorious armed robbery kingpin, Dabo Hassan, 60, and five other suspects who were alleged to have been terrorising residents of Funtua, Sabuwa and Dandume Local Government Areas of the state. The Command’s Public Relations Officer, DSP Gambo Isa said in a statement on Monday in Katsina that the suspects were arrested on Saturday in Kilawa-Mahuta, Dandume Local Government Area,

after a gun battle with the police. Isa added that the suspects were subdued after a fierce encounter with the command’s Special Anti Robber y Squad (SARS) patrol team. He said other suspects arrested were Muntari Jibrin, 25, Abdullahi Samu, 20, Tukur Mamman, 20, Babangida Saidu, 27, and Ishaka Yusuf, 20. The command’s spokesman said the police recovered one AK 47 rifle with 19 rounds of ammunition; two locally made rifles and four

empty magazines of AK47 rifle, army camouflaged, charms and mask. He said the suspects had confessed to the crime and other cases of various armed robbery and kidnapping along Zaria-Funtua, Sabuwa and Dandume roads. He added that effort was being intensified to arrest the other fleeing members of the team and recover their weapons, saying the suspects would be charged to court for prosecution after investigation.

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COMMENT SMALL BUSINESS HANDBOOK

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

he challenge of poverty is really a global phenomenon. Its impact is being felt everywhere and people are hurting like never before. At a recent academic assembly in New York’s Long Island, scholars from different parts of the world came together to discuss and interact on the many challenges facing humanity, including poverty, deforestation, lack of tangible development in the so called developing countries and financial markets. They also presented their research and learning on sports, the state of justice, and such important issues. We also had the opportunity to share our ideas and propositions on the way forward regarding these challenges. Clearly, there was some consensus that an undisputed fact that ran through most of the conversation, like a line of tread, was the challenge of worsening levels of poverty across the globe, and in particular, Sub-Saharan Africa. There was also a kind of coalescence of opinion on the significant negative role and apparent complicity of governments in the mass poverty engulfing nations. In particular, the idea that substand-

Wednesday 02 May 2018

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Poverty is neither a curse nor a choice ard leadership is probably the most important cause of poverty and other ills facing humanity, is gaining prominence. Indeed, much of the raging conflicts and the attendant dehumanization, destitution and, loss of lives and human dignity, spreading like wild fire in many parts of Africa, and elsewhere, has been traced to the poverty of leadership. Many leaders, due particularly to their very low education, poor world view, (which accounts for many of their failures, including the desire to die in office and promote tribal supremacy), lack of capacity, primordial tendencies and provincial mentality, have execrated and elevated to gruesome civil wars, what would have ordinarily been minor inter-ethnic conflicts. By taking sides with parts of their countries in oblivion of their places as national, rather tribal or ethnic champions, many leaders have flunked in their role as fathers of their nations, in preference for becoming local champions. It is has become more incontrovertible that the leaders of this present world will have much accounting to do with their creator, on their last days. This is because they have presided over the not so honourable job of degradation of God’s favourite creation – human life. Today, about 50 per cent of the people in this world, well over three billion people, survive on less than $2.50 a day. This is a collective indictment for all those undeserving men and women in whose control God has had to place the well-being of his creation, and who spend their chances dividing and ruling them unjustly; and

Over the past several years, Nigeria has achieved one of the highest economic growth rates. The average in some decades was as high as 7.4 per cent, according to a report released by the World Bank sometime in 2014. Yet about 100 of the 186 million citizens live below the poverty line causing them this great pain called poverty. Much of this pain is simply man-made; the product of greed and Godlessness; just like environmental pollution, oil spillage and some aspects of desertification. The challenge for all of us, whether in political position or not, is to see to it that we contribute to the reduction of the dangerous trend of rising poverty around us. Although it has become our collective challenge, those in position of authority and particularly those in command of the common patrimony of humanity, need to reassess their roles and responsibilities that may have contributed to this scourge. Perhaps, they still may have time to make amends. We have seen many countries where there are wars and all kinds of disputes, insurgencies and restiveness. What we need to look again is for the underlying causes of the strife. If we look closely we might find that it is the absence of good governance and justice that is at the base of all the turbulence. Look at Myanmar, a county that has stunned the whole

world by the way it has continued to treat the Rohingya minorities, shortly after the “champion of peace and human rights” became their leader. She flunked more than anybody dead or alive. This is the climax of selfishness and poor leadership. Look at the Sothern Cameroon, where a man who is evidently senile and can only stand on the props of the hands of other men, is busy killing his own people because they are of different tribes and tongue. In Nigeria, the Niger Delta where oil companies are encouraged to take the oil and degrade the environment remains a classic case of exploitation. Needless to comment on the burgeoning IDP camps. I was in some parts of the Niger Delta last weekend. I returned early enough to make the trip to New York, from where I write this piece. One was surprised that the fish, for which they used to be known was one of the most expensive food items I patronized. I was even afraid lest I consumed crude oil-rich fish. I am aware there is a plan to clean up the place. Yes there is a plan. The implementation is now a major prayer point of the people in the area. To be poor in Haiti, one of the poorest countries in the world, may be bad but it is easily understandable. The country in its entirety is poor. You are poor. Your neighbour is poor. Your representative in government is poor. Your country has little financial capacity for anything. In fact you heard that your country owes many others because it is poor. So there is reason to avoid self-deprecation and selfblame. You understand what is doing you, as they say in local Nigerian lingo. The country is poor. Period. To be poor in Nigeria may also not be completely

hard to understand. Many things can visit poverty on a man. However, to be abjectly poor in Nigeria is not only hard to understand but a communal disgrace. It can no longer be traced to the poor that we are collectively unable to let go some minor parts of the collective patrimony we cornered, mostly through public office, to minimize their poverty. I call it the people’s collective patrimony because all the billion we make in Nigeria come from the exploitation of natural resources, particularly oil. There are no inventors here and nobody is working any patent of which I know. Over the past several years, Nigeria has achieved one of the highest economic growth rates. The average in some decades was as high as 7.4 per cent, according to a report released by the World Bank sometime in 2014. Yet about 100 of the 186 million citizens live below the poverty line. And the reality could be worse than this. How on earth can we hope to have a country, in the not so distant future, when the bulk of our folks are so poor they can’t feed? As the World Poverty Clock indicates, Nigeria’s uncontrolled and rising population will face starvation as insecurity expands and food production retards. The poverty we face today is not a curse, contrary to the ideas being sold in some ignorant circles. It is also not a choice we made because, as I said in 2005 in my book, Microfinance and Economic Activity, there is no award for poverty. Above all, we do not have a social security system that protects those who opt to be jobless and poor.

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CBN’s innovative approach to non-oil export financing

UCHE UWALEKE Uche Uwaleke is the Head of Banking & Finance department at Nasarawa State University Keffi

ith oil revenue accounting for over 90 per cent of foreign exchange receipts, the contribution of non-oil exports to the country’s economic growth has been nothing to write home about. This is despite measures by the Central Bank of Nigeria over the years including the use of minimum credit requirements and moral suasion to change this narrative. Unfortunately, as empirical studies have shown, this is the situation in many oil-exporting countries still plagued by the Dutch disease associated with the discovery of oil. In a bid to spur non-oil exports, commercial banks in these countries are often required to lend a certain portion of their portfolios to exportoriented businesses. While this could be considered a well-intentioned move to boost exports, the practice, many believe, distorts the market given that export credit is not a priority for commercial banks. Little wonder in a country like Indonesia, loans to export-geared small and

medium enterprises as a percentage of total loans have been falling short of the minimum threshold of 20 per cent since 2012 with many banks choosing to face sanctions rather than bear the risk of nonperforming loans associated with lending to the export sector. It goes without saying that export-oriented firms face considerable financing needs ranging from procurement of raw materials and spare parts, plants and machinery, packaging materials as well as working capital to making provision for export-value chain support such as warehousing, quality assurance and technology upgrade. The difficulty usually faced by these firms in accessing credit facilities greatly hampers the competitiveness of Nigeria’s non-oil exports. According to the Central Bank of Nigeria, over the last five years, credit flow to the export sector has not only been low, but has maintained a downward trend accounting for an average of 0.6 per cent of total domestic credit to the private sector. High risk aversion and dearth of medium-to-long term funds at competitive interest rates in the commercial banking system have been largely blamed for poor access to credit by exportoriented companies in Nigeria. Against this backdrop, the CBN’s recent move to reverse the declining trend in the flow of credit to the non-oil export sector through the activation of the N500 billion non-oil export stimulation facility,

introduced about two years ago, is highly commendable. The NESF, managed by the Nigerian Export Import Bank, is intended to boost the level of non-oil export earnings, engender foreign reserve accretion .and address the seemingly intractable problem of over-reliance on crude oil exports. Together with the N50 billion export development facility, the NESF is expected to attract and incentivize new and additional investments to the non-oil export sector, stimulate private sector growth as well as encourage foreign investment and job-creation. The overarching aim of the NESF and EDF is to lower costs for Nigerian exporters and make their products competitive in the global market. Just like the highly rated Anchor Borrower programme, it is crucial to recognize critical success factors early in the implementation stage. Studies have shown that many export deals fail not necessarily due to lack of appropriate funding sources, but from lack of knowledge about funding sources and how exporters can gain access to them. In a 1986 study of export promotion programs in the United States, Kedia and Chhokar found that such programs had no significant impact on exports not least because of a lack of awareness by the target beneficiaries. Therefore, it is a no brainer that awareness is critical to successful implementation especially in view of the fact that besides existing export-oriented companies seeking expansion, the NESF is also targeting start-ups. The accommodation of start

ups is particularly commendable against the backdrop of a recent disclosure by the Chief Executive Officer of the Nigerian Export Promotion Council Mr. Segun Awolowo, to the effect that informal export of goods by Nigerians is in excess of US$40 billion annually. Incentives provided in the Export stimulation facility will not only help to formalize such undocumented transactions but also boost the country’s GDP. The public enlightenment programmes meant to sensitize exporters on how to access these funds should not be left to the CBN or NEXIM Bank alone. All participating financial institutions should be involved. It is very vital to establish performance indicators and periodically undertake a review of the performance of the NESF in order to determine the funds’ development impacts in terms of job creation and improvements in productivity and capacity utilization among other benchmarks. The CBN and NEXIM Bank should ensure that there is adequate risk management framework for the NESF given the high level of Non-Performing Loans in the banking industry. Besides proper administration of the fund, NEXIM Bank should collaborate with relevant government agencies like the Standard Organization of Nigeria to address other vital issues such as quality standards which contribute to the poor market access and weak competiveness of Nigerian goods in international markets.

The NESF comes at a maximum interest rate of 7.5 per cent for shorttenored transactions spanning up to three years, and 9 per cent for longer term transactions that are up to 10 years. Barring other exogenous factors such as high exchange rate and inflation, these should help to lower the cost of operations in addition to addressing the problem of mismatch whereby long-term assets are funded with short-term facilities. Be that as it may, the rate of interest charged for this facility is relatively high when compared to other frontier and emerging economies such as Indonesia, Malaysia, India, Pakistan and China where interest rates are below 5 per cent. In fact, in many developed countries, the rate of interest is even less than 2 per cent. Therefore, to properly position Nigerian exporters to face foreign competition, the NESF should find accommodation for lower lending rates than what it currently offers. This could take the form of special financial package for large value exporters. Without a doubt, lower interest rates will help to strengthen the export competitiveness of Nigeria which is one the cardinal objectives of the intervention fund.

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Educating democratic citizens and issues of voters registration seriously affecting our politics is highly important as 2019 inches closer.

MARTIN IHEMBE Ihembe is a Political Scientist with research interest in political development. He can be reached via08023688848

s Nigeria’s electoral democracy continuous to grapple with leadership failure, it has become clear that this problem emerged as a result of the kind of choices the electorate make when casting their ballot. Out of ignorance or on purpose, most voters tend to vote on the basis of ethnic affiliation or other sentiments. This has given ethnic champions, religious bigots, and mediocre access to power in our political space at the expense of those who possess the capacity to make meaningfully contribution in government. If we truly yearn for the kind of development that comes with democratic government, we cannot continue like this and expect that development will magically happen; because acting in this manner amounts to what Albert Einstein defines as insanity. For this reason, civic education among a class of democratic citizens I refer to as “Hobbits” and “Hooligans”, an issue we not given the attention it deserves and is

REUBEN HOPO Hopo is of the Public Affairs Unit, Lagos State Printing Corporation, Alausa, Ikeja.

ccording to a 2017 Q3 report of the National Bureau of Statistics, Nigeria recorded its highest ever aggregate unemployment rate rising from 14.2% in the fourth quarter of 2016 to 18.8%. The monumental increase occurred despite the fact that all tiers of governments as well as the Organized Private Sector, OPD, generated additional 1.2 million jobs, which thus put the estimated labour population at 85. 1% for the same period. The indices also revealed that the number of people within the labour force that were unemployed or underemployed increased drastically from 13.6 million and 17.7 million in the second quarter to 18.8 million in the third quarter. Analysis of these figures shows that the number of women within the labour force (aged 15-64) who were willing, able and actively seeking for job but unemployed was 21.2% while that of men was 16.5%. Thus, the total number of unemployed and underemployed put together increased from 37.2% in the previous quarter to 40% in the third quarter. Also, the youth unemployment rate under the third quarter increased to 33.10% and represents the highest ever in the Country. A contra-distinction of youth unemployment across a few countries between the third and fourth quarters of 2017 to February 2018 for

The hobbits and hooligans in Nigerian In his seminal work – Against Democracy - Jason Brennan classified democratic citizens into three broad categories, namely: the hobbits, hooligans and the vulcans. Essentially, the hobbits are apathetic to politics, hence their knowledge of political issues is very low, if not zero. The hooligans are more knowledgeable in politics than the hobbits. However, they are “rabid” (extreme) in their political views as they refuse to welcome opposing views that is at variance with theirs. For them, it is all about belonging to People’s Democratic Party, All Progressives Congress or Third Force that matters to their selfimage in the same way being Igbo, Hausa or Yoruba matters to them. By contrast, the vulcans are rational in their political decision. They make electoral decisions on the basis of careful examination of public policy options put before them by those who seek govern them and settle for a candidate with realistic public policies that appeal to them. Given their nature, the hobbits and the hooligans are more susceptible to political manipulation by ethnic bigots, religious fanatics and demagoguery elements who sell the “us” versus “them” narrative during elections, instead of presenting realistic policies they intend to implement if elected. In Nigeria, the vast majority of democratic citizens are either hobbits or hooligans. The number of the vulcans is negligible. This

On this note, the media, Civil Society Organisations and NonGovernment Organizations whose mandate falls around issues of democratic accountability, rule of law and transparency in government have to embark on civic education among the less informed electorate whose ballot these democracy’s assassins relay on for electoral victory explains why the religious and ethnic narratives which occupied the political space in the 2011 and 2015 general elections appealed to most of the electorate in these categories. The attitude of the voters’ on both side of the divide in the two elections brings to mind what a former American president said about a Latin American dictator: “he may be a son of a bitch, but he is our son of a bit.” Put differently, even if he is bad, let him go because he is our own. Has that attitude from the less informed class of democratic citizens solve the problems for which those governments were voted in? If they achieved anything at all, there is more of the debit than the credit. The country has since been extremely polarized with “democracy’s assassins” at the helm, which has done more damage to our corporate existence by creating all manners of ills and the elevation of a clannish and provincial style of governance at the centre. To continue this way and expect things to change is to imagine that it is possible to catch a cloud and

pin it down as a nun in an abbey near Salzburg thought. On this note, the media, Civil Society Organisations and NonGovernment Organizations whose mandate falls around issues of democratic accountability, rule of law and transparency in government have to embark on civic education among the less informed electorate whose ballot these democracy’s assassins relay on for electoral victory. This is so because they constitute the large percentage of the electorate, and their vote is highly influence in swing the pendulum of power to any direction. Allowing them to remain in their ignorance and fixated worldview would detain us with this set of incompetent and kleptocratic politicians who are only interested in feasting on our common patrimony and watch us being brutally murdered, while they are protected by our security services.To complement the efforts of the Third Sector Organizations listed above, the Vulcans who have a higherknowledge in public policy issues have to join in educating the Hobbits and the Hooligans on the need to shun supporting politicians on the basis of pity sentiments of whatever kind, and carefully examine whether the campaign promises of those seeking to govern them are realistic enough to address their problems.

ernment out of power by posting exasperating twits, or liking and commenting same posts on social media platforms without a Permanent Voter Card (PVC), no matter how adrenalined up you are. This is where the problem lies. According to statistics from the Independent National Electoral Commission (INEC), since it commenced Continuous Voters Registration (CVR) in January this year, only 5, 110, 836 persons have registered. If you add that number to the already registered persons before the 2015 general elections, you will get 73, 944, 312. In a country with an estimated population of about 190 million, this raises concern. When I put the above figure side by side the 170 million Nigerians that voted during the Big Brother Nigeria show, I wept for the future of our youths. If they can attach such importance to BBN, why not the PVC which determines their future leaders? If they cannot register to vote out those who have failed to provide the basic infrastructure that brings about economic development and provide security against the activities of luciferous elements who are currently killing innocent Nigerians, why complain? Worse still, the statistics also indicates that the number of uncollected PVC is very high. The number of those that have collected less than half of those that registered.

Issues of voters registration and uncollected PVC Vexed by the abysmal performance of the Buhari led government, most Nigerians have been threatening to vote it out of power come 2019. Truth is, you do not vote a gov-

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On Nigeria’s dire unemployment burden instance revealed that, Spain has the highest number of unemployment with 35.50% followed by Nigeria with 33.10%, and in descending order with Italy having 32.80%; France with 21.60%; Turkey with 19.20%; Euro Area with 17.7%; Australia with 13.30%; India with 12.90%; United Kingdom with 12%; Canada with 11.10%; South Korea with 9.60%; United State with 9%; Netherland with 7.20%; Germany with 6.20% and Japan is 4.20% It could be reasonably affirmed that one of the scenarios that plunged the country into recession in the second quarter of 2016 was its lingering unemployment situation. Now that the country has exited the economic conundrum, Government at all levels need to pay dire attention to mass employment generation to be able to rejuvenate a sound and virile economy that is buoyant, able to make living affordable for her over population and most importantly cushion the inflammatory inflation on the citizenry. It is in this direction that Lagos State has been consistent and emphatic through the building of strong institutions that encourage job creation. The Lagos State government has clearly reached another milestone by institutionalizing a framework for mass employment in the State with the establishment of the Lagos State Employment Trust Fund. The agency till date has succeeded in helping Lagos residents in establishing over 6000 micro-small and medium enterprises

with a total loan grant of almost N5 billion to beneficiaries, who are mostly artisans, entrepreneurs and traders. Taking a cue from this proactive effort, there is higher possibility that when other stakeholders provide maximum opportunities for more Nigerians to have access to gainful employment, it will inevitably result in stronger economic growth and enhanced revenue for governments. In the same vein, the creation of the Ministry of Wealth Creation and Employment by the Lagos State government in tackling the employability of many jobless compatriots has been laudable for achieving positive results. The Ministry since its creation has accelerated synergies with the private sector in training and retraining artisans to upscale their skills, so that they would be more accessible to the global market. Graduate Internship Programme by the Ministry has also fetched quality of life to many graduates who applied to gain the needed work skills and ethics required by the private sector. Most of them have been offered gainful employment while others now have the skills to operate as entrepreneurs. The huge investments in road infrastructure in the State are also genuine commitments towards provision of jobs for thousands of people in related fields. The Government’s ‘‘Ready, Set, Work’’ initiative has also led to the inculcation of entrepreneurial spirit among school levers. The State Government’s several tourism and sporting initiatives have equally opened up new frontiers of busi-

ness opportunities to a lot of people with special skills and talents for self employment. Also, the State Government’s investments in agriculture have greatly enhanced job creation as well as food security in the State. In the same light, equipping critical agencies with high propensity for employment such as the Lagos State printing Corporation, which was equipped in 2017 with hi-tech digital machines, has sustained a sizeable number of workforce among whom are specialists and other categories of workers who earned their living because of Government’s strategic intervention in investing in state-ofthe-art equipment that now gives the corporation, a genuine corporate image above other peers in the industry. The printing corporation being a training partner to the National Directorate of Employment since 1987, is now better equipped to offer trainees quality skills and experience with new global best technology that enrich their marketability for job prospects. The same advantage is also enjoyed by students from the State’s technical colleges on industrial attachments. The International Labour Organisation in its recent report has shown that Africa would face a rise in its unemployment situations in the current year due to scarcity of decent work. In Nigeria, with steady rise in over population, all tiers of governments should exigently strengthen diversification to reap economy growth and

employability advantage for millions of Nigerians that are out of job. Provision of mass employment is the only recipe for Government to enhance national cohesion and sense of belonging for all Nigerians. On a final note, to forestall looming disaster in the country, governments at all levels need to ingeniously devise programmes that would incorporate the youths into the center stage of nation building process in the country. For this to be effectual, the course of action must commence with a fundamental revamping of the education sector. We need to alter the curriculum of our tertiary institutions to do away with courses that no longer fit into present day’s socio-economic reality. Indeed, we need to lay more emphasis on technical education as well courses that de-emphasise the craze for non-existing white collar jobs. Similarly, we should make effort to promote social entrepreneurship among the youths. This could be done through the establishment of internship programmes aimed at giving youths the opportunity to learn valuable skills in contemporary fields such as information communication technology, fund development, public relations, program development, management and much more. Equally, corporate organisations, NGO’s, individuals and government institutions should be committed to mentoring of the youths.

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EDITORIAL PUBLISHER/CEO

Frank Aigbogun

EDITOR-IN-CHIEF Prof. Onwuchekwa Jemie EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, SALES AND MARKETING Kola Garuba EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole MANAGER, SYSTEMS & CONTROL Emeka Ifeanyi HEAD OF SALES, CONFERENCES Rerhe Idonije SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

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

National Assembly, please pass the 2018 budget

even months after the president submitted the proposed 2018 budget to the National Assembly and four months into the fiscal year, the 2018 budget proposal has not been passed and sadly, it appears to be no longer a priority in the National Assembly. It has taken a back s eat to the dispute with the executive over expenditure without approval and perceived harassment of lawmakers by the executive. In March, the Speaker of the House of Representatives, Yakubu Dogara gave a deadline of April 24 for the passage of the budget. The Senate President also gave such deadlines but all those deadlines have passed and no progress has been made on the budget meaning it will continue to drag into the fiscal year and when it is eventually passed, there will be no proper implementation of the budget especially the capital components of the budget.

Recent figures show that average percentage expenditure of overall national budget implementation was 22 percent. That of 2017 was adjudged to be only 21 percent, the lowest in five years. Last year als o, the budget recorded a deficit of N1.7 trillion against the N2.18 trillion budgeted for capital projects. In fact, late passage of the budget has become a norm in Nigeria. Since the return to democratic governance in 1999, the budget has only been passed on time once or twice. This does not speak well for our democracy and for our country. Of course, the lawmakers are not accepting blame for the long delay in passing the budget. They have blamed t h e la c kl u s t re a tt i tu d e o f heads of ministries, departments and agencies and their refusal to appear before the National Assembly to defend the propos ed budget estimates for their departments, for the delay. The executive s omehow agre e d with the National Assembly when the vice president promised, last

month, that all ministries, departments and agencies (MDA’s) would be made to submit their expenditure in line with the budget as well and in compliance with the accounting year. Although some of the factors causing the delays may be beyond the control of the national assembly, one would expect that they, at least, show some urgency by prioritising the passage of the budget and not use the excuse of the attitude of the executive to abandon debate on the budget. But alas, they are too engrossed in issues that have to do with their continued relevance and survival in politics and do not really whether the budget is passed or not. But perhaps, we need to remind both the executive that is lethargic about the budget and the national assembly that is content to sit back and watch the executive run the country aground that those who suffer the economic consequences of delayed budget passage are not the fat cats in the executive and leg-

islature, but firms, individuals and households who need any relief they can get from economic hardship plaguing the land! A lot of projects are being held up because the budget hasn’t been passed and even the famed private sector relies heavily on the passage of the budget to do business. We are not unaware that perhaps, the real problem hindering the passage of the Budg et may b e the p ower play and squabble between the executive and the legislature. True, in a democracy this is not unusual. We also sympathise with the national assembly who are fighting hard to prevent the emasculation of the legislative arm of government by the executive. But the national assembly still needs to realize that the budget touches fundamentally on the well being of the people for whom it claims to be fighting for. They must redouble their efforts and robustly engage with the executive to ensure the budget is passed speedily and without further delay.

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Wednesday 02 May 2018

BUSINESS

COMPANIES & MARKETS

DAY

Sterling Bank earmarks N10bn for consumer loans

Pg. 14

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

Fidelity Bank’s profits hit record high ...Net Income surge 93.73 percent in FY’17 BALA AUGIE

idelity Bank Nigeria Plc registered a record profit in the fourth quarter of 2017 as the lender continues to intensify its risk management strategy. The Nigerian lender’s profit reached N18.57 billion in December 2017, marking 93.73 percent surge from the N9.74 billion recorded the previous year. The bottom line (profit) growth is the highest since 2014 when BusinessDay started gathering data. See Chart. The growth in profit was largely driven by the N9.5 billion growth in net interest income, N0.8 billion growths in net fee income and N1.5 billion reduction in total expenses. Interest income grew by 22.40 percent to N150.74 billion in the period under review, thanks to a 24.21 percent increase in interest income on loans and advances to customers. Fidelity Bank, with over 400,000 customers across the country, is efficient in curtailing costs and boosting profit as cost to income ratio (CIR) fell to the lowest in five years. See Chart. CIR fell to 67.50 percent in December 2017 from 76.30 percent recorded in 2013. See Chart. Fidelity Bank is able to turn each Naira invested in revenue in generating higher profit as net margins

moved to 10.47 percent in December 2017 from 6.40 percent as at December 2016. Net Interest Margin (NIM) increased to 7.3 precent in December 2017 from 6.4 percent in 2016 as the growth in the average yield on earning assets outpaced the increase in average funding cost. Fidelity Bank risk management strategy has yielded fruit as there was an improvement in asset quality

amid the exposure to oil and gas and 9 mobile (formerly Etisalat). Non-performing Loans (NPLs) improved to 6.40 percent in December 2017 from 6.60 percent as at December 2016. NPLs in absolute figure increased by a mere 2.50 percent to N50.67 billion in December 2017 from N49.40 billion the previous year. However, Fidelity Bank said it expects NPLs to move to 8.80 percent if it includes

the exposure to 9 mobile in subsequent figures. Analysts had forecast the gradually economic recovery would show face in the numbers of Nigerian banks when they release full year results. Experts say unpaid loans, interest income from short term securities and a rise in profit will help bolster capital buffers. The gross domestic product of Africa’s largest oil producer expanded for three straight quarters last year

after a 1.6 percent contraction in 2016, with year-onyear growth reaching 1.9 percent in the final three months of 2017. An increase in crude prices and the introduction of the Investors and Exporters’ Window by the central bank that ended a crippling shortage of dollars helped attract more investment flows into the country, while improving liquidity for the nation’s lenders.

Fidelity Bank’s loans and advances to customers increased by 7.01 percent to N768.73 billion from N718.40 billion as at December 2016. Fidelity Bank’s customer base has increased by over 64 percent in the last 4 years (2013) leading to triple digit growth in Savings deposits (114 percent). The lender’s share price close at N2.55 2:00 pm as of Monday, valuing it at N73.88 billion.

Fines, management expenses discourage investors — CSAN President

he huge fines paid b y s o m e i n s u rance companies and management expenses discourages shareholders from investing more in the industry, Shehu Milkail, President, Constance Shareholders Association of Nigeria (CSAN), has said. Milkail said this on Monday in Lagos that data sourced on X-Compliance Report from the Nigerian

Stock Exchange (NSE) updated last on April 12 called for caution. He said that African Alliance Insurance Plc, according to the report, paid about N46. 1 million monetary fines to the NSE for breaking its rule on account submission. “The company filed its audited and interim financial statements after the regulatory date of March 31. “The underwriter was

slammed N46. 1 million by the Exchange for late submission of 2015 and 2016 accounts,’’ he said. He said the huge fine and management expenses of underwriters could affect their buoyancy if not meticulously managed. Milkail pleaded with underwriters to abide with the corporate governance policies of regulators to avoid sanctions and to make the industry investors destina-

tion. “No doubt that the slams, bogus management expenses aside the country’s economic situation were responsible for the low or no dividends payments in the previous years as only 7 per cent of the underwriters were able to pay dividends,’’ he said. Milkail added that data sourced from the Nigerian Insurers Association (NIA), disclosed that a whopping

N264.15 billion was spent as management expenses in five years. According to the data, in the 2012 financial year, N48. 22 billion was incurred on management expenses. “About N48.59 billion, N53.83 billion, N52.12 billion, and N61.39 billion in 2013, 2014, 2015 and 2016 respectively, brought the total sp ent as management expenses to N264.15 billion in five years,’’ he

said. He, however, commended the National Insurance Commission (NAICOM) for safeguarding the interest of the investors as well as customers. According to him, the commission has given concise directives to the operators to reduce enormous management expenses. “The CSAN is absolutely in support of such a directive,’’ Milkail said.

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COMPANIES & MARKETS Sterling Bank earmarks N10bn for consumer loans Chinwe Agbeze

terling Bank has reserved N10 billion loans for consistent salary earners in Nigeria under its newly launched product, Specta, by December 2018. The bank disclosed this during the launch of Specta, a digital innovative retail lending platform recently in Lagos. Speaking at the launch of Specta, Benedicta Sadoh, head, value chain, said the lending platform offers consumers loans of up to N5million in five minutes without collateral. ‘‘With Specta, consumers have access to personal loan products within five minutes of profiling. We give a maximum loan of N5 million but this is subject to a repayment amount equivalent to 33.3 of the customer’s net monthly salary,’’ said Sadoh. ‘‘No collateral is required and all loans are insured. So, there is insurance against job loss, death and permanent disability. Specta ensures speed,

convenience and safety.’’ Sadoh explained that Specta is strictly for salaried workers at all levels and those interested can apply without having an account with the bank or downloading any application. ‘‘We engage the human resource manager and all the necessary approvals are in place, the manager populates an excel sheet with the details of their interested staff. As soon as the details are given to us, within five minutes it is uploaded in Specta,’’ she explained. ‘‘An SMS and email is sent to each of the corporates saying it is time for them to enjoy their Specta experience and their five minutes starts. Specta is barely four months old and as at today, we have over 700 corporates that have signed up with us. ’’ Shina Atilola, group head, strategy and innovation, said the lending platform was birthed with the aim of eliminating the burdens associated with loan procurement making it as seamless as possible. ‘‘Our purpose at sterling

Bank is to enrich lives and we do this by adding value to individuals. Most people want to pay school fees or buy products and they don’t want to go through the arduous of loans,’’ said Atilola. ‘‘One can sit in the comfort of their home or car and with a mobile phone, they can apply. From the application to the crediting of their account, the experience is less than five minutes. We have done the average analysis and have discovered that its 2.55minutes. It’s the first of its kind in the industry. According to Grama Narasimhan, executive director, retail and consumer banking, the bank is targeting 100,000 customers by December, 2018. ‘‘Our loan cap is N5million for one transaction but a customer can do multiple transactions to get more loans. As long as customers come to us, we are happy to lend to them,’’ he said. ‘‘The future of banking is digital and not in people coming to the bank to fill application forms to get service from the bank.’’

Brand extension: Nigerian Breweries launches Tiger Beer in Nigeria SEYI JOHN SALAU

s the battle to win over Nigerian consumers and stay atop the beer war, Nigeria Breweries Plc (NB), recently launched Tiger Beer in to the Nigerian market. Tiger Beer is a product of Nigeria’s leading brewer, NB, a Heineken Operating company. The global beer is strikingly bold, and refreshingly smooth. Tiger Beer was born in 1932 on the streets of Singapore. Tiger Beer is made with the finest ingredients through a precise brewing process. Franco Maria Maggi, Marketing Director, NB said Tiger

Beer is arguably the world’s fastest growing premium brand, growing by 24% (2016) year on year, and still continues to grow rapidly and is currently marketed in over 60 countries, including UK, US, Singapore, China, Vietnam, Australia and now in Nigeria. According to Maggi, Tiger Beer is a rallying point for those who are unknown, those with the potential to change the world. “Tiger Beer is a beer for the bold, the courageous and the daring, encouraging them to ‘uncage’ bravery in pursuit of passion,” he said. Tokunbo Adodo, Portfolio Manager - International Premium, NB said Tiger Beer iden-

tifies with the bold Nigerian, whose passion brings a sense of purpose. “It is for the man of courage, and will be anchored around creativity, and inspiring real stories of people living their potential, and making their mark. “Tiger believes everyone has a Tiger inside, which is why we uncage the courageous creative spirit of the young generation to help realize their true potential. It is only when you uncage your tiger, can we uncage the world. Tiger Beer’s courageous spirit appeals to the trend-conscious consumer, and we know the new 45cl Tiger Lager Beer format is right up their alley,” he stated.

L-R: Omobolanle Victor-Laniyan, head, sustainability, Access Bank Plc; Osagie Ehanire, minister of state for health; Nancy Wildfeir-Field, President, GBCHealth; Oyewale Fakoya, Brewery medical doctor, Nigeria n Breweries Plc, and Zovera Youssoufou, chief executive officer, Aliko Dangote Foundation, during the Corporate Alliance on Malaria in Africa private sector forum in commemoration of World Malaria Day in Lagos.

Business Event

L-R: Wasiu Shafe, chief finance officer; Hamda Amba,, managing director, and Olufunsho Olusanya, executive director, all of FSDH Merchant Bank during the Bank’S pre AGM press briefing in Lagos. Pic by Pius Okeosisi

L-R: Abimbola Ali,vice principal Academics Methodist Girls High School, Jadesola Adedeji, founder STEM METS Resources and program coordinator Airbus A380 Workshop Nigeria, Oluwamumiyo Makindipe, participating student, Airbus A380 Little Engineer workshop and Rana El Chemaitelly, founder and CEO, The Little Engineer Program, at the launch of Airbus Foundation A380 Little Engineer Workshop in Lagos Nigeria .

L-R: Aggrey Maposa, MD, Kantar Nigeria; Mariam Fagbemi, director, Kantar Public Nigeria; Akin Adefisan, and Apena Timileyin of Kantar Milward Brown distributing free treated mosquitoes nets in celebration of the World Malaria day recently in Lagos.

L-R: Bimbo Ikumariegbe, general manager, sales and marketing; Biodun Omoniyi, MD/CEO both of VDT Communications Limited and Lekan Balogun, MD/CEO, Bitflux Communications Limited, when VDT received, “Broadband Services Provider of the Year” and “Corporate Internet Company of the Year” awards at Beacon of ICT Awards 2018 in Lagos

Politics & Policy

Why I’m the best to govern Ekiti State – Olujimi 19

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BUSINESS DAY

Why Buhari’s US visit is a sham – PDP INNOCENT ODOH, Abuja

he people’s Democratic Party (PDP) has given a number of reasons why the visit of President Muhammadu Buhari to the United States (US) remains a sham and cannot in any way benefit Nigerians The People’s Democratic Party (PDP) through its National Publicity Secretary, Kola Ologbondiyan in a statement on Monday toldNigerians and the international community of plans by the Presidency to once more, deceive the public by releasing imaginary and fictitious investments and economic opportunities as gains from President Muhammadu Buhari’s visit to the United States. “Our investigation revealed that part of the scheme is to inject extraneous issues in their account of interaction between President Buhari and President Donald Trump in order to arrive at a predetermined impression of a successful state visit. “ This includes presenting President Trump with false performance indices and claiming that the US President endorsed the Buhari administration’s im-

Ologbondiyan

aginary economic direction, its discredited anti-corruption war as well as the failed handling of security in the country. “This is in addition to bogus claims of imaginary deals sealed with certain investors to bring in

huge investments into Nigeria, a practice that has become a pattern whenever the President goes on official visit abroad, the statement said. The PDP called on Nigerians to note that the Presidency had

Presidential aspirant raises alarm over insecurity ...pledges to revamp economy, create job

Tope Adefemiwa

all, endemic corruption which has assumed a ten-a-dime prevalence and has affected every thread of our nation’s fabrics,” he said. The presidential aspirant said the country needed a youthful leader with vigour, energy and passion, adding that having held several leadership positions in the past he was experienced enough and capable of leading Nigeria out of its current situation. “We need to reform and re-engineer the judiciary, strengthen all corruption-fighting agencies, revi-

talise our ailing economy, improve our educational standard, build critical infrastructures, revamp our industries, build more refineries, create modern transport system, social security, improve power supply, construct massive road networks, reorganise our nation’s security paraphernalia and create investor-friendly atmosphere. “If elected I would fight corruption, develop critical infrastructure, massively industrialise the country and empower women among others,” he said.

Melaye: PDP accuses governor bello of wasting over 5 billion

he Peoples Democratic Party (PDP) in Kogi State has accused the State Governor, Alhaji Yahaya Bello of wasting over N5 billion public fund on the failed plot to recall the Senator representing Kogi West Senatorial district of the State, Senator Dino Melaye. But reacting to the allegation, Governor Bello denied the allegation that his government has a hand in the recall process of the embattled Senator, describing the allegation as unfounded . The Governor noted that the power to initiate recall of any Senator is the prerogative of the constituency the lawmaker is representing. But the PDP noted at the governor was involved, describing Governor Yahaya Bello as “heartless” lamenting that the over N5 billion would have paid at least two months salary of workers in Kogi State. In statement signed by Achadu Dickson, Director Research and Documentation, called for the thorough investigation of the claim by some of the electorates who claimed that their signatures were forged. “Those who were involved in the petition submitted to INEC for the recall of Senator Dino Melaye must be arrested and tried for forgery ” Achadu said According to the party, the huge human and financial resources deployed to the” Dino Melaye must go agenda “would have made meaningful impact on the lives of the workers that are being owed several months salary.

2019: Woeful defeat awaits Buhari, APC – Yinka Odumakin INNOCENT ODOH, Abuja

INIOBONG IWOK

presidential aspirant on the platform of KOWA Party, Tope Adefemiwa, has raised the alarm over rising cases of insecurity and killings by Fulani herdsmen in the country, and the failure of the Muhmamadu Buhari administration to curtail the killings. Adefemiwa, in a declaration speech, said the desire to rescue the country from mis-governance, informed his decision to aspire to be the president of Nigeria, stressing that the country with enormous potentials- human and natural resources- which if well taped could be among the best in the world. Ademifewa promised to create jobs especially for the youth, revamp the educational system, and also industrialise the country, especially the rural areas if elected. “Nigeria lies prostrate owing to many challenges most of which have dominated national discourse. Not for dearth of good policies, not for dearth of manpower, not for lack of intellectually-fertile minds, nor lack of resources but due to lack of commitment, strong will and above

always claimed to attract huge investments, the latest being claims of a $15 billion investment during the 2018 Commonwealth Head of Government Meeting (CHOGM), whereas no signs of such investments have come to our country. The main opposition party added that Nigerians are aware that in line with this scheme, a particular cabinet minister has, since last week, been moving around media houses and other interests in the United States with a view to procuring, swaying and lobbying for endorsements for President Buhari. “We note that the issue of governance by falsehood and procured endorsements in the past three years has led our nation into the present predicament in all sectors. “As we move towards 2019, it is imperative that Nigerians are not fed with fake performance indices, whereas the market dynamics and reality on ground show the contrary. “We therefore, charge the Presidency and the All Progressives Congress (APC) to shed their proclivity for propaganda as government by falsehood cannot yield any dividend to the people,” the PDP said in the statement.

he Secretary General of the apex pan Yoruba socio-cultural organisation, Afenifere, Yinka Odumakin, has predicted a “woeful defeat” for President Muhammadu Buhari and his party, the All Progressives Congress (APC) in the 2019 elections if the nation continues to deteriorate. Odumakin told BusinessDay on Sunday that “Except the APC rigs the results of the election; I don’t see how APC will win this election judging from what the country is today. If the situation of the country continues as it is I can guarantee you that woe awaits them in 2019.’’ He however, urged Nigerians to rise up and demand for free and fair election. On the question of restructuring of the federation, he said that Afenifere is in partnership with the leadership of the South East, South- South, Middle Belt and others andhave agreed to take a common stand on the question of restructuring. “Our main focus is restructuring because if this country does not restructure we are going nowhere.

In 1983, Shagari’s budget was 25 billion dollars when we were 80 million population, now that we are 198 million the budget is 23 billion dollars.We must do something different and something new,” he said. On the question of the incessant killings allegedly perpetrated by the marauding herdsmen in parts of the country, Odumakin lamented that the killings have continued because President Muhammadu Buhari has failed to take decisive action against the marauding Fulani herdsmenbecause of what he described as “conflict of interest.” Odumakin added that the security forces felt shy of moving against the Miyetti Allah, the umbrella body of the herdsmen because doing so will might hurt Buhari, who is the grand patron of the Fulani herders. He urged Buhari to choose between being Nigerian President and the patron of the Miyetti Allah stressing thatas long Buhari remains the grand patron of Miyetti Allah, the crisis might worsen. “It is the cultural affinity that he shares with them but he (Buhari) should have denounced being the grand patron of Miyetti Allah, but he has not done so,” he said.

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BUSINESS DAY

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Politics & Policy

2019: INEC and the quest for technology in elections INNOCENT ODOH, Abuja

he Independent National Electoral Commission (INEC) andthe ECOWAS Network of Electoral Commissions (ECONEC) in collaboration with the Electoral Commissions Forum of the Southern Africa Development Countries EFC-SADC, held a three-day international conference in Abuja between April 9 and 11 with the theme “Opportunities and Challenges in the Use of Technology in Election.” The participants at the well- attended conference such as chairpersons, vice chairpersons and members of Election Monitoring Bodies (EMBs) in the ECOWAS and SADC countries, reviewed, assessed and shared experiences on the lessons learnt on theintroduction, trend, impact and potentials of the use of election technologies in the last three decades. While fielding questions on the possibility of enhancing the success of elections with the use of technology INEC Chairman, Mahmood Yakubu, who also chairs the ECONEC, reiterated that even though thecommission will deploy technology in the collation and transmission of results the commission will however, not employ electronic votingin the 2019 election apparently because of some challenges associated with that. The conference organized by the INEC, the European Centre for Electoral Support (ECES), the Electoral Commissions Forum of Southern Africa Development Countries (ECF/SADC) drew participants from over 30 countries from West and southern African

Yakubu

sub-regions, who brainstormed on the deployment of technology for elections. Yakubu noted that within the existing legal framework in Nigeria, the commission has enough backing for the deployment of technology saying “I want to categorically say that the commission is not deploying electronic voting in 2019 but we will deploy technology for the collation and transmission of electronic results and we believe that by doing so we will collate, transmit and declare results more speedily and more accurately.” He added that the commission will involve the citizens through what he called “Citizens Mandate

Protection” to help at polling stations. “With technology election is in the hands of the people. We want to assure you that technology has come to stay in the conduct of elections in the two sub region and we are not just talking about actual voting, collation and transmission of results but all other processes including the confirmation of the voters register. Technology will be deployed in all the processes including the tracking of logistics for elections. “We will continue to do whatever that is required to ensure that we retain the confidence of our people because elections at the end of the

day is not just about technology it is about the people and about the people’s confidence in the process. Technology is a facilitator it is never an end in itself,” he said. The conferences was supported by the European Centre for Electoral Support (ECES) whose President Monica Frassaoni, noted that the views expressed during the three-day meeting will form the basis of ECES continued support for Nigeria in the 2019 elections. At the conclusion of the exercise, the stakeholders resolved to encapsulate their vision in the Abuja Declaration, which stipulated a 10- point agenda namely; “That EMBs of the ECONEC and ECF-SADC regions bear the burden discharging the sacred national duty of organizing and conducting free, fair, credible and transparent elections, bearing in mind that the outcome of a well conducted and generally accepted election is the basis of good governance, peace, stability and development. On the other hand, a badly conducted election with disputed outcome is always a trigger for conflict, sometimes resulting in civil war with negative consequences, not only on the affected state, but on neighboring states in particular and the region and the continent in general; “EMBs of ECONEC and ECFSADC regions are aware that sustaining the usage of technology in elections is an expensive undertaking. This requires the mobilization of adequate resources, which sometimes may be beyond the capacity of the state to bear as a sovereign responsibility. Therefore, the private sector, which requires a stable and peaceful political and socio-economic environment to

operate and thrive, should contribute to meeting the cost of elections; “EMBs of ECONEC and ECFSADC regions are willing to take advantage of the opportunities offered by technological innovations to improve the credibility of the electoral processes and to enhance the sanctity of the ballot and integrity of the electoral outcomes. In doing so, EMBs should view the application of technological innovations in the electoral process as a facilitator, rather than “magic bullet” for the delivery of good and credible election by adopting simple, appropriate, cost effective and sustainable technologies. The deployment of such technological equipment and applications should be secured in law, protected against intrusion and accompanied by appropriate training of electoral officials and effective civic and vote education to engender trust, confidence and ownership by all stakeholders; “EMBs of ECONEC and ECFSADC regions are conscious of the numerous challenges associated with the adoption, deployment and usage of electoral technology, including the deficit of infrastructure and expertise, cost, choice and effectiveness of technology, as well as the twin issues of communication platforms and security od sensitive election data in a world characterized by cyber warfare and election interference through the use of technology on a global scale by state and non-state actors among others.” Nigerians are just too eager to see the success of the much hyped use of technology in the 2019 elections but remain apprehensive of the deficit infrastructure needed to drive the use of technology.

Political backlash: How FG, ECOWAS moved to end open grazing INNOCENT ODOH, Abuja

ollowing the severe impacts of the open grazing on the political economy of countries in West Africa, especially Nigeria, the federal government and the Economic Community of West African States (ECOWAS) have deepened their collaboration to end the incessant crises involving herdsmen and famers, which have killed scores and displaced many more across the region. President Muhammadu Buhari told a joint high-level meeting of Ministers of Security and Agriculture/Animal Resourcesfrom ECOWAS, Cameroon, Chad, Mauritania and the Central African Republic on pastoralism and cross-border transhumance that opened on Thursday April 26, that open grazing of cattle needs to be reviewed in favour of ranching. Represented by the Vice President, Yemi Osinbajo, the president who declared the meeting open,

noted that ranching is the most productive method of modern animal husbandry adding that for West Africa to curb the damaging conflict it must meet this global standard. Osinbajo submitted that the increasing deaths and destruction associated with the conflict has increased the tension which has now been intertwined with ethnic and religious sentiments and compounded by criminal banditry. He pointed out that the current crisis was triggered by competition for water and fodder, which are increasingly shrinking due to the negative impacts of climate change. “In recent years we have seen an alarming escalation in tension between crop farmers and pastoralists across West Africa and even though these tensions have their origins in the competition for resources sooner than later they become overlaid or intertwined with ethnic, religious and partisan grievances. This is complicated by the actions of criminal bandits

Buhari

who have taken advantage of the proliferations of illegal weapons as well as our porous borders across West Africa. Clearly the importance of regional cooperation in border management, in law enforcement and in identity management cannot be overemphasized,” he said. He noted that although the 1979 ECOWAS Protocols on Free Movement of Peoples and Goods guarantee free movement of goods and

services, “Nigeria can no longer allow the undocumented movement of goods and people that simply contribute to our security challenges. We must ensure that the protocols are complied with and the sections are duly followed.” He added that the 1998 Protocol relating to Transhumance can be activated to address the crisis warning that the crisis could cause serious food insecurity in the subregion if not curbed since over 70% of the population depends on crop production for their survival. President of the ECOWAS Commission, Jean Claude Kassi Brou in his remarks said that despite the fact that West Africa has been recognized as livestock producing region, with 60 million heads of cattle, over 160 million small ruminants and well over 400 million poultry, the region has witnessed a deterioration in pastoralism and Transhumance both within countries and between member states of the community and neighbouring countries.

“In recent years, we have recorded numerous cases of conflicts, which unfortunately claimed human lives, caused forced population displacements, led to erroneous stigmatization of ethno-linguistic and cultural groups against a backdrop of insecurity and terrorism, resulted in the adoption of legal texts by countries to delay, prevent or prohibit the movement of cattle. “In addition to demographic growth, rapid urbanization, climate change, limited farmland, poor implementation of transhumance management systems and mechanisms and inadequate investment in livestock farming are factors that have contributed to undermining the sector and to reducing the availability of natural open fields. “Admittedly, the challenges abound, but the principles of regional integration and solidarity spur us to work together to find sustainable solutions for the security Continues on page 19

Wednesday 02 May 2018

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Politics & Policy

Why I’m the best to govern Ekiti State – Olujimi Deputy Minority Whip of the Senate, Senator Biodun Olujimi (PDP, Ekiti South) is one of the PDP governorship aspirants in Ekiti State. In this interview with OWEDE AGBAJILEKE, the former Deputy Governor of the state and Commissioner for Works speaks on the May 8 gubernatorial primary of the party. Excerpts: Are you ready to step down for a consensus candidate to run against Professor Kolapo Olusola, the Deputy Governor of Ekiti State, the anointed candidate of the governor, Ayo Fayose? ell, the truth is: there were four of us in the race. And we were meeting because the Governor (Ayo Fayose) already was biased. The party in the state was biased. Everyone was biased. So, the four of us decided to speak with one voice. I can confirm to you that by now, one of them already asked me to continue, so there are just there of us in the race; myself, Prince Dayo Adeyeye and the candidate of the governor. So right now, we only have three (aspirants). In the other party, the All Progressives Congress (APC), they have about fifty-one governorship aspirants. If we have three, what is wrong in the three going to the field and contest? It is the primaries of our party. It is not the general election. So, we are all in the race; three of us. And I can assure you that it is one of us that will win the governorship election.

time. We need to develop it. We also need to ensure that education is put in a better pedestal than it is now. Our major problem is unemployment and we are going to look for ways by which we can get jobs that we can give our youths so that they can leave the roads and stop taking peanuts to hail politicians. I am a mother and I do not want anyone to rise at me because I will not allow my children to do that. And so, I am going to take it out of Ekiti. And the only way to do it is to create jobs to ensure that they have something to do; they have a sense of well-being; they have the feeling that government is working for them. I will work for Ekiti State.

As a woman, how bright are your chances, especially now that you are standing between the governor and another man? For me, I have no issues with the governor. He is not contesting. He is about to finish his term. The person that is contesting should be allowed to come into the fray so that he campaigns and do all we are doing. He is new in the party. But of course, he has been Deputy Governor. So that is leverage. He should come out and campaign like all of us. I have a better chance of winning than he has because I have things to show in Ekiti State. I have so many communities that I have touched. I have so many people and I know that if it is a free and fair primary, I will have resounding success in Ekiti State because I know them. I know where they are coming from, I know their expectations, I know what they want and I know they are frugal people; they will not want you to waste their money. I know where they are goingso; they also know that I love them with passion. And they know that what they want now and what they need is someone who loves them with passion and who is willing to give everything for them. That is what I stand for. What are the things you have

Olujimi

done for your people with your previous political positions? I have been there for quite some time and I have impacted positively on the political landscape of Ekiti State. When I was Commissioner for Works, I was the only one that brought a World Bank project which is a bridge that used to take at least 20 lives a year. I went to the World Bank and they agreed to assist us. The bridge is one of the best in Ekiti today. I can tell you of several roads and bridges that were also constructed when I was Commissioner for Works. As member of the House of Representatives, I did several empowerments and I built a few structures for our people. As senator, I have been able to provide over 124 solar boreholes. I have constructed about 12 kilometers of roads. I have been able to do drainages to assist the people I have also done about 20 kilometres of erosion control. I have done empowerments that permeate the entire state and I am usually standing there to assist anyone that is in trouble. Also, I have electrified communities with my Constituency Project. I have a lot more but this is not where to start recounting. What will you do differently if you are elected as governor? Because the state is not a very

buoyant state and you cannot waste their resources, whatever resources you make in Ekiti must remain in Ekiti. I am going to use my linkages to bring development into Ekiti. As I have done as a senator and brought so much to them, I am going to use the people I know to ensure that we set up factories in Ekiti State. We are going to take agriculture to a great level because that is what we are known for. We are an agrarian state and that sector has not been developed over

The SDP thing was a gimmick for people to lose orientation because I was there in the public space mobilising and they thought they needed to throw spanner in the works that was the issue of the SDP

There are reports that some of the aspirants are being intimidated. Are you one of them? All of the aspirants are being intimidated except the government candidate, but I cannot be intimidated. I know the beginning of the government because I was part of government. I was part of the other government; so no-one can intimidate me. I don’t feel intimidated at all. I know if there is a free and fair primary everything will go well. And by the way, it is one party. We will go into the primaries, whoever wins will be supported. Whoever loses should go home and rest and that is how primaries have been. No two people can ever win one governorship primary. Are you planning to defect to SDP if the PDP primary does not go your way? Many of our people have defected because they do not believe they should go through the agony some of us are going through but I won’t leave the party. This is the party that has given me almost every important assignment that I have had. The SDP thing was a gimmick for people to lose orientation because I was there in the public space mobilising and they thought they needed to throw spanner in the works that was the issue of the SDP. But suffice it to say that amongst all the former Deputy Governors, I am the only one left. Every other person has gone because of high-handedness, intimidation, harassment and that is not good for our Party. Those votes are votes that are supposed to be PDP votes. All of them have emerged in all other parties. Are you saying they won’t have votes? They will have votes because they have also been part of the system in Ekiti and they know how it works.

Political backlash: How FG, ECOWAS moved to end open grazing Continued from page 18

of people, modernisation of animal production systems, respect for the cultural and sociological diversity of people, which are the strength and assets of ECOWAS and its Member States,” Brou concluded. In his reactions, Nigeria’s Minister of Agriculture, Audu Ogbe, said that Nigeria’s solution to the crisis is that open grazing of cattle has to end because the herders have exploited it to allegedly shoot and kill farmers and sometimes wipe out an entire community especially in Nigeria. “It is time for us to consider ending an old culture that allows free movement of cattle. We must establish ranches to meet global standards,” he said. The Minister however, acknowledged that ranching is not cheap stressing that the government has to seek international assistance to help cattle farmers to subsidize ranching. He noted that the average cow needs about 40 litres of water and 10 kilograms of fodder, per day, which is not cheap. Special Representative of the United Nations Secretary General for West Africa, Mohammed Ibn Chambas said: “It is clear that pastoralism and transhumance constitute a regional problem, and therefore require a regional approach to effectively address them. “Conflicts between herders and farmers have an impact on national and regional human security, hamper economic development and tear communities apart. Most livestock-related conflicts in the region stem from increased competition between herders and farmers for access to water and pasture,” he said. To resolve these conflicts in the long term, there is a need to address the underlying causes, including land and water issues, rural land management and climate change, IbnChambas warned. “There are already good initiatives in place to foster peaceful coexistence between herders and farmers throughout the region. It is crucial to enhance these programmes and extend them to ECOWAS Member States that are yet to implement them,” he added. He reaffirmed the commitment of the United Nations Office for West Africa to support ECOWAS and its Member States to curb conflicts between herders and farmers. Proposals and recommendations for peaceful resolution of conflicts between farmers and herders in the Community will be submitted to the Heads of State and Government of the Economic Community of West African States (ECOWAS) at their next session in Lomé, Togo. Despite these efforts to end the conflict, many people believe thatthe recommendations being put forward by the Nigerian government and others may remain on paper except the regional bloc takes drastic actions to stop open grazing.

BUSINESS DAY

Wednesday 02 May 2018

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Wednesday 02 May 2018

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Nigeria joins league of sustainable oil palm producers …launches own version of RSPO …measures in place for smallholders certification …easy players’ access to finance JOSEPHINE OKOJIE

igeria has now joined the league of global sustainable palm oil producers as it launches its own version of the national interpretation of Roundtable on Sustainable Palm Oil (RSPO) recently in Benin City, Edo State. To ensure that Nigeria starts producing its palm oil in a sustainable way, 51 stakeholders across the country’s palm oil supply chain have signed to participate in Nigeria’s RSPO. The RSPO which requires palm oil producing countries to develop their respective national interpretation of the principles and criteria used in accessing and endorsing stakeholders for certification comprises of 132 indicators. In his welcome address, Fatia Afolabi, Nigeria facilitator of RSPO said that the RSPO national interpretation would help build sustainability in the country’s palm oil industry and increase efforts to ensure that the country takes back its position in the comity of palm oil producing nations. “We need to start producing palm oil in a sustainable way if we are to take back our position in global palm oil production. The standards of the RSPO addresses the legal, economic, environmental and social requirements of producing sustainably,” Afolabi said. Under Nigeria’s version of RSPO,

L-R: Fatia Afolabi, facilitator-Nigeria RSPO; Goodwin Obaseki, Edo State Governor and Graham Hefer, managing director, Okomu Oil Palm during the launch of Nigeria’s national interpretation of Roundtable on Sustainable Palm Oil (RSPO) in Benin City, Edo State recently.

measures are being put in place to ensure that smallholder farmers, which account for 80 percent of the country’s production, can also obtain the certification. “The RSPO set standard details for the sector. When the production of palm oil is protected, it becomes

inclusive, sustainable and have positive impact on the environment,” said Abraham Baffor, director for Africa, Profest- an NGO that supports governments, organisations implement their commitment to responsible production and sourcing of agric inputs, said during the launch

of the country’s version of RSPO in Benin, Edo state. “RSPO understands that smallholder farmers have unique challenges obtaining the certification; as a result, we are currently working on waivers to grant smallholders and putting measures in place to ensure

they come on board. “The RSPO will help farmers maximise the use of their land by increasing their productivity without necessarily expanding their farmland areas,” Baffor said. He stated that there are 64 major and 68 minor indicators which oil palm suppliers must meet before the certification processes commences. Goodwin Obaseki, Governor of Edo, during the launch said that the state is committed to the RSPO goals and that adopting the principles is critical to achieving the Edo states goal of creating 200,000 hectares of palm oil plantation. “We believe the principles of RSPO if properly enacted will achieve our goal of 200,000 hectares of palm oil plantation,” Obaseki said. “To ensure we are RSPO compliant, we are working with Profest to set up a technical committee. Under my leadership, Edo state will pioneer the establishment of palm oil council in Nigeria through the collaboration of oil palm producing states,” he added. In his keynote address, ‘The oil Palm a Sustainable Crop with a Zero Carbon Footprint’, Gert Vandersmissen, member, RSPO executive Board said that oil palm can take Nigeria out of poverty when the country starts producing it in a sustainable way. Vandersmissen stated that sustainability means profitability and environmental friendliness, adding that it is important for Africa to start producing in a sustainable way.

FG commends AFGEAN farmers’ market model for fresh produce JOSEPHINE OKOJIE

he Federal Government has commended the Agricultural Fresh Produce Growers and Exporters Association of Nigeria (AFEGAN) market model it has adopted for its fresh produce. Audu Ogbeh, Minister of Agriculture and Rural Development made the commendation during his recent visit to one of the AFEGAN fresh produce market in Ikeja. Ogbeh who was delighted by what he saw at the farmers market, applauded the association for creating market access even without the support of the government. The minster noted that the AFGEAN farmers market will help address the issues of food wastages while creating market access to farm produce. He was excited that most of the

farmers in the AFGEAN market were women who did not have to depend on the government to provide them with the structures to sell their produce. Also speaking, Adeotun Abbi-

O laniyan, founder and CE O, Maidville Consulting and also the representative of AFGEAN said that the minister’s visit to the farmers market shows government commitment to agriculture and the

desire to grow the economy through the sector. “We have been able to draw the attention of the government to our market initiative. The minister has applauded our efforts in creating an

Audu Ogbeh, minister of Agriculture and Rural Development at the middle with farmers at the AFGEAN market for fresh produce in Lagos recently.

opportunity for ourselves as farmers. “As farmers we have decided to do what we can to create market for our produce. We are creating markets to address the greatest challenge of farmers, which is access to the market,” Abbi-Olaniyan said. Akin Sawyerr, executive secretary of AFGEAN commended the efforts of Maidville, who have run with the market idea from inception and has made it happen. Sawyerr said that there is great need for farmers to have access to markets to sell their produce and be able to reinvest their profits in the supply chain. “There is a serious lack of good, clean and well organized markets across Nigeria, where formal supermarkets are clearly unable to meet the growing dietary needs of Nigerian growing middle class. This is what AFGEAN hopes to achieve with its farmers market,” the executive secretary said.

Wednesday 02 May 2018

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BUSINESS DAY

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NCAN partners NSCDC to stop foreign traders’ encroachment at farm-gates JOSEPHINE OKOJIE

he National Cashew Association of Nigeria (NCAN) is collaborating with the Nigeria Security and Civil Defense Corps (NSCDC) to stop foreign traders in Nigeria’s agric sector from encroaching into farms to purchase produce directly from farmers. Tola Faseru, national president, NCAN made this know during the association 2018 trade meeting held in Ilorin, Kwara state, while re-emphasing the urgent need for Nigeria to checkmate the excessed of foreigners at the country’s farmgates. “The encroachment into the farm gate by foreigners is inimical to the value chain system and cuts off our locals from participating in the trade. Expatriates position themselves in the bushes to buy directly from the farmers thereby taking away the much-needed jobs from our people,” Faseru said. “To this end, we are collaborating with the Nigeria Security and Civil Defence Corps (NSCDC), in order to maintain effective surveillance, check the influx of foreign nationals, control and put a stop to their activities at the farm gate across the country, especially for cashew,”

L-R: Abdullahi Gana Muhammadu, commandant general, Nigeria Security And Civil Defence Corps (NSCDC) and Babatola Faseru, national president, National Cashew Association Of Nigeria (NCAN) during NCAN trade administration meeting in Ilorin, Kwara State, recently.

he said. In his remarks, Adeyinka Fasiu, Kwara State commandant, NSDC, representing the Abdullahi Gana Muhammed, commandant general,

Ekiti rice farmers get N80m farm inputs from Anchor Borrowers Programme AKINREMI FEYISIPO, Ibadan

he Ekiti State Chapter o f t h e R i c e Fa r m e r s Association of Nigeria (RIFAN) has distributed farm inputs worth over N80million as loans to no fewer than 174 rice farmers under the CBN’s farmers Anchor Borrowers Program. Rotimi Kolawole, state coordinator, RIFAN who made this known in Ado Ekiti, said that the beneficiaries were currently cultivating 400 hectares of rice farms, adding that the farmers are expected to harvest a yield of over 1600 tonnes this season. Kolawole expressed gratitude to t h e st ate g ove r n m e nt f o r supporting rice cultivation which is thriving in the state. Kolapo Olusola the deputy governor had led several other relevant public officers on solidarity visits to the farms. According to Kolawole, the second phase of the programme would commence immediately adding that interested farmers could obtain expression of i nte re st f o r m s at a ny o f t h e offices of the State Agricultural Development Programme (ADP) in their locality.

In his remarks, Kehinde Odebunmi, the state commissioner for Agriculture and Rural Development charged the benefiting farmers to use the farm inputs judiciously, stressing that they must be conscious of their loan repayment plans and avoid unnecessary complications that may arise due to negligence. The commissioner said that the government would continue to support farming adding that the focus was to guarantee food security and productively engage youths in the State. Odebunmi assured that government would also continually provide technical and extension services to the farmers towards achieving maximum yield possible and to also prevent misuse of inputs. He noted that agr iculture remained a veritable option to productively engage youths and consequently reduce the challenge of unemployment adding that the programme would encourage youth participation in commercial Agriculture. In p u t s d i s t r i b u t e d t o t h e farmers include napsak sprayers, seeds, surface water pump and accessories as well as herbicides and fertilizers.

NSCDC disapproves of the practice and said it had to be stopped. He noted that NSCDC is glad with the partnership and that it has been approved by the commandant-

general, adding that the association’s task forces is ready to work with various agric association across the country. Fasiu called on all foreign

nationals interested in doing the business of cashew and any agro produce to stay at the port city to receive their cargoes. He then called the attention of traditional rulers, community leaders and as well as relevant cashew stakeholders to check the excesses of foreign nationals who encroach on the farm gate by ensuring proper documentation and registration of farms with the security agency, stating that this action will contribute immensely towards the prevention of foreigners’ encroachment. Most of the foreigners that are involved in this practice do not bring back foreign exchange into the country as their transactions do not take place through the banks. Key players say this is bad for Nigeria’s economy which is badly in need of foreign exchange, after being hit by recession arising from low oil prices, which has slashed government revenue by over 50 percent, creating market distortions and job losses. According to industry players, the international practice ofn purchase of agro produce is through the commodity chain or licensed warehouses. A commodity chain is a process used by firms to gather resources, transform them into goods or commodities, and finally, distribute them to consumers.

IAR&T decries poor performance of Agricultural Development Programmes’ AKINREMI FEYISIPO, Ibadan

he Institute of Agricultural Research and Training (IAR&T), Moor Plantation, Ibadan, has expressed concern over the poor performance of Agr icultural D evelopment Programmes (ADPs), in many states across the federation as a result insufficient funding by some state governments. James Adediran, executive director of the institute, said he was concerned about the level of performance and achievement of most ADPs due to poor funding. He also said a lot is still to be done by state governments toward moving agriculture forward in their respective States. Speaking at the opening of 31st South West Zonal Workshop of Research Extension Farmers Input Linkage System (REFILS), themed ‘Quality Control and Value Addition: Panacea to Agricultural Marketing Challenges in Nigeria’ held at the institute’s training hall in Ibadan, Adediran said: “I am concerned on the level of performance and achievement of most ADPs which are low because of insufficient funding by their state governments, while in some zones of the country, the activities which form the framework of research extension farmers input

linkage system have seriously dropped in content and context “I sincerely appreciate your enviable agricultural policy and its implementation for agricultural growth in your respective state. Definitely, a lot is still to be done towards moving agriculture forward in the states and South West in general since the demand for food is much higher than supply,” Adediran said. “Our population is skyrocketing daily. But, food production is still at low ebb because we rely mostly on the peasant farmers to feed the nation. The greater percentage of those engaged in farming is the small scale farmers. There is therefore urgent need to embark on the new strategies that will increase output and give economic returns

on agricultural activities so as to achieve sustainable food and fibre production,” the professor said Also speaking, Olukemi Lawal, zonal coordinator of South West, REFILS said that the annual workshop was organised to find solutions to the problems being faced by farmers across the South West zone while addressing journalists. “The purpose of this workshop is to bring stakeholders together; we are bringing together scientists, extension workers and farmers to deliberate in ensuring food security in Nigeria. We come together to deliberate and review the report of Agricultural programmes, we also deliberate on them. We should find solutions to major problems confronting the farmers,” Lawal added.

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Wednesday 02 May 2018

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Short-term credit dormant in banking sector in 6 months Stories by HOPE MOSES-ASHIKE

he structure of bank’s credit in the first half of 2017 indicated that credit of short-term maturities remained dominant, according to the Central Bank of Nigeria (CBN). Credit maturing within one year accounted for 43.7 percent, indicating a decline, compared with 46.0 per cent at end of June 2016. The medium-term (greater or equal to one year and lea than three years) and long-term (3years and above) maturities stood at 18.4 and 37.9 per cent, respectively, compared with 18.1 and 35.9 per cent at the end of the corresponding period of 2016. Similarly, deposits of less than one-year maturity constituted 96.1 per cent (of which 74.9 per cent had maturity of less than 30 days), compared with 95.3 per cent at the end of the first half of 2016. Further analysis showed that the medium and longterm deposits constituted 1.0

and 3.0 per cent, respectively, compared with 1.8 and 2.9 per cent at end-June 2016. Consequently, loan to deposit ratio fell to 79.0 per cent at end June 2017 from 80.5 per cent at end-June 2016, and reflected significant holdings of government securities by banks as claims on the core private sector also fell. Although marginal improvements were observed with the long-term deposit and credit structure during the review period, the continued miss-match of deposits and loans structure remained a threat to stability of banks

and their ability to create longtenored assets. The banking sector exhibited weaker competition among players in the first half of 2017. The market share of the largest bank, with respect to assets and deposits, stood at 14.8 and 12.9 per cent, respectively, compared with 13.5 per cent and 12.8 per cent at the end of the first half of 2016. Nineteen smaller banks have market shares ranging from 0.08 to 11.7 per cent of assets and 0.02 to 12.9 per cent of deposits. The Herfindahl-Hirschman Index (HHI)2 (a commonly

accepted measure of market concentration) of the industry rose to 783.65 and 737.66 for assets and deposits from 751.17 and 733.37 in assets and deposit, respectively in the first half of 2016. The concentration ratios of the six largest banks (CR6) were 60.11 (HHI=3,612.97) and 57.1 per cent (HHI=3,254.75) in assets and deposits respectively, compared with 44.89 (HHI=2,011.83) and 51.89 per cent (HHI=2,692.07) at the end of the first half of 2016. This suggests that oligopoly is possible in the market.

Retail banking drives up Fidelity Bank profits by 94% … As Nnalue emerges N10m grand prize winner

idelity Bank Plc has d e l i ve re d st ro ng financial results, posting a 94 percent growth in profits for the year ended December 31, 2017 boosted by its retail banking drive. Savings Deposits grew by 15.2 percent to N178.6 billion, accounting for 23.0 percent of total deposits from 19.5 percent in the 2016 full year. This has improved the Bank’s low-cost deposits ratio to 77.0 percent of total deposits. The bank has reiterated its commitment to deepening financial inclusion and growing retail banking Nigeria as Bartholomew Ekenechukwu Nnalue of Aba Shoe Plaza Branch of the bank emerges winner of the N10million

grand prize in the ‘Get Alert in Million’ Promo reloaded. The promo is the 7th savings promo the bank is running in the last 10 years to reward customers who operate savings account with Fidelity Bank. Nnamdi Okonkwo, managing director/CEO Fidelity Bank Plc. in a statement said the successes recorded with the ‘Get Alert in Million’ Promo’ is a testament of the bank’s commitment to deepening the savings culture in Nigeria to further promote retail banking. In the last ten years, this is the seventh draws we have done and the believability of it is how we have delivered on all our promises without exception; it’s been an excit-

ing time for our customers. In all we have given N110 million and 108 consolation prizes; fridges, television and Generators to 185million winners,” said Okonkwo. He however drops a hint about the 2017 results of the banks, which he suggested was boosted by the retail banking drive of Fidelity Bank. “Shortly we will be announcing our 2017 results, if you see the growth in our savings account; you will understand that our customers have been loyal and so all we could do is reward them the way we had,” Okonkwo stated. Chijioke Ugochukwu, Executive Director, Share Services and Products, said cultivating a savings culture is a better way of getting on

the financial ladder. “By the time customers are able to accumulate some money in terms of savings, they develop that culture, and then big dreams become a possibility. When you save money everybody is a winner; the gifts under this promo are added bonus – however when you cultivate a savings culture you are a winner,” she said. Fidelity Bank has rewarded its loyal customers in the last 10 years to grow its retailbanking portfolio and promote financial inclusion in the Nigerian banking sector. The ‘Get Alert in Million Promo’ was initiated to encourage many of the unbanked community to embracing the savings culture.

Sterling Bank lending platform offers N5m instant loans

igerian consumers are in for exciting times as Sterling Bank Plc, announced the launch of Specta, an instant lending platform that offers consumer loans of up to 5 million Naira in five minutes. The impressive lending platform uses proprietary data and analytics to process and disburse consumer loans to salary earners who belong to pre-approved communities in less than five minutes without paper work and collateral. The types of loans offered includes personal, payday, wedding finance, rent, education and medical finance loans, among others, to salary earners. Commenting on the revolutionary product, Grama Narashiman, Executive Director, Retail and Consumer Banking, Sterling Bank Plc said, “Specta automates, simplifies and personalizes the loan application, disbursement and receipt process eliminating the slow turnaround time and other inconveniences associated with the manual process.” Narashiman disclosed that Specta was created to enable individuals who belong

to pre-approved communities have access to loans with ease. Pre-approved communities are companies or organisations that have been profiled and enrolled on the Specta platform. Individuals who however work for organisations that have not been profiled can apply to be enrolled as individuals on the Specta platform. Speaking on the new platform, Ibidapo Martins, Chief Marketing Officer, Sterling Bank Plc said the key feature of Specta is the uniqueness of the platform as it has been personalized for each distinct user. “With Specta, we want to help our customers solve some of their most pressing financial needs ranging from house rents to medical bills and wedding expenses in a timely manner while they pay back in comfortable installments.” He said. Martins further added that prior to the introduction of Specta, salary earning employees typically encountered challenges to access loan facilities as they could not provide the collaterals which their corporate counterparts offered, which made it difficult for them to support their dreams and ambitions.

CIBN reconstitutes governing council

he Chartered Institute of Bankers of Nigeria has elected new national officers to steer its affairs for the next two years. At the head of the newly constituted Governing Council as President/Chairman of Council, is Uche Messiah Olowu, a distinguished banker of repute. Other officers elected to assist Olowu in the task of running the affairs of the Institute are, Bayo Williams Olugbemi, who emerged the first vice-president; Kenneth Onyewuchi Opara, FCIB, 2nd Vice-President and Pius Oladeji Olanrewaju, National Treasurer Before his election as President, Uche Olowu has been the Institute’s 1st Vice President and Chairman, Board of Fellows/Practice Licenses of the Institute. He is a seasoned professional banker and astute scholar with over 30

years cognate experience. He has a Masters degree in Business Administration (MBA) in Management from Rivers State University of Science & Technology (RUST), Port Harcourt, where he traditionally capped it with a Doctorate of Philosophy degree (Ph.D) in management-Organisational Behaviour. Bayo Olugbemi was elected as the 1st Vice President and prior to his election, he has served as a member of the Governing Council of the Institute (2016-2018) and a facilitator of several CIBN programmes including the 2016 & 2017 Annual Bankers’ Dinner where he anchored the occasion as Chairman of the planning committee. Opara Ken was elected the 2nd Vice President of the Institute, while Pius Oladeji Olanrewaju was elected the National Treasurer of the Institute.

Wednesday 02 May 2018

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Pension Today

BUSINESS DAY

In Association with

State’s slow compliance to pension reform worsening social protection for workers …as only Lagos, Niger, Rivers, Osun comply fully

igures from the National Pension Commission, regulator for the pension industry shows that out of the 36 States of the Federation only four have fully complied with provisions of the Pension Reform Act 2014. It shows that four states including Lagos, Niger, Rivers and Osun have fully complied, contributing to their employees Retirement Savings Account (RSA); payment of accrued rights and provision of group life insurance as provided in the Contributory Pension Scheme (CPS). While another eight states including Anambra, Delta, Ogun, Kaduna, Zamfara, Edo, Ondo and Ekiti, have complied half way, contributing to their employees Retirement Savings Account (RSA) and payment of accrued rights, but yet to provide group life insurance. While 17 other states, including Imo, Jigawa, Kogi, Oyo, Nasarawa, Taraba, Akwa Ibom, Kebbi, Sokoto, Benue, Kwara, Plateu, Cross River, Bayelsa, Abia, Ebonyi, and Katsina have failed to provide these key welfare programmes to their employees, enjoying luxury of their offices, and want to continue or install their representatives in 2019 against the wishes of citizens. According to the Pension Reform Act 2014, the objective of the CPS among others is to ensure that every person who worked in either the Public Service of the Federation, Federal Capital Territory, States and Local Governments or the Private Sector receives his retire-

ment benefits as and when due. Apart from that, it is also to assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age. Workers in some many states of the federation are being owned monthly salaries and where they are paid at all; high cost of leaving fueled by rising inflation is not allowing them save much for the future. This development underscores why states must comply with the Pension Reform Law to be able to provide and save for their employees for retirement. A situation where by incumbent governments fail to comply, and having borrowed so much or put their states in huge debts, and then pass pension burdens to incoming governments are inimical to the survival

The Contributory Pension Scheme, as the name suggests, is contributory in nature, making it mandatory on employers and employees in both the public sector and private sector organisations with three or more workers to contribute 10 and 8 percent respectively of the emoluments of the employee into a Retirement Savings Account (RSA)

RC634453

Diamond Pension Fund Custodian Limited 1A, Tiamiyu Savage Street, Victoria Island, Lagos State. Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com

of employees during old age. Longe Eguarekhide, managing director/CEO, AIICO Pension Managers Limited who commended government of States that have complied, said it takes courage, compassion and interest in citizens welfare, for a sitting governor to provide these for its employees. While confirming that only 4 states in Nigeria are fully compliant with the CPS, he urged workers in other states to push for their rights to adequate pension arrangements. “The savings culture thus introduced provides an autonomous pool of long-term capital that can be accessed to propel development in critical need areas. Success-

fully done, this can spark off a virtuous cycle of development.” Aderonke Adedeji, president, Pension Fund Operators Association of Nigeria (PenOp) said the states are at different stages of implementation, but the good thing about it is that some progresses are being made. Adedeji said getting the states to comply with provisions of the CPS is a long and pain staking process. “For a lot of the states, you cannot go in and get a yes for an answer. It literally does take years to talk to the executives, labour unions, and other stakeholders.” She said PenOp and PenCom have sometime last year formed a joint committee, that is going round the

states to encourage them to comply with the pension law. The Contributory Pension Scheme, as the name suggests, is contributory in nature, making it mandatory on employers and employees in both the public sector and private sector organisations with three or more workers to contribute 10 and 8 percent respectively of the emoluments of the employee into a Retirement Savings Account (RSA). Apart from ensuring that every worker receives his entitlement as and when due, the other objectives of the scheme includes to assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age.

This section is created to increase awarness and deepen knowledge about the contributory pension scheme. If you have enquiries or contributions, send to this e-mail: diamondpfcbusday@yahoo.com

BUSINESS DAY

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Wednesday 02 May 2018

E-mail: insurancetoday@businessdayonline.com

L-R: Tombofa Ashimi, non-executive director; Olanrewaju Sulaiman, non-executive director; Mohammed Bintube, chairman; Oluwatobi Olaleye, company secretary; Funke Moore, Ag. managing director/CEO; and Adeyinka Olutungase, chief finance officer at the 20th Annual General Meeting of Goldlink Insurance Plc held in Lagos.

L-R: Rotimi Edu, vice president, Nigerian Council of Registered Insurance Brokers (NCRIB); Bola Onigbogi, deputy President, NCRIB; Sola Tinubu, president, NCRIB and Olaotan Soyinka managing director/CEO, Sovereign Trust Insurance Plc at the last edition of the NCRIB Members’ Evening hosted by the Company at the NCRIB House in Lagos.

Management liability claims takes deeper root in global institutions they had suffered a significant loss from professional and management liability. The focus on professional and management liability risks, which also includes gender pay gap and duty of care, by NGOs and international schools are new to the top featured losses and concerns of the survey, and threaten the quality of education and services provided to students and beneficiaries of their care. This coupled with emerging threats such as natural disasters, which cost the world $306 billion according to Swiss Re, nearly double the cost of 2016, and legislation posing greater challenges to program and school operations, data protection and infrastructure, make life challenging for these industries. “Having worked in this business for over 30 years, I thought that nothing surprises me anymore, but we did not anticipate

seeing such a surge in management liability claims and for it to be such a huge loss for our primary two segments – NGOs and international schools,” said Dan Tuman, president, Clements Worldwide. “In today’s social climate, these trends make a clear case for organizations and industries everywhere to take steps to adapt their policies accordingly and prepare for the unexpected as no one is immune to risk.” And while respondents have shifted their attention to other losses besides political violence, more than 35 percent of respondents still express worry over increased threats of political violence and disruptions from elections or political environment, up from 27 percent last year. More conflict seems likely given the existing civil wars in Syria and Yemen, Al Shabaab in East Africa and Al Qaeda in West Africa.

Africa Re to launch Young Insurance Professionals Programme

foundation in insurance and reinsurance for participants – a key component for career development in the industry. The YIPP is another milestone in the Corporate Social Responsibility initiatives of Africa Re, in line with its mission of fostering the development of the insurance and reinsurance industry in Africa. The best participants in the nine (9) month online training will Certificate of Completion issued by Africa Re; Invitation to a Capstone On-Campus where they will be introduced to cutting-edge managerial and leadership skills; and sponsorship to attend one of the major insurance/reinsurance events in Africa (AIO, FANAF, OESAI, GAIF, FAIR, etc.).

Stories by Modestus Anaesoronye

he rise of professional and management liability due to global harassment and abuse claims is a leading cause of loss and risk among global organizations, according to the 2018 Clements Worldwide Risk Index. The survey released in Lagos in an event held in collaboration with the U.S. Embassy in Nigeria found that 17 percent of the organizations surveyed shared they were subject to a lawsuit or litigation within the last six months, with industries such as international schools (28 percent), government agencies (25 percent) and government contractors (29 percent) the most impacted by this loss. Twenty-seven percent of NGOs and UN agencies reported that

he African Reinsurance Corporation (Africa Re) will during the 45th Conference and General Assembly of the African Insurance Organisation (AIO) billed for next week in Accra Ghana launch the Young Insurance Professionals Programme. The YIPP, which is an online training programme, free of charge targets all insurance/reinsurance professionals under the age of 32 years and working with insurance or reinsurance companies, broking firms, insurance supervisory

authorities or other related organizations. The fourteen (14) courses, which are carefully selected and well designed, will build a solid

Linkage Assurance CEO among Top 25 capital market performers in 2017

he Managing Director/ CEO, Linkage Assurance Plc, Pius Apere has been listed among Top 25 Chief Executive Officers (CEOs) who delivered the most value to stakeholders, and contributed to the stellar performance recorded by the Nigerian capital market in 2017. Last year, listed stocks gained N4.36 trillion in market capitalisation, a development that made the Nigerian capital market one of the best in the world. The 25 CEOs who were celebrated during the Business Day Top 25 CEO Awards held in Lagos accounted for over 60 percent of the success recorded on the NSE. That means they added some N2.6 trillion to market value in 2017. Pius Apere led new Management of Linkage Assurance Plc with the support of the Board recorded significant achievements in 2017 leading to being awarded as one of the Top 25 CEOs. In the 2017 financial year, the Company recorded gross premium income (GPI) of N4.102 billion as against N4. 032 billion in 2016, and was able to beat negative market sentiments that affected the company before the new management came in early 2017. “From 2017 the Company share price has rose above 90 kobo and we were in a position to carry out half year 2017 Accounts audit exercise successfully within two months to pay interim dividend, having wiped out the negative retained earnings which existed for over 10 years. The Company is also in a position to pay final dividend from 2017 audited Accounts which awaits NAICOM’s approval.”, according to senior official in the company.” The Company had an improved investment performance and profitability in 2017 despite the challenges in the market environment leading to better investment returns to shareholders in terms of pay-

Pius Apere

ment of dividend and increased shareholders fund. The Company also in 2017 brought in a new marketing strategy that focused on client/insured, with the ultimate aim of deepening the company’s marketing outreach which will enable growth of gross premium income, which is expected will manifest from 2018. “We have developed our IT infrastructure in 2017 to put the company in competitive position in line with our peers. To improve our operational efficiency, we have deployed the Virtual Private Network (VPN) to our 13 branches in 2017 to ensure seamless operational link and/or fully integrated with Head office.” “Online sales platform including document Management System (DMS) has been developed in 2017 and deployed in 2018, having got NAICOM’s approval.” A lot of progress was made in the area of market visibility, including launching of new innovative retail products, strengthened ties with brokers for bigger market share, closing the gong ceremony at NSE etc to carry all market players along, targeted at increasing the company’s brand visibility as part of its aggressive revenue generating strategy.

Wednesday 02 May 2018

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BUSINESS DAY

E-mail: insurancetoday@businessdayonline.com

PTAD adds 7,969 from South-West, North-Central civil service to payroll

L-R: Akinwunmi Olaseni, head, Life Underwriting, AIICO; Olakunle Lasisi, branch secretary, Nigerian Red Cross Society (NRCS); Sarah Adeniran, group head, Brokers Management, AIICO; Mobolaji Onibodu, branch chairman, NRCS; Oluwole Apata, head, Group Life Sales, AIICO; and Gloria Chiekwe, admin officer, NRCS, in commemoration of 2018 World Malaria Day, where AIICO Insurance Plc donated mosquito nets among other items IDP camps in the North-Eastern part of the country. This was made possible through AIICO’s partnership with the Nigerian Red Cross Society (NCRS).

Godlink Insurance secures shareholders approval for recapitalisation Stories by Modestus Anaesoronye

nterim Board of Directors of Godlink Insurance Plc have secured the approval of its shareholders to recapitalise the company, to enable it operate in full capacity and compete effectively in the market. This lifeline is coming after six years when the company board were sacked, and taken over by the regulator, National Insurance Commission (NAICOM) following anomalies and misstatements discovered in its audited financial statements for the year ended December 31, 2011. With this expected lifeline, the management is optimistic that there will be light at the end of the tunnel. “It is the hope of the board and management that the recapitalisation plan, which has received the approval of NAICOM, will be

acceptable by the shareholders, says Funke Moore, acting managing director/CEO of the Company. “This will enable us recover the lost confidence by our customers and also help us get new clients to enable the company bounce back to its former position as a leading insurance company in Nigeria.” According to Moore backed by other members of the management, “what many people do not know is that even in our present state, we write premiums in excess of N1 billion and, we are meeting our obligations. She noted that the goodwill of the company, the brand equity and the kind of people (employees) they still retain are a huge asset to the company. According to her, the Company will be raising about N3.3 billion through rights issue as well as preference shares to put back the company in its rightful place in the industry.

Meanwhile, during the Annual General Meeting held in Lagos, shareholders gave approval to the board under special business to among others: “Issue up to 4,600,000 ordinary shares of 50 kobo each from the Company’s share capital by way of rights issue in such proportion, at such time, for such consideration and upon such terms and conditions as the directors may deem fit subject to obtaining approval of relevant regulatory authorities”. “That the directors be and are hereby authorized to raise additional capital by way of private/ special placement through the issuance of 2,000,000,000 irredeemable, convertible preference shares of 50 kobo each on such terms and conditions that shall be determined by the directors subject to obtaining the approval of the relevant regulatory authorities.

Mohammed Bintube, interim board chairman, who thanked shareholders for their patience and long waiting to see the survival of the company, assured that challenges confronting the company were already coming to an end. He however urged the shareholders to ensure they take up their rights when the rights offer starts. NAICOM had in 2012 has constituted a sevenman interim board of directors to oversee the affairs of Goldlink Insurance Plc sequel to the sack of members of the board of directors of the company following anomalies and misstatements discovered in its audited financial statements for the year ended December 31, 2011. NAICOM again on 25 February 2016 after the Company’s board meeting dissolved the former board and appointed new board, which is currently leading the recapitalisation process.

Leadway Pensure unveils new campaign

eadway Pensure, a Pension Fund Administrator in Nigeria has revealed a new logo and campaign for the company. The logo change comes with renewed commitment to ensure that customers continue to enjoy superior service. The new Logo seeks to create a visual connection with the Leadway Group. The adoption of the Leadway Camel thus signifies

strength, capacity and resilience which are the notable virtues customers have come to associate with the brand. We are pushing the Camel to an iconic status, as customers usually associate with logos they can identify with. Along with the logo change comes a campaign that speaks to a new generation of customers. This new campaign carefully side steps the conventional mes-

saging that Pensions companies usually tow, instead choosing a bold and direct way to connect to a younger demography by acknowledging who they are now and encouraging them to secure their future through hard work and the right savings culture. On the choice of speaking to the younger generation, Olusakin Labeodan, executive director Sales and Investment explained that

it is important the younger generation understand the need to save for the future. Ta g g e d # Wa t c h Me , the campaign is centered around youths who want to live life to the fullest but understand the need to save for the future. According to Labeodan, ‘It is important to speak to them and not at them; reach them at a level that they understand, a level they can connect to.

he Pension Transitional Arrangement Directorate (PTAD) has added 7,969 Civil Service Pensioners to its payroll for regular monthly pension payments. These pensioners were verified in the South West & North Central in the first quarter 2017 and have been paid their March 2018 pension. The addition of this group has improved the economic livelihood of pensioners who have been deprived of their rights for a long period. Thus, further supporting the role of PTAD in making sure the labours of our heroes is not in vain. Before this addition, over 19,500 verified Civil Service pensioners from the North West, South East, North East and South-South had been reinstated and paid their arrears. Also ongoing is the computation of benefits for over 5,000 verified Civil Service Pensioners. This will conclude the payrolling of all verified Civil Service Pensioners In January 2018, the Civil Service Pension Department (CSPD) paid N2.215 billion to 111,525 pension-

ers, 219 Retired Permanent Secretaries and Heads of Service. For the month of February, N2.216 billion was paid and in March, N2.216 billion was paid to pensioners, Retired Permanent Secretaries and Heads of Service. For the Parastatals Pension Department (PaPD) which started verification of defunct and privatised agencies in fourth quarter 2017, 98,259 pensioners were paid monthly pension of N4.097bn in January 2018. For the month of February, N4.134bn was paid to the pensioners while N4.117bn was paid in March. For Pensioners verified in fourth quarter 2017 & first quarter 2018 under the Parastatal Pension Department (FHA, NNN, NICON, Nigerian-Re, DSC& NITEL/ Mtel) the accurate computation of their benefits is currently being made. Over 30,000 pensioners under the defined benefit scheme who were yet to be pay rolled over the years have been cleared and added to PTAD payroll post verification of Civil Service, Police, Customs, Immigration and Prisons Pensioners across the country.

Sigma Pension promises value added services to retirees

igma Pensions Limited, a pension fund administrator has promised to offer value adding services to retirees under its management. The PFA said is in line with its vision to ensure that retires enjoy a happy retirement after their work life. Mabel George, head, Business Development Division West, Sigma Pensions speaking at a retiree forum with the theme: “A Seamless Path to a Happy Retirement” held in Abeokuta, Ogun State underscored the importance of keeping close relationship with, and adding values to retirees under its scheme in line with its vision and mission statement. According to her, the essence of the forum is to keep the retirees abreast of developments in the pensions industry and also afford those close to retirement an opportunity to ask questions that are relevant to their funds in the care of the Sigma Pensions Limited. Unlike the stresses that often characterised the old pension’s scheme, where pensioners, including bedridden retirees were asked to appear physically for verification, George stressed that Sigma Pensions will

ensure that retirees do not suffer undue stress. “We are poised to add value to you. To know how we can make improvement in the pension’s payments, we have come here to educate you all.” She added: “Eligibility for benefit payments are different depending on ages, time frame in retirement, ministry or establishment, sex, retirement based on medical ground, employment termination, which is 25 percent of the pensions, amount in savings account of the pensions company, among others. “We want to ensure that your pensions are paid as at and when due before 21st of every month. But I want to urge you to always ensure that you do proper documentations. As pensions administrators we will advise you on what us best fit. Don’t be swayed, ask questions and we will oblige you where and when to come on.” “For instance, if you have a change either in your mobile number or home address quickly get back to us. If there are discrepancies in your date of birth quickly reach out to us. Give us updated information. They are minor things you can do”, counseled George.

BUSINESS DAY

Wednesday 02 May 2018

BUSINESS DAY

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Wednesday 02 May 2018

Mercedes eyes billionaires targeted Maybach SUV Page 30

Toyota gives new RAV4 extra rugged design

JLR to cut jobs, reduce output amid Brexit, diesel concerns Page 30

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Most problematic cars buyers must avoid

Mustang scores hat trick as bestselling Coupe

Stories by MIKE OCHONMA

lobal demand for the new 2018 Ford Mustang has driven Mustang to its third straight year as the best-selling sports coupe in the world. Registrations in 2017 totaled 125,809 cars, according to Ford analysis of the most recent new light vehicle registration data from IHS Markit. This data compiled from government and other sources and capturing 95 percent of global new vehicle volumes in more than 80 countries put Mustang ahead of all other sports coupe competitors worldwide. According to Erich Merkle, Ford sales analyst “Demand for Mustang continues to be very strong, especially overseas, where until recently people couldn’t get their hands on one”. “Even more encouraging is that, the updated 2018 Mustang is just now getting rolled out to export markets.” Of the nearly 126,000 vehi-

…As initial quality improves by 8% over 2016

very year, J.D. Power & Associates releases its Initial Quality Study (IQS), and the 2017 edition proves to be what car buyers already know. The old adage, “They don’t make them like they used to,” is dead and gone. Today’s cars are built better and more reliable than ever, but across the board, initial quality has improved a whopping 8% over 2016, according to the report. In 2016, Kia leapt to the No. 1 spot, ending the nearly 30-year reign of premium brands. It held on to that top spot for 2017, with Genesis, Porsche, Ford, and Ram rounding out the rest of the top five. But while a rising tide lifts all boats, there are still winners and losers. And even today, there are brands that have a long way to go, which is something customers of these automakers found out the hard way. The agency has been conducting the IQS for 30 years by sending a comprehensive 233-question survey to car buyers who have purchased new cars and asks them to rate their first 90 days with their new rides. And as far as the industry has come, it’s clear a lot can still go wrong on a brand new car. From the 2017 survey, here are the 10 car brands with the lowest ini-

tial quality, ranked by number of problems reported per 100 vehicles. 2017 Infiniti Q60 Red Sport; After some time in the wilderness, Nissan is refocusing its premium Infiniti brand, with a number of new models, eye-catching styling, and some seriously formidable new engine architecture. But big changes take time, and right now quality in current models leaves something to be desired. New owners told J.D. Power they found 107 issues per 100 cars. Oddly enough, Nissan itself ranks 10th overall in terms of quality. 2016 Jeep Renegade with MySky roof; Jeep is in the midst

of a renaissance, enjoying a level of popularity it has never experienced. But despite its crossovers and SUVs flying off dealer lots, its quality leaves something to be desired. Squeaks, rattles, and wind noise have always been common on the rugged Wrangler, but a series of engineering recalls and tech problems have continued to plague the brand. Buyers can almost expect headaches. Just like the 2017 Infiniti Q60 Red Sport, there were 107 reported issues per 100 vehicles. 2017 Subaru Outback; Like the Jeep, customers can’t buy Subarus fast enough. Their line-up of

affordable, safe, all-wheel-drive models are perfect for young families and older drivers alike. But that doesn’t keep the Japanese brand from having issues. Out of 100 cars, buyers reported 113 problems. 2017 Audi SQ7 TDI; Audi has long positioned itself as a techforward car company. Unfortunately, a risk of being an early adapter means a lot can go wrong. While rivals BMW and MercedesBenz rank sixth and 18th, respectively, Audi finds itself at the back of the pack when it comes to quality. Out of 100 cars, customers reported 115 problems with their new vehicles.

7.36% crashes caused by bad tyres- FRSC

oboye Oyeyemi, Corps Marshal of the Federal Road Safety Corps (FRSC) has revealed that in 2017, a total of 691 crashes representing 7.36% of the total crashes recorded were as a result of bad or defective tyres. The road safety chief made this known in a presentation titled “Merits of the Proper Use of Tyres” delivered at the 2018 National Tyre Conference, organised by the National Automotive and Development Council (NADDC) in Kano with the theme: ‘Strategy for Resuscitating Tyre Industry in Nigeria’. On behalf of the Corp Marshal, Bisi Kazeem, corps public education officer, said having most of the tyres used in Nigeria produced locally is a key factor in eliminating fake and substandard ones on Nigerian roads. The Corps Marshal stated that tyres have been responsible for 5,562 vehicles being involved in road crashes from 2012-2017. He gave the breakdown of total crashes caused by bad tyres from 2012 to 2017 as follows: 2012 (693 crashes); 2013 (1,271 crashes); 2014 (873 crashes); 2015 (813 crashes);

2016 (689 crashes); and finally, in 2017 a total of 691 crashes representing 7.36% of the total crash recorded. The presentation featured a survey conducted by FRSC on use of tyres on Nigerian roads in 2016 where it was discovered that of the 2,486 vehicles and 10,024 tyres that constituted the population of the survey, 39% tyres are not expired as against 61%; 50% tyres are new, 35% fairly used tyres, and 15% rebore tyres; 9% are complete worn-

out tyres as against 91% that are not complete worn-out. The corp marshal mentioned that 60% of the vehicles surveyed have correct tyre pressure while 40% have incorrect tyre pressures, of this category, 26% of the tyres were over inflated and 14% under inflated; 42% of motorists either did not have or have poor knowledge of tyre expiration date, while 58% have good knowledge of tyre expiration dates. In spite of the foregoing factors, Oyeyemi equally noted that higher

speeds are less forgiving and lower speeds are more forgiving in all traffic situations including tyre burst. He gave an instance thus; at speed of 80 kilometers per hour the risk is 20 times that of 30 kilometers per hour in the case of a tyre blowout. Furthermore, the Corps Marshal lamented the total disregard and subsequent non compliance to the instructions on tyres, regretting that many of the local vulcanizers use non-properly calibrated measuring tools while some lack basic knowledge of measurement of tyre pressure which results in arbitrary gauging of tyres without recourse to manufacturer’s specification is common Poor state of roads such as potholes and failed portions of the road affect the life span of tyres. He stated that the Corps will not relent in its efforts to ensure compliance to safety standards especially as it affects the use of tyres. The efforts are not limited to enlightenment and awareness creation on tyre safety has been embarked upon by the Corps through electronic and print media including the social media.

cles registered worldwide, Ford reported 81,866 of those were registered in the United States, meaning just over one-third of all Mustang registrations are occurring in export markets. Demand remains particularly strong in China, where Mustang was the best-selling sports coupe last year based on 7,125 registrations. The most popular configuration worldwide is the Mustang GT with the 5.0-liter V8. While sports cars have traditionally skewed toward male buyers in the United States, Mustang is increasingly finding favour with women. In an environment of relatively flat sports car sales to women, Ford research shows a 10 percent gain in women buying Mustang in the last five years. Since global exports began in 2015, through December 2017, Ford has sold 418,000 Mustangs around the world. Sports coupes, as defined by IHS Markit, include two-door and convertible models.

30 BUSINESS DAY

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Wednesday 25 April 2018

Mercedes eyes billionaires targeted Maybach SUV …Joins Bentley, Rolls Royce in ultraluxury class in China

Toyota gives new RAV4 extra rugged design MIKE OCHONMA

oyota has chosen a more rugged design for its new RAV4 compact SUV (Sport Utility Vehicle) in a bid to boost sales in the most popular SUV segment across the world, even as the automaker has benefited from the shift away from diesel toward gasoline and hybrid power trains. The new, global model was revealed at the New York auto show few weeks ago ahead of its sales, which will start in the first quarter of 2019. The new RAV4’s bolder design “communicates a ‘go anywhere’ sense of fun and adventure.” Its new specification drops the current model’s version specifically within in line with Toyota’s stated aim to phase out the powertrain from its passenger cars in by the end of the year, especially for the European region, RAV4’s launch engines will be a 2.5-liter gasoline-electric hybrid and a 2.0-liter gasoline, mirroring the current car’s gasolinepowered lineup. Both engines are newly developed to give it better fuel economy and more power,

without giving performance figures. The new car is built on the larger version of Toyota’s New Global Architecture, dubbed TNGA-K with a car length measuring 4600mm, which is 5mm shorter than its predecessor, but using the new platform increases interior space by adding 30mm to the wheelbase, Toyota said. The new car is also 10mm wider at 1855mm. The more rugged, bolder design “communicates a ‘go anywhere’ sense of fun and adventure,” while the ruggedness is reflected in the higher ground clearance and “wider stance,” . In places like European, the RAV4 will offer four-wheel drive. The hybrid includes an electrified rear axle that transmits power to the rear wheels independent of the combustion engine at the front. This allows Toyota to get rid of the propshaft, saving weight and increasing fuel economy. Its current version hybrid emits 115 grams of CO2 per kilometer, a figure that the automaker says the new model will beat without being more specific. RAV4’s four-wheel-drive system on the 2.0-liter model in-

cludes a propshaft that disconnects from the engine to save fuel when the car is only driving using the front wheels. It comes with a 7-inch infotainment screen in the dashboard and some models will come with a digital rearview mirror that displays camera footage taken from the rear of the car. Optional equipment still needs to be finalized. Safety technology of the SUV is bundled into Toyota’s Safety Sense package that includes pedestrian detection, automatic emergency braking, radar cruise control and lane departure warning. Steering assist can automatically turn the wheels to nudge the vehicle back into its lane, even as the car can recognize road signs and give the driver alerts, for example, when the speed limit changes. Last year alone, Toyota sold 71,268 RAV4s in Europe, putting it 10th in the compact SUV segment, according to figures from market analyst JATO Dynamics show. As at the time of filing this report, one unit of the Toyota RAV is currently on display at the departure hall of the Murtala Mohammed Airport 2.

ercedes-Benz looks ready enter the ultraluxury SUV segment and join rivals Bentley and RollsRoyce in targeting wealthy buyers who are choosing high-riding crossovers instead of sedans. It was previewed as a potential rival to the Bentley Bentayga and upcoming Rolls-Royce Cullinan with the Vision Mercedes-Maybach Ultimate Luxury concept at this year’s Beijing auto show. The concept shows how the typical strengths of an exclusive high-end sedan can be combined with an SUV. the concept vehicle was inspired by Chinese influences. The focus on China for instance reflects its importance

seat passengers more legroom, as well as power-reclining seats. Rear passenger compartment will be the main selling point to offer first-class comfort geared toward those who employ a chauffeur. Mercedes parent Daimler revived the Maybach badge for ultraluxury sedans based on its S-class flagship sedan in 2015 after earlier dropping it as a standalone brand because of slow sales. Since the reintroduction, more than 25,000 models have been delivered to customers, according to Daimler. In 2017, more than one in ten S-class models sold was a MercedesMaybach. The main markets are

as a market for the world’s most exclusive cars. According to the “Hurun Global Rich List 2018” report, China added four dollarbillionaires each week last year and led the world with a total of 819 whose combined net worth amounted to $2.5 trillion or 3.2 percent of global GDP. The Beijing concept is expected to be based on the Mercedes GLS SUV and be sold as the Mercedes-Maybach GLS class. Like the Maybach S-class sedan, it will likely get a distinct grille and front fascia. Inside, it will have a reworked rear passenger compartment that will give the rear-

China, Russia and the U.S. If the “Ultimate Luxury” concept goes into production, it would be the second SUV from Daimler’s ultra-premium car line, which launched a small series of G 650 Landaulet SUVs limited to 99 units last year. Mercedes-Maybach just gave its version of the S class sedan a mid-cycle facelift, with the refreshed version hitting showrooms this month. Currently the line includes the base Sclass Maybach, which starts at 144,638 euros in Germany, the 6.5-meter stretched “Pullman” and a convertible.

JLR to cut jobs, reduce output amid Brexit, diesel concerns

aguar Land Rover will cut about 1,000 jobs and reduce production at two of its UK factories due to uncertainty around Brexit and confusion over diesel policy leading to a fall in sales. Output will be cut at JLR’s factories in Solihull and Castle Bromwich, affecting some 1,000 agency workers on short-term contracts, the source said. Solihull builds the Range Rover, Range Rover Sport and Range Rover Velar models alongside the Land Rover Discovery and the Jaguar FPace. In Castle Bromwich, the company produces the Jaguar F-Type, XE, XF and XJ models. JLR said in January that its Halewood plant near Liverpool, which produces the Range Rover Evoque and the Discovery

Sport, would temporarily reduce production later this year in response to weakening demand due to Brexit and tax hikes on diesel cars. The company did not detail any job losses. Jaguar sales are down 26 percent so far this year, while Land

Rover demand dropped 20 percent in its home market as buyers shun diesel, concerned over planned tax rises and possible bans and restrictions in several countries. JLR, a unit of India’s Tata Motors, declined to comment

on the number of jobs which would be lost. “In light of the continuing headwinds impacting the car industry, we are making some adjustments to our production schedules and the level of agency staff,” the company said.

It continues to recruit large numbers of engineers, graduates and apprentices as it invests in new products and technologies, and remains committed to UK plants in which it has spent more than 4 billion pounds since 2010.

Wednesday 02 May 2018

C002D5556

BUSINESS DAY

Tax Issues

Report sees countries attract FDI by lowering corporate tax rates IHEANYI NWACHUKWU

lobal tax reform and the adoption of numerous international tax policy changes in 2018 are providing a catalyst for countries to pursue tax competitiveness in new and innovative ways. A recent report “the outlook for global tax policy in 2018” by EY noted that countries continue to look to stimulate economic activity and attract foreign direct investment (FDI) by maintaining or lowering their corporate tax rates. The outlook combines insights and forecasts from EY tax policy professionals in 41 jurisdictions worldwide. The most active international investors are busy reviewing their supply chains, trade and customs and the cost of imports, according to surveys conducted between February and March. Chris Sanger, EY Global

Tax Policy Leader, says: “The long-term trend of having a low-rate, broad-base tax system that has been playing out for many years continues in 2018. Six of the 41 jurisdictions (15percent) surveyed in our latest outlook have lower headline corporate income tax rates in 2018 – that is roughly the same as the 16percent in our 2017 Outlook and the 18percent in our 2016 Outlook, when like-forlike countries are compared.” The report indicates that we may be set to reach a tipping point in relation to this trend, with eleven jurisdictions (27percent) forecasting a lower overall corporate income tax (CIT) burden in 2018 (versus 20percent in 2017), while seven (17percent) forecast a higher overall CIT burden in 2018 (versus 22percent in 2017). Global tax reform may be driven further by comprehensive reform in the US. The findings indicate that US tax reform – combined with other converging de-

velopments including implementation of the OECD’s Base Erosion and Profit Shifting (BEPS) recommendations, new EU anti-avoidance directives, and tax transparency and disclosure measures – will have a significant impact on multinational tax-

payers in 2018, irrespective of whether they have US or non-US operations. The fall in the US rate of more than a third to a federal/ state combined average of around 26 percent represents the biggest percentage reduction among all countries ana-

lyzed in the report, and sees the US rate fall below current OECD and G7 averages. Significant rate reductions in FY18 were also made by Argentina (reduced from 35percent to 30percent), Colombia (40percent to 37percent), and Luxembourg (27percent to 26percent). This year’s outlook also finds that research and development (R&D) and other business incentives are benefitting from governments’ drive to remain competitive, with 14 of 41 countries (34percent) forecasting greater support for businesses in 2018. Six jurisdictions (China, Denmark, Germany, Hong Kong, Italy and Singapore) are enhancing both R&D and other business incentives in 2018. Sanger says: “The US tax reform package contains a whole spectrum of burdendecreasing measures. In response, it is probable that investor and corporate taxpayer behaviors will change in a number of ways, which in time could drive other

Workers in OECD countries pay one quarter of wages in taxes T

governments – in particular the US’s closest neighbors and largest trading partners – to form corresponding tax policy measures.” The report also highlights the breadth of change in relation to digital taxation, encompasses direct tax changes (Greece, Italy, and United Kingdom), indirect tax changes (Argentina, Singapore and Turkey), redefinitions of permanent establishment (in Italy and India) and anti-avoidance measures targeting companies that may be data-intensive (New Zealand). Indeed, 15 of the 41 jurisdictions (37percent) are already forecasting higher tax burdens as a result of digitally focused changes in 2018. Sanger says: “We anticipate that the ongoing debate around digital taxation, together with a continuing desire for European tax harmonization and the desire for tax certainty, will increasingly drive organizations to view the world though a multilateral lens.”

CITN inducts 409 tax professionals STEPHEN ONYEKWELU

orkers in Organisation for Economic Co-operation and Development (OECD) countries paid just over a quarter of their gross wages in tax on average in 2017, with just over half of countries seeing small increases in the personal average tax rate, according to a new OECD report. Taxing Wages 2018 shows that the “net personal average tax rate” – income tax and social security contributions paid by employees, minus any family benefits received, as a share of gross wages – was 25.5percebt across the OECD. This OECDwide average rate, calculated for a single person with no children earning an average wage, has remained stable in recent years, but it covers country averages that range from below 15percent in Chile, Korea and Mexico to over 35percent in Belgium, Denmark and Germany. Increases in the average personal tax rate in 20 of the OECD’s 35 member countries in 2017 were mainly due to wage increases that reduced the impact of tax-free allowances and credits. Average tax rates fell in 13 countries and were unchanged in two (Chile and Hungary). The biggest increases in the tax rate were in the Czech Republic (0.5 percentage points),

Turkey (0.5 percentage points) and Mexico (0.4 percentage points), and the largest decreases were in Luxembourg (-2.0 percentage points), Finland (-0.6 percentage points) and Iceland (-0.5 percentage points). The 2018 edition of Taxing Wages also looks at how tax systems affect the disposable income of households with children. It finds that almost all OECD countries provide a reduced personal average tax rate for households with children relative to households at the same income level without children. This is due primarily to the provision of cash transfers to parents.

On average, a one-earner married couple on an average wage with two children pays 14percent of gross wages in taxes, due to reduced personal income taxes and cash benefits. The gap is even wider for lower income households. For example, looking at single workers earning 67percent of the average wage, a worker without children pays 21.3percent of their wages in taxes, whereas a worker with children pays only 1.8percent, on average. On the whole, the size of the fiscal benefit for families with children has increased since 2000, and this is especially the case for single workers with children, whose tax rates are

often negative. “This easing of the income tax burden on families with children, especially on single parents, is encouraging,” said Pascal Saint-Amans, Director of the OECD’s Centre for Tax Policy and Administration. “Setting tax policy in a way that maintains work incentives, particularly for low and middleincome earners, is vital to spur inclusive growth.” If taxes and costs paid by employers are also considered, Taxing Wages 2018 finds that overall taxes on labour costs decreased on the average worker for the fourth consecutive year in 2017, due to lower employer social security contribution.

he Chartered Institute of Taxation of Nigeria (CITN) on April 26 inducted 409 members swelling its ranks and positioning it to drive tax practice and administration in Nigeria. Unstable oil prices have made Nigeria’s revenue generation Herculean because each time there is a fall in prices of the black gold, Africa’s most populous nation’s economy heads southwards as was demonstrated during the economic recession that occurred through 2016. This has led to creative, innovative and sometimes aggressive tax policies and initiatives to shore up revenue through taxation, a more sustainable and reliable source of revenue. To drive this, Nigeria needs tax professionals that understand the issues at stake. Tax professionals have a critical role to play. The CITN, according to its current president has been at the forefront of efforts to modernise and simplify Nigeria’s tax system. “Dear inductees, it is important to bring to your remembrance the need for strict adherence to the code of conduct for members. Upon your being admitted today having sworn on the oath of allegiance, you are expected to conduct your affairs bearing in mind that there are penalties for misconduct” Cyril Ikemefuna Ede, President and Chairman of Council, CITN said at the induction ceremony. A show of government’s interest to take taxes seriously is

the extension of the Voluntary Assets and Income Declaration Scheme (VAIDS) by an additional three months. With this extension, taxpayers now have till June 30, 2018 to make their declaration. It is expected that taxpayers would seize this window of opportunity to regularise their tax affairs. At the induction ceremony, Abiodun Aina, Coordinating Director, Domestic Taxes Group at the Federal Inland Revenue Ser vices (FIRS) pointed to the growing impact of government’s recent tax initiatives. “Over 800, 000 Limited Liability Companies have been added to the tax net and government’s revenue composition which used to be 80 percent from oil and 20 percent from non-oil has changed to 65 percent from oil and 35 percent from non-oil revenues” Aina said. The Chartered Institute of Taxation of Nigeria started on February 4, 1982 as Association of Tax Administrators and Practitioners. Thereafter, it transformed into Nigeria Institute of Taxation, which was formally launched on February 21, 1982 and statutorily recognized on May 6, 1987 as company Limited by Guarantee. The Institute was chartered by the Federal Government of Nigeria by the enabling Act No. 76 of 1992 (now CITN Act, CAP C10, Vol. 2, Laws of the Federation of Nigeria, 2004) and was charged with the responsibility, among others, of determining what standards of knowledge and skills are to be attained by persons seeking to become professional Tax Practitioners or Administrators.

BUSINESS DAY

C002D5556

Financial Inclusion

& INNOVATION

Wednesday 02 May 2018

Supported by:

We need to talk about financial inclusion for women IBUKUN TAIWO & OLAYINKA DAVID-WEST

here was a disturbing revelation in the Global Findex Report which was published in April. Aside from disclosing that financial inclusion levels had stalled and are in decline, it also revealed that women were being excluded twice as fast as men. The Global Findex report suggests that “any effort to increase overall account ownership in [Nigeria] needs to prioritize financial inclusion for women.” We agree for several reasons. Prioritizing women’s financial inclusion is good for achieving inclusive growth because women are natural builders. They tend to invest more of their income in the development and advancement of their families and communities. Research has shown that when women are economically empowered, they prioritize household responsibilities such as children’s education and housing while men prioritize business expenses and sometimes make large investments in fixed assets like land. Hence, female empowerment and financial inclusion have immediate trickle-down effects on the society at the grassroots compared to men. Empowering women also contributes towards the fulfilment of the Sustainable Development Goals (SDGs), particularly, SDG 5 - Gender Equality. Despite the multiplicity of challenges within the financial services ecosystem, women’s nurturing competencies support the urgent need to advance women’s financial inclusion and stop the bleed. The national deadline of 2020 to achieve 20 percent financial exclusion is too close for comfort, especially with these regressing figures. So, even as different actors and stakeholders attempt to plug the different holes within the ecosystem, there are several low hanging fruits we can initiate that would increase financial access of women. The strategies presented in this article have been utilised in other regions and demonstrate the possibilities. Informal + Formal Globally, women are actively engaged in formal and informal economic sectors, yet a significant number are being served by only informal financial services providers. For these women, the sharing economy is not a new concept.

Banding together to pool resources and save towards a common goal is regular practice. Informal savings clubs and cooperatives minimise the impact of financial shocks caused by major purchases and big-ticket expenses such as school fees and even emergencies such as a death in the family. Several financial inclusion efforts have been successful via partnerships with informal financial service providers to onboard unbanked women into the formal sector. For example, a program led by CARE International across sub-Saharan Africa with over 5,000 informal savings groups provided linkages to banks while supporting the development of products that met the needs of the group members. These partnerships enhanced the benefits of the informal providers and reduced their risks while helping thousands of women attain greater financial security and access other financial services including insurance, mobile banking and others. Take the service to them Women are economically active

as they strive to feed their families and manage the meagre financial resources available to them. However, there are psychological factors inhibiting their formal financial inclusion, for example, banking halls are not only intimidating but are also not in the proximity of many of the unbanked populations. Mobility is also a luxury many women can’t afford as they are juggling business activities, taking care of kids and tending to the home. Being able to take financial services, from within traditional banking halls, to their “natural habitat” and at convenient times helps overcome that hurdle. Using the on-demand model, it is possible to take the banking service to their places of business, meetups with fellow women and so on and market these services to them. Gender-specific services Several financial institutions have recorded success onboarding financially excluded women by focusing on female peculiarities. For instance, women experience more disruptions in their earning patterns due to pregnancy,

motherhood and family migration among several others. Therefore, loan and credit services that accommodate these disruptions by offering shorter tenures have been popular among this demography. A pregnant woman who is still economically active will have anxieties about the months before and after giving birth - a pain point which financial products can and should address. In fact, the pregnancy stage is an ideal opportunity to introduce financial products/ services to excluded lower-income women as it positions their mind towards future planning, savings, and the like. Whichever approach is taken, the emphasis should be on the customer’s needs. A more in-depth study, in the vein of financial diaries, will enable us unearth more insights into daily behaviours and aspirations of unbanked females at the grassroots. Partnerships with women-facing development initiatives/projects There’s a popular saying, “if you want to go fast, go alone; if you want to go far, go together”. We

need more partnerships between financial service providers and women-focused development projects. Aside curbing the duplication of efforts by piggybacking on the progress of women development projects, the addition of financial services as a value-add to these projects boosts their appeal and impact. Gender inequity and its impact on female financial inclusion is no joke. It constitutes one of the problems plaguing us as a nation as it limits women’s productivity and economic contributions, crippling their chances of achieving their potential, all of which have significant socio-economic consequences. What other ways can we improve financial inclusion in general? We would appreciate your feedback. Reach us by email: sustainabledfs@lbs.edu.ng or Twitter: @sustainabledfs.

Olayinka David-West and Ibukun Taiwo are members of the Sustainable and Inclusive Digital Financial Services initiative of the Lagos Business School

Wednesday 02 May 2018

C002D5556

Financial Inclusion

& INNOVATION

BUSINESS DAY

Supported by:

Islamic banking and financial inclusion in Nigeria BALA AUGIE

di Araba, located in Mushin Local Government Area of Lagos State, has a population of about 50,000 people.

One fascinating thing about this part of Lagos is that it houses over 70 percent of Hausa Muslims, who have sojourned in the town for over 70 years since their parents made an inroad into the town as petty traders. Mustapha Shittu, 45, a fashion designer in this area, says he needs money to buy materials, machines and employ more people but has been handicapped by funds. When asked whether he is aware that Islamic Microfinance Bank gives uncollateralised loans, he said, “I am not aware of it and l am also unaware they give noninterest loans. Nobody has told me, not even the chief imam of this area has informed us.” Shittu is just one out of millions of Muslims in the country who are yet to take advantage of the financially available channels to raise money, start their businesses and expand existing ones. Research has shown that lack of awareness of the benefit and

impact of Islamic banking are increasingly undermining financial inclusion. Sanusi Lamido Sanusi, former governor of the Central Bank of Nigeria (CBN) and Emir of Kano, recently outlined some of the issues and challenges of Islamic banking to include, among others, lack of Shari’ah educated

in conventional economics and misconception of the system. Nigeria is Africa’s most populous country and largest economy. About 50 percent of its total population of well over 170 million people are Muslims. The majority Nigeria’s citizens are living below the poverty line mainly due to financial exclusion.

Islamic microfinance, in its framework, has the capacity to improve the standard of living of Nigerian Muslims as it discourages usury and interest (riba) and all sorts of exploitations. In order to reduce the exclusion rate and increase the number of bankable Nigerians, the CBN reviewed its guidelines on Islamic

Banking (non-interest banking). The CBN in August set up two new financial instruments namely, ‘Funding for liquidity Facility (FflF)’ and ‘Intra-day Facility (IDF)’, to provide liquidity management for non-interest banks. The two new financial instruments were also designed to help foster growth in emerging Islamic finance industry. The global Islamic financial system is projected to reach $6.5 trillion by 2020, according to a report by the International Financial Service Board (IFSB), with Asia in the lead. But Nigeria is still not taking full advantage of this. Analysts say there is a strong relationship between the success of Islamic microfinance and economic growth as the former is a form of intermediation for the less fortunate. Shehu Yakubu, a 28 year old small scale tomato seller in Kano, says if given a non-interest loan, he will expand his business and even buy buses to convey his products in large quantities to the market. “A lot of traders have never heard of such a microfinance scheme. I will like the relevant agencies to come to us and sell the package. The idea is fantastic,” said Yakubu.

Financial inclusion strengthens with disbursement of N87.28bn to small businesses HOPE MOSES-ASHIKE

he implementation of the Micro, Small and Medium Enterprises D e v e l o p m e n t Fu n d ( M S M E D F ) c o nt i nu e d w i t h the disbursement of a total of N87.28 billion so far to beneficiaries. The CBN launched the MSME Development Fund on August 15, 2013 with a share capital of N220 billion. The Fund was established in recognition of the significant contributions of the Micro, Small and Medium Enterprises (MSME) sub-sector to the economy and the existing huge financing gap. The CBN’s half year economic report show that in June 2017, a total of N1.59 billion was disbursed compared with N16.53 billion in the corresponding period of 2016. The financial institutions that participated in the programme were six banks, three Microfinance Banks (MFBs), six non-governmental organisations microfinance institutions (NGO-MFIs) and 12 cooperative societies. In addition, one state government accessed funds under the programme in the review period.

The tot a l sum disburs e d from inception in 2012 to date was N87.28 billion, with N63.19 billion (72.4%) to state governments, while the micro, small and medium enterprises (MSMEs) collectively accessed N24.1 billion (27.6%). The total sum of N15.39 billion was repaid in the review period. The sum of N23.51 billion had been repaid from inception to end of June 2017. The CBN hosted the Alliance for Financial Inclusion (AFI) – a global network of policy makers/regulators instrumental to developing and promoting financial inclusion strategies in member-countries. Delegates from Mozambique, Senegal, Lesotho, Seychelles, Sierra Leone, and Bhutan attended the 5-day programme to understudy the Nigerian financial inclusion strategy development & implementation processes. Although, according to the World Bank’s Global Findex Database released 19, April 2018, Nigeria was left behind in global rising financial inclusion, and as such the country is in need of financial inclusion champions to help quicken access to financial services by its populace. “Financial inclusion is on the

rise globally, accelerated by mobile phones and the internet, but gains have been uneven across countries,” the World Bank said in a statement. Nigerian adults who are 25 years and above w ith bank accounts declined by 5 basis points from 49 percent in 2014 to 44 percent in 2017. This was not different with account holders over 15 years, as their numbers fell 4 percentage points from 44 percent in 2014 to 40 percent in 2017, as compiled from the latest World Bank’s Global Findex Database. The data shows that 51 percent of Nigerian males had a bank account in 2017 compared to the 27 percent recorded for females; this brings the gap between the male and female to 24 percentage points. This is however a bigger than the 20 percentage points gap that was recorded in 2014 when the total male with an account was at 54 percent with females at 34 percent. In 2011, just 30 percent of Nigerian’s who are 15 years and above had an account with a financial institution; however there was an improvement with 44 percent in 2014, while in 2017 it falls to 40 percent.

PRIVATEEQUITY & FUNDRAISING 34

People & Perspectives

Wednesday 02 May 2018

BUSINESS DAY

C002D5556

DUFIL snaps up May&Baker’s food production line in N775mn deal

MICHEAL ANI

ay & Baker Nigeria PLC, a leading player in the Fast Moving Consumer Goods (FMCG) industry and health care space, on Thursday 26th April 2018, sold its food production line, worth some N775 million to DE United Foods Industries Limited (DUFIL), owners of Indomie noodles. May & Baker’s food production line covers its noodles business under the brand name, Mimee Noodles. It was a 100 percent acquisition of May and Baker’s food division, and less than 10 percent of its total balance sheet size, according to Sandra Aduba, May and Baker’s head of Communication Department. “The Noodles industry is a red ocean and a loss contributing unit for us hence the decision to sell. The board and shareholders approved the sale at an EGM held on 23rd Nov. 2017,” Aduba said in an emailed response to questions. Dufil said it embarked on the acquisition “in furtherance of our aim to contribute to the growth of the Nigerian economy, enhance production capacity and focus on non-

Source: Bloomberg

oil exports to meet the needs of Economic Community Of West African States(ECOWAS) market and beyond which, will deliver optimum values to all our stakeholders,” the noodles giant said. May & Baker shares have risen 3.85 per cent this year, according to data compiled by BusinessDay and was priced at N2.70 as at the close of trading in

PE WORD OF THE WEEK intage V Th e year that a private equity fund stops accepting new investors and begins to make investments on behalf of existing investors.

Lagos on Monday, with a market capitalisation of N2.6 billion. According to its full-year 2017 financial report, the drug maker reported an 802 percent surge in Profit After tax (PAT) from N41 million in 2016 to N370 million in 2017, signalling an end to a scathing foreign exchange liquidity problem that ravaged the sector in 2016, spurring high operational cost since most of their inputs were mainly imported. The FMCG firm said the acquisition was completed following receipt of approvals from the respective boards of Directors of DE United and M&B, the respective sharehold-

ers of both companies and the Securities and Exchange Commission (SEC). The Central bank Of Nigeria (CBN)’s decision to restrict specific items from accessing its official window in 2016 placed significant pressure on input costs for FMCGs, as they had to source for Foreign exchange (FX) from the parallel market at higher rates to settle import bills which consequently depressed gross margins. In response to this, several FMCG companies developed backward integration strategies and effective supply chain management to reduce over reliance on imports to militate against

exchange rate volatility that has hitherto hampered growth One could have wondered why the drug making firm resolved in selling out some of its asset giving the firm’s 2017 tremendous performance and a great rebound of economic activities. Aduba disclosed that the divestment from the Noodles business provides much needed cash for the company, and will also reduce the losses hitherto contributed by this unit by helping management refocus on its new corporate vision which is “to be a leading healthcare brand in Sub-Saharan Africa.” “We are re-focusing on our new vision of being a leading healthcare brand not just in Nigeria but in the SSA region leveraging on our Biovaccines JV with the government”. “Our new Agreement with National Institute for Pharmaceutical Research and Development (NIPRD) to launch a new sickle cell drug; launching of our nature care brands and new products portfolio.” “We are focused on delivering excellent returns for our shareholders and good value for all stakeholders. We will also be coming out to the stock market to raise fresh capital this year to drive our new vision,” Aduba added. Dufil was incorporated in Nigeria as a private limited liability company on 16 September 1993, and has been involved in the manufacturing, selling, marketing and distributing of instant noodles ( under the indomie brand) since its inception.

BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, DIPO OLADEHINDE, ENDURANCE OKAFOR, DAVID IBEMERE ... Graphics: DAVID OGAR ) Businessday’s Private Equity and Fundraising section is a weekly publication that provides in-depth analysis on private equity trends and tracks deal activity in Nigeria.

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

Wednesday 02 May 2018

PRIVATEEQUITY & FUNDRAISING

C002D5556

BUSINESS DAY

People & Perspectives

Newcomer investors flood Nigeria venture capital market (2) OLUBUNMI ABAYOMI-OLUKUNLE AND ADEKUNLE ADEWALE, partners at Nigeria-based venture capital and private equity advisory law firm, Balogun Harold, have observed a steady increase in the number of Africa-focused venture capital funds, corporate VC, accelerators, private equity firms implementing growth strategies and other early-stage investors who set up shop in Nigeria in 2017. Both (ABAYOMI-OLUKUNLE AND ADEWALE) are of the opinion that growing investor confidence and a positive economic outlook make a compelling case for a robust year ahead for Venture Capital-led Mergers and Acquisitions in Africa’s largest economy. Their insightful views and projections for 2018 are outlined below by BusinessDay’s Private equity and Fundraising editor, LOLADE AKINMURELE. Ode to the SEC’s Year of review Venture capital funds are regulated under Nigerian law and firsttime fund managers will have to obtain SEC clearance both at the fund level and fund manager level. The existing requirements can be particularly burdening for firsttime fund managers especially considering that no thresholds have been set by SEC for excluding certain types of VC funds. Also, prospective first-time mangers still have legitimate concerns around the timing and requirements it takes to finalize fund manager registration. The current situation is largely the reason for the spate of regulatory arbitrage in the local market. The evidence we and is that of first-time fund managers now opting for more creative fund structures that limits or completely removes exposure to undue regulatory burden. In our view, the current VC regulation requires a complete overhaul and needs to be brought in line with the realities of venture capital investment in a developing market. It is comforting to note that the existing venture capital rules are now being reviewed by the SEC. Price Is What You Pay; Value Is What You Get Valuation is still largely a fluid science, especially in frontier markets. We and those VC investors in the local tech market tend to use variables like, the earning potential of a business model, the barriers to entry in the business and the value of the intellectual property in the business as a measure of value. However, the more common metric driving good valuations is the experience of founders –a not too common metric given the early-stage of the market - We and that founders with past successes are able to command a good valuation even for untested business models. The Board Observer’s Tightrope. For good measure, investors typically reserve the right to nominate a board observer in their investment agreements. However, it helps, for investors to understand, at the point of structuring an investment, that board observers can be exposed to the same level of liability, risk responsibility as elected directors under the shadow director principle applicable under Nigerian law. This is irrespective of the fact that board observers do not typically have voting rights The depiction of a ‘shadow

Olubunmi Abayomi-Olukunle

director’ by Millet J. in the case of Hydrodam (Corby) Limited (1994) 2 BCLC 180 aptly captures the corporate law concept of shadow directors. ‘a shadow director. . does not claim or purport to act as a director’. On the contrary, he claims not to be a director. He lurks in the shadows, sheltering behind others who, he claims, are the only directors of the company to the exclusion of himself. He is not held out as a director by the company.” Without any doubt, more thought has to go into board observer provisioning, on the side of VCs and also, the company. It is particularly useful for VCs to understand the situations that can give rise to finding that a board observer is a shadow director, the factors that Nigerian courts will look at in determining who is a shadow director and typical actions by a board observer that can risk imposing shadow directorship on a board observer. On the basis of this understanding, investors should and it easy to efficiently allocate risks that come with a board observer status. Who Is Speaking For The Industry? Government/regulatory support is the missing link that ties most of the key issues in Nigeria’s venture capital industry, from tax incentives, to investment barriers, regulatory issues and even to IPOs. Government support is critical at this time to scale the industry and to consolidate on the innovations that founders are pioneering across different sectors. The industry must be selfless enough to commit time

and resources into helping government understand the unique requirements of the industry, early-stage businesses and the nature of the support required. We expect to see more industryled advocacy in 2018. If There Are Tax Breaks, Better “Take ‘em” Tax incentives can make all the difference for venture capital investors, tech founder and companies and the industry as a whole. There are already a number of tax incentives, which exist. In 2017, the Federal Government classified a number of new/ small scale industries as pioneer industries. This means qualifying companies can claim exemption from corporate taxes for a period of 5years, tax-free dividends and certain capital allowances. However, what we find in practice is that early-stage companies are not taking advantage of the variety of tax incentives available under existing law. The feedback that we have received is that the conditions for enjoying reliefs are too tedious for start-ups to meet. This is a legitimate concern. Something has to be said about the process for administering the existing tax incentives in Nigeria, especially for early-stage companies. This remains an important area of engagement and advocacy for industry associations. Tech founders and their investors should no longer simply wave tax incentives away, especially in an era of aggressive tax enforcement. Investors should also make this a point of diligence; obtain information on which incentives are applicable in a sector of focus with a view to taking the benefit

thereof.

clauses to reasonability tests.

Still not silver bullet While Nigerian courts will ordinarily honour foreign law and clauses under the principle of freedom of contract, Nigerian courts will not simply back off, when faced with an application by a defendant to either stay or strike out a suit on the basis of a foreign law or jurisdiction clause. It has now become fairly standard for Nigerian courts to subject these clauses to public policy tests and exercise discretion as to whether or not to stay proceedings. In this event, the burden will typically be on the plaintiff to show why proceedings should continue in Nigeria despite the existence of these clauses. The way to succeed with foreign law and jurisdiction clauses is for VCs to understand what Nigerian courts will consider in holding that a foreign law or jurisdiction is unreasonable, against public policy, inconsistent with Nigerian law and therefore, unenforceable.

Venture Capital Outlook For 2018 With growing confidence in the African technology ecosystem from the global VC market, coupled with a positive economic outlook, we see a very robust year ahead for VC led M&A. We expect that more founders and first-time fund managers will close their funds in 2018. We also envisage an upswing in exits, mostly, by trade sales and IPOs, to a limited extent. However, it is also very probable that 2018 will bring the first wave of shareholder activism, founder/ investor-led litigation, IP litigation and regulatory action.

Of Good Leavers, Bad Leavers And Serial Innovators. Is that the conditions for enjoying reliefs are too tedious for startups to meet. This is a legitimate concern. Something has to be said about the process for administering the existing tax incentives in Nigeria, especially for earlystage companies. This remains an important area of engagement and advocacy for industry associations. Tech founders and their investors should no longer simply wave tax incentives away, especially in an era of aggressive tax enforcement. Investors should also make this a point of diligence; obtain information on which incentives are applicable in a sector of focus with a view to taking the benefit thereof. VCS need to pay significantly more attention to key man risk provisioning, which assumes a slightly different dimension in frontier markets. Aside from regulatory risk, key-man issues are probably the other significant operational risk that investors need to structure around, proactively. Founder exits are common and in a market that is short of talent, the exit of a founder can well signal the death of a portfolio company. In addition to traditional contractual mechanisms like vesting, key-man insurance, bad-leaver forfeitures, VCs need to implement capacity building strategies as well. VCs also need to align trade restraint and noncompeting clauses with existing law as Nigerian courts have in decided cases subjected trade restraint

About Balogun and Harold Balogun Harold is a speciality investment & finance law firm for lenders, private equity, venture capital and strategic investors focused on Nigeria. The Firm provides investment, finance & strategic advice to governments, investors and businesses across selected industry sectors. The Firm is deliberately structured along sector groups (and not the traditional practice areas) and all our lawyers are admitted into sector groupings from inception. Our sector focus is helping us grow a core of legal professionals who combine deep industry knowledge and expert perspectives to offer clients, breakthrough commercial and business insights that help them succeed. Every day we are solving two major problems for those that entrust us with their businesses. We are helping them identify and mitigate the risks associated with their business and also helping them create sustainable wealth. All our efforts are focused on the sole objective of helping our clients to succeed. In doing that, we rethink conventional practices, implement innovative strategies and leverage our specialized knowledge and broad network to make the most of our clients’ opportunities for success. Our Clients recognise that strategy is an essential part of the legal support we deliver. Our Partners have spent several years working with Nigeria’s oldest law firms and now leverage their years of transactional experience and networks, to pioneer customised innovative approaches to legal service and problem solving. Steadily and surely, we are pioneering a new approach to how legal services are delivered and how lawyers are perceived by their clients, globally.

36 BUSINESS DAY

Wednesday 02 May 2018

Leadership SHAPING PEOPLE INTO A TEAM

There’s no good alternative to investing in R&D ANNE MARIE KNOT

ven companies that claim to have a longterm orientation worry about whether research and development is worth the investment. Sarah Williamson is the CEO of FCLTGlobal, an organization co-founded in 2016 to encourage a longer-term focus in business and investment decisionmaking. According to Williamson, a current concern among many institutional investors and corporations is that companies don’t get credit for long-term investments in R&D. This is both because the resulting knowledge might walk out the door, as employees join other firms or start their own, and because companies can acquire other firms who have the needed technology. Fortunately, neither of these concerns is warranted, and my research shows why companies and investors will be better off if companies make long-term investments in R&D. R&D SELDOM WALKS OUT THE DOOR If an employee comes up with a great new product or a technical discovery during R&D, isn’t that employee likely to leave the company, either to found a startup or to join a competitor? In fact, this is unlikely. For one thing, most industries don’t have many new startups. A recent study indicates that the average rate of new firm creation in an industry is 0.06%. Related research looking at employee movement to both startups and existing firms produced similar results. Although the research focused on law firms, not tech firms, all the assets in those firms reside in human capital. Even in that setting, where starting a firm

is as simple as hanging a shingle, the researchers found that the probability of employees leaving to create new firms is 1%. SMALL FIRMS ARE NOT MORE INNOVATIVE What about the claim that companies can buy technology downstream through acquisitions? The first problem with this view is that it ignores where most innovation comes from. The prevailing view is that small, entrepreneurial companies are the source of innovation and growth in the U.S. economy. While it’s true that a small number of new firms are disproportionately innovative, big companies are the primary source of invention. Recent research I conducted under a grant from America’s National Science Foundation, and documented in my book, “How Innovation Really Works,” reveals that large companies invest more in R&D and have higher research quotients. (RQ is a measure of a company’s return on its R&D investments.) Companies with more than 500 employees not only do 5.75 times more R&D than small companies, but their R&D is 13% more productive.

Given that large companies have more-productive R&D, why are small companies considered more innovative? For one thing, smallcompany innovation is often more visible. Small companies have to swing for the fences to attract market share from large companies, and home runs attract attention. The problem with swinging for the fences, however, is that the probability of hitting a home run is extremely low. Similarly, the probability of small company success is low: On average, only 25% of venture capital-backed startups ever return their invested capital. S TA R T U P I N N O VAT I O N S DON’T REALLY COME FROM THE STARTUP Even if there aren’t too many innovative startups, shouldn’t big companies still try to acquire the ones that do exist as a substitute for doing R&D internally? The answer is no. These startups appear more innovative than they really are, because their initial innovation typically comes from outside the company. It is well known that Bill Gates didn’t develop Microsoft’s disk operating system — he bought it for $50,000 from Seattle Computer

Co. Similarly, Steve Jobs developed a graphical user interface after seeing one at Xerox’s Palo Alto Research Center and hiring employees who had worked there. These stories are the rule rather than the exception. In a 2003 survey of Inc. 500 companies, only 21% were based on ideas that the founders had researched on their own. The most likely source of ideas is the founder’s prior job. Fully 52% of venture ideas come from the founder’s prior company or industry, and another 14% come from a buyer or supplier in that industry. This isn’t to say that these founders walked out the door with their employers’ intellectual property. This is merely saying that when all your expertise and contacts are tied to one industry, these assets are most valuable when leveraged to create a new venture in that industry. WHAT HAPPENS WHEN COMPANIES ACQUIRE TECHNOLOGY FIRMS We’ve seen that when large firms forgo developing particular technologies internally, it’s highly unlikely that they will be able to find smaller companies with those

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

same technologies. Let’s assume for the moment, however, that such small companies do exist. What’s the record on technology acquisitions? Yazin Ozcan shared data on 2,378 technology mergers and acquisitions that he compiled for his paper “Innovation and Acquisitions: Two-Sided Matching in M&A Markets.” His paper identified the top 17 technology acquirers (those with more than 10 tech acquisitions between 1986 and 2007). For each of these 17 companies, I compared the firm’s RQ with that of its industry. Seventy percent of these acquirers have lower average RQs than their industries. Thus these companies seem to be following the maxim “Those that can, do; those that can’t, acquire” — precisely the strategy captured in the ethos Williamson mentioned: “Instead of doing R&D, we’ll acquire companies who do.” The problem is that this ethos applied to a company’s new acquisitions kills the target firm’s R&D as well — thus the lower RQs of the acquirers. THERE’S NO EASY ALTERNATIVE TO R&D Acquiring your way to innovation doesn’t work — the only way to stay innovative as a big company is to invest in R&D yourself. Luckily for big companies, investing in R&D is a good strategy. Your inventors will seldom walk out the door with your ideas. And recognizing that you can’t buy the technology you want downstream will force you to be more productive with your R&D investments. Higher R&D productivity will in turn yield higher profits and improved growth. (Anne Marie Knott is the Robert and Barbara Frick professor in business at Washington University’s Olin Business School and author of the book “How Innovation Really Works.”)

Wednesday 02 May 2018

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Abia to partner Chinese firm, Geometric to boost power in Enyimba Economic City Project UDOKA AGWU, Umuahia

bia State government says it is set to partner Geometric Power Plant and Ruyi Holding Group, a Chinese firm, to ensure reliable power supply for the Enyimba Economic City Project and the entire Abia State. Ude Oko Chukwu, acting governor of the state, while speaking at a meeting with Geometric, Ruyi Group and the Enyimba Economic City Development Company plc at the premises of Geometric Power Plant, Osisioma, assured that the government would partner them and do everything to ensure the project was realised. According to Chukwu, the state will provide the enabling environment including infrastructure such as good roads to drive the project, which is very critical to the state.

While assuring the Chinese investors of their safety, the acting governor said Abia was the safest state in the country, and noted that development could only thrive in an atmosphere of peace and security. He expressed optimism that job opportunities would be created for Abia youths once the project was completed. According to Liming Sun, executive president of Ruyi Holding Group, who spoke through an interpreter, his group builds and invests in providing reliable power, and with the Enyimba Economic City Project the South East zone will need more power. A model of electricity, which domiciles the power locally, is needed, he said, disclosing that his company has licence to supply electricity to nine local government areas in the state, including the Enyimba Economic City.

Anambra boosts capacity of 1,500 teachers EMMANUEL NDUKUBA, Awka

nambra State has commenced the training of 1,500 teachers in core subjects to acquaint them with modern teaching methods, Kate Omenugha, commissioner for basic education, says. While declaring open t h e t ra i n i n g re c e n t l y , Omenugha, who was represented by the chairman, Post Primary Schools Service Commission, Joy Ulasi, enjoined the teachers to use the training to learn innovations in the education sector. Omenugha said the training being organised by the state and the State Education Programme Investment Project in Awka would encourage development of the sector. She commended Governor Willie Obiano for having the interest of teachers

at heart, describing him as teacher friendly. In his remark, the representative of the National Association of Proprietors of Private Schools in the state, Chinaza Onwuazombe, described the training as a noble objective, but appealed to the organisers to extend it to teachers in private schools. Responding on behalf of other beneficiaries, Chinyere Ofor-Muogbo, expressed satisfaction with the training, explaining that she had learnt major approaches to teaching quality assurance. O f o r- M u o g b o, w h o teaches English language at Awada Secondary School, Obosi, advocated for the training to be organised regularly for improving knowledge, understanding and expose teachers to modern methods in teaching/learning in schools.

Dickson: Nigeria not yet out of the woods SAMUEL ESE, Yenagoa

ayelsaStateGovernorHenry Seriake Dickson has asserted that Nigeria is not yet out of the woods economically despite the fact that she has exited recession. Dickson, represented by his deputy, Gboribiogha John Jonah, stated this at the 2018 Labour Day celebration in Yenagoa, noting that though the condition had improved,theAprilfederalallocation to Bayelsa State fell by N700 million compared with March. On the issue of national minimum wage, he said it was hard for some states to pay the present N18,000, and though a higher minimum wage or living wage was justified, states ought to have been involved in the negotiations. The governor, who admitted that labour demand that the state pay what it owed them was legitimate, government could not fulfil

its promise due to circumstances beyond it control, but assured that the promise would be kept when conditions improve. He pointed out that the inability to pay gratuities was also due to the prevailing economic situation, though the government had agreed to set aside N250 monthly to offset the N6 billion it inherited from the previous administration. He explained that the ongoing civil service reform was in the interest of the state and by extensionlabour,whiledescribing the day as one of appraising the working class. He also used the occasion to address other issues raised by labour, including school security, stateownedmediaoutfits,Bayelsa State Fire Service and sports facilities, where he challenged the contractor handling the renovation of theSamsonSiasiaSportsStadium to complete his job as the state government had paid him fully.

37 NEWS

BUSINESS DAY

Moghalu, Durotoye, others call for citizens’ participation in nation building

former deputy governor of the Central Bank, Kingsley Moghalu, on Tuesday urged Nigerians to be actively involved in the process of nation building to have a better country. Moghalu made the call while speaking at the 11th edition of “The Platform “in Lagos. The News Agency of Nigeria reports the programme with the theme “Get Involved” was organised by the Covenant Christian Centre. Moghalu said the current problems facing the country would find quick answers if citizens contributed their quota to the nation’s development. He said Nigerians were justified to complain about a number of issues based on disappointments by leaders resulting in dashed hopes. Moghalu pointed out “complaining and managing” would not solve any problem until Nigerians got involved in the process to choose the leaders they desired. The former CBN chief added that the real power lay with the people and urged

Nigerians to use the power to bring about change. “There is no power greater than the power of the people. The power to change belongs to the people. We can get the kind of nation we desire if we use our power,” he said. Moghalu, however, said it would be difficult for people to get the leadership they deserved if they did not partake in the electoral process. He therefore urged Nigerians to obtain their Permanent Voter Cards so that they could vote leaders of their choice. Moghalu said Nigeria belonged to everyone, pointing out the passiveness of citizens had unfortunately allowed some few people to claim ownership of the country. In his speech, a leadership expert, Fela Durotoye, noted that the country had suffered rot in all sectors consistently for about 50 years. He blamed the problems on poor leadership and followership as well as erosion of the country ‘s values. He however said the situation could be changed for the better if Nigerians made the

decision to make the change happen. Durotoye said rather than continue to blame the past generations for the parlous state of affairs, the current generation of Nigerians could brave the odds and bring solutions, saying, “Very soon, the old generations would be no more and the problems might still be here. “So, this generation of Nigerians should strive to be a great generation. A great generation is a generation that solves problems not the one that transfers burden to the next generation. “A great generation is a generation that acts and the one that passes problem solving techniques to the next one.” Durotoye, who is nursing a presidential ambition, said the change that everyone desired was possible if everyone got involved in achieving it. He therefore urged Nigerians to participate in the electoral process by voting and engaging people in government. Also speaking, Charles Omole, a leadership expert and lawyer, said it was wrong

for anyone to believe that Nigerian politicians behaved differently from those in other parts of the world. He said politicians were the same all over and their preoccupation was always to control power and resources. Omole however said the reason why things worked better in other climes was because of strong institutions, respect for rule of law and more effective competition in the democratic space. He said the country would be better if all these were entrenched in the polity and people participated in the electoral process. “Participation in the process is not about obtaining PVCs alone, it is also about contesting in elections with the objective to make a change,” he said. In his speech, Pastor Francis Adebayo of the Harvest Place (Church) said getting PVCs was not enough to participate in the electoral process. He said citizens needed to vote and monitor the process and continue to engage leaders on good governance.

L-R: Idiat Adebule, deputy governor of Lagos State; Akinwunmi Ambode, governor, Lagos State; Akintola Benson, commissioner for establishments, training and pensions, and Folasade Adesoye, head of service, Lagos State, during the 2018 May Day celebration in

CHANGE OF NAME

I, formerly known and addressed as Nkechinyere Brenda Onyeulor now wish to be known and addressed as Nkechinyere Brenda Onyeulor- Imo. All former documents remain valid. General public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss Adebayo Oluwayemisi Doyin now wish to be known and addressed as Mrs Medayese Oluwayemisi Doyin. All former documents remain valid. General public please take note.

CHANGE OF NAME

I, formerly known and addressed as Edogun Moses now wish to be known and addressed as Edogun Moses Ose. All former documents remain valid. Diamond Bank and general public please take note.

I, formerly known and addressed as Bilewu Lateef Adekunle now wish to be known and addressed as Bilewu Oluwakemi Yusuf. All former documents remain valid. General public please take note.

Labour in a joint address presented by the state chapter of the Nigeria Labour Congress (NLC) andTradeUnionCongress(TUC) expressed appreciation to the Dickson administration for its policies and programmes.

I, formerly known and addressed as Oderinde Ibrahim now wish to be known and addressed as Oderinde Ibrahim Olasunkanmi. All former documents remain valid. Banks and general public please take note.

CHANGE OF NAME

38 BUSINESS DAY NEWS Rise and fall of Erin Energy: The Kase Lawal... Continued from page 1

only cash-generating asset, a Nigerian oilfield. New York and Johannesburg listed Erin Energy filed for bankruptcy last week as it seeks to restructure its debt and regain financial viability, as Allied Energy Plc and Camac International Nigeria Ltd founded by renowned Nigerian-born industrialist Kase Lawal who is also current chairman of Unity National Bank, the only black-owned bank in Texas USA hit the centre of controversy surrounding Erin’s demise. The first alarm bells were rang in 2014 when Investigative journalism group amaBhungane revealed investment losses of South Africa’s Public Investment Corporation (PIC) in a Nigerian oil venture that benefited American-Nigerian oil man Kase Lawal, an ally of thenpresident Jacob Zuma. Despite being on the edge of bankruptcy, PIC investment committees headed by then chief investment officer Dan Matjila now CEO handed Erin $270-million in 2014 and took a 30 percent stake and a seat on the board. After the deal, Erin bought what it called the “economic rights” to Nigerian oil mining licenses 120 and 121, which included the productive Oyo oil field owned by Lawal and his family. However Oyo oil field turned out not to be as productive as forecasted as Erin shareholders sued CEO and certain directors of Erin over the deal. The shareholders claims the CEO of Erin Energy overpaid by almost $200 million in Oyo Field deal that also benefited Allied Energy, another company controlled by Lawal. The shareholder’s also claims that certain directors failed to protect the negotiations from the CEO’s undue influence and then sent out the transaction proxy which misleadingly portrays the deal process as pristine. A legal dispute occurred in 2012 as Allied Energy bought 40 percent of the oil rights from a subsidiary of Italian oil major ENI, however Allied only paid $100 million of a $270million purchase price, according to court records, putting Erin Energy in jeopardy leading to a subsequent embarrassing scenario

for Erin Energy. Two Nigeria court and a London court of International Arbitration ruled in favour Eni instructing Camac International to pay ENI $200-million, a Cayman Islands court issued a winding up order for Lawal’s Camac International who was its chairman, CEO and controlling shareholder. All attempts by BusinessDay to get Erin Energy side of the story prove abortive as the company refused to respond to emails forwarded to the email found on their website. In April this year, things turned from bad to worse for Kase Lawal as two Cayman Islands court representatives requested all recorded information relating to the company’s property or financial affairs from the Southern District of New York. The two liquidators want to get to the bottom of the dissipation of nearly $1 billion of assets held by CAMAC’s subsidiaries. The liquidators noted that CAMAC’s two indirect subsidiaries Allied Energy Nigeria and CAMAC International Nigeria (CNIL) transferred shares they held in American junior Erin Energy, of which Lawal was CEO from 2011 to 2016. In 2016, the PIC’s investment committee agreed to secure a

and Drug Administration and Control (NAFDAC), to ban with immediate effect , further issuance of permits for the importation of codeine as active pharmaceutical ingredient for cough preparations. It would be recalled that the National Assembly and other stakeholders had raised alarm at the rate at which Nigerian youths are addicted to codeine, tramadol, and other related substance. According to the Nigeria Senate about 3 million bottles of codeine are sold daily in major cities in Nigeria and the prices range from N250 to N1000 per bottle. It was revealed that a great percentage of young women across Nigeria including students of tertiary institutions, working class ladies, married women and a vast majority of unemployed girls, are hooked on codeine and other drugs. Codeine is an opiate popularly used in the treatment of pains but evidence abound about its abuse in Nigeria as youths now organize what is called codeine party where

$100-million bank guarantee so that Erin could borrow for drilling and other expenses at the Oyo oil field. Erin’s loan was finalised in January 2017, and it pledged its assets as security essentially the oil rights that were ultimately owned by Camac which implies that should Erin not be able to repay the loan, and should the oil well happen to be locked up, the banks could ultimately turn to the PIC for the cash. “CAMAC is our majority stockholder, and it may take actions that conflict with the interests of other stockholders,” Erin said in its 2016 financial report. Erin continued, “CAMAC beneficially owned approximately 56.7 percent of our outstanding shares of our common stock and continues to own a majority interest.” “CAMAC controls the power to elect our directors, to appoint members of management and to approve all actions requiring the approval of the holders of our common stock, including adopting amendments to our Certificate of Incorporation and approving mergers, acquisitions or sales of all or substantially all of our assets, subject to certain restrictive covenants,” Erin said.

•Continues online at www.businessdayonline.com

it is served with water. The Minister of Health, Isaac Adewole ordered the ban in a statement signed by Olajide Oshundun, the Assistant Director of Information, in the Ministry. He said the directive became necessary due to the gross abuse Codeine usage has been subjected to in the country. The statement reads; “In its stead, Codeine containing cough syrups should be replaced with dextromethorphan which is less addictive. “He also directed the Pharmaceutical Council of Nigeria, (PCN) and NAFDAC to supervise the recall for labelling and audit trailing of all codeine containing cough syrups in the country, while he has also banned sales of Codeine containing cough syrup without prescription across the country.” Adewole noted that the National Agency for Food and Drug administration and Control had an emergency meeting with the Pharmaceutical Manufacturers Group (PMGMAN) to inform them that there is an embargo on all new applications for registration of

codeine- containing cough syrups as well as applications for renewal being abolished. The Pharmacists Council of Nigeria (PCN) has been directed to continue enforcement activities on Pharmacies, Patent and Proprietary Medicine Vendor’s Shops and outlets throughout the country. The National Agency for Food and Drug Administration and Control [NAFDAC] was also directed to fully carry out its functions among others: to regulate and control the manufacturing, distribution and sale of drugs, including inspection at points of entry of drugs, drug products and food for compliance with the new directive. The Minister stated that the FMOH shall ensure collaboration among regulatory agencies namely, NAFDAC, PCN, National Drug Law Enforcement Agency (NDLEA), Nursing and Midwifery Council of Nigeria (NMCN), for effective implementation of extant Acts, regulations, policies and guidelines on codeine control and usage. “Furthermore, these agencies shall work together to increase pharmacovigilance around codeine, tramadol and other related substances of abuse,” Adewole stated.

Wednesday 02 May 2018

Why deal with GE signals rebirth of Nigeria’s... Continued from page 1

consortium which has received a sovereign guarantee that any certified investment made will be refunded if the concession does not get to financial close as envisaged. Many have described the agreement as a good one for Nigeria for several reasons. “Typically, concessions are done in respect of a going concern but this agreement with GE is taking a rail system that is virtually dead and bringing it back to life,” a senior presidency official told BusinessDay last night. “For most of the last 15 years, the Nigeria Railway Corporation, NRC has not had one single commercial freight contract so you can be right in saying the system was dead,” the official said while explaining the euphoria in government since the deal was initialed in Washington last weekend. A significant amount of cattle and other agricultural goods come from the north down south while manufactured goods including cement and salt as well as imported goods andpetrolmovefromthesouthtothe north and none of that goes by rail. BusinessDay learnt that Dangote group once tried to move its

Muhammad Musa Katsina, leader of the 2018 Senior Executive Course 40, National Institute for Policy and Strategic Studies, Kuru (l), presenting a plaque to Godwin Obaseki, governor, Edo State, during a courtesy visit by participants of the Course, to the Edo State governor, at Government House, Benin City.

Reason FG banned production of syrups containing... Continued from page 1

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Already, NAFDAC has developed IEC materials that will be used in an already planned national campaign against drug abuse, an awareness programme that includes Young Pharmacists Group of the Pharmaceutical Society of Nigeria, which will soon be flagged off in Kano and Lagos. As a way of discouraging youths to shun the drugs, the Federal Government through Federal Ministry of Health shall partner with National Orientation Agency (NOA), Nigeria Football Federation (NFF), Football celebrities, members of the Actors Guild of Nigeria, Performing Musicians of Nigeria and other celebrities to drive national campaign against drug abuse. ‘The FMOH shall ensure that Drug treatment intervention for victims of substances abuse shall be undertaken across the spectrum of health care delivery system in the country,’ Adewole stated. He stated that Civil Society Organizations shall be strengthened to deliver effective sensitization, prevention, treatment and rehabilitation services. Recall that in view of the serious public health concerns drugs abuse poses to Nigerians , a working

salt from Lagos using the NRC but its train derailed in Umuahia (South East Nigeria) and the consignment was left abandoned by NRC officials for 30 days. The oil firm Oando also had a bitter experience when it engaged NRC to move petrol products by train to the north. According to BusinessDay investigations, in all these 15 years NRC management never accounted fully for revenues from the passenger rail services they operated. And a $1.7bn track rehabilitation budget broken into nine separate contracts has yet to be fully accounted for. Since signing the agreement, members of the GE consortium have since left Washington for Johannesburg South Africa for a series of meetings and workshops aimed operationalizing the deal within the shortest possible time. At the onset, the focus of the consortium’s operations will be on bringing about a rapid transformation of how container cargoes leave and come into the nation’s premier ports in Apapa. One of the consortium members TRANSNET of South Africa is coming with a trains operations module while another member APMT, the ports terminal operator is making a separate investment to turn one of the disused train stations in either Ilugun or Omi Adio into an inland port terminal for the optimization of the Apapa port decongestion project. Under the scheme, containers from Apapa will be taken by rail to the inland container terminal while export goods will now be transported from the inland terminal to Apapa. This way, container-bearing trailers will no longer need to come into Lagos, BusinessDay learnt. In addition, the interim arrangement will focus on the movement of fertilizer inputs from the ports to the 11 functional fertilizer blending plants and from there to the markets around the country. Recently a ship bringing fertilizer input under the federal government scheme run by the Nigerian Sovereign Investment Authority, waited for 42 days to berth in Apapa because of the traffic gridlock there where it takes an average of eight days for one truck to enter the port.

•Continues online at www.businessdayonline.com group which comprised of experts from various Ministries, Agencies of Government (including regulatory agencies), Development Partners and Associations was constituted in January and tagged Codeine Control and other Related Matters Working Group (CCRWG). The CCRWG was formally inaugurated on January 23, 2018 with clear Terms of Reference of developing key recommendations and strategies to address the menace of codeine, tramadol and other related substances in Nigeria. The CCRWG submitted its interim report on April 12, 2018 and recommended short-, mediumand long-term measures for implementation in a memorandum submitted to the Minister, today, 1st of May 2018. Adewole restated the commitment of Federal Government to ensure the full implementation of the NationalDrugDistributionGuideline (NDDG) by January 01, 2019 and closure of all open drug markets penultimatetheimplementationdate of the NDDG that is, December 31, 2018.Itisapublicknowledgethateasy accesstocodeine,tramadolandother substances of abuse is promoted by the chaotic drug distribution system.

BUSINESS DAY

Wednesday 02 May 2018

CITYFile Group wants FG to call GIC Motors to order JOHN SALAU

A L-R: Vice chairman, Comerade Muibi Mufutau; Chairman, Retired Col. Samuel Fola Akande; Dr. AbdulHakeem AbdulLateef, Hon Commissioner, Ministry of Home Affairs; Mrs Toyin Awoseyi, the Permanent Secretary, and Mr. Babatunde Onashokun, Treasurer, at the Inauguration of State Exco, Nigeria Legion.

Wage: Ekiti seeks review of sharing formula AKINREMI FEYISIPO, Ibadan

s agitation continues for the upward review of the current national minimum wage of N18,0000, Ekiti State government is making case for the immediate review of the revenue allocation formula in favour of state and local governments to enable them cope with the eventuality of the wage increase. The state’s position was contained in a memorandum it submitted to the tripartite national minimum wage during a public hearing in Ibadan, the Oyo State capital. The tripartite committee on the national minimum wage was inaugurated in November 2017 by President Muhammadu Buhari, but only started public hearing across the various zones of the country, to get inputs from stakeholders, last week. The ad hoc committee of the House of Representatives recently described the current revenue sharing formula as illegal on account that it does not have the approval of the National Assembly.

The ad hoc committee headed by a member of the All Progressives Congress from Benue State, Mark Terseer-Gbillah, was investigating data collection processes, maintenance and usage by the Revenue Mobilisation Allocation and Fiscal Commission. Under the current sharing formula, the Federal Government takes the lion’s share of 52.68 per cent from the federation account. The 36 states take 26.72 per cent, while the balance of 20.60 per cent goes to the 774 local governments in the country. Over time, the formula has generated controversies and remains a key factor in the clamour for true federalism. Making case for the review of revenue allocation formula, Governor Ayodele Fayose of Ekiti, stated that the clamour for increase in workers’ wage could not be ignored, especially as increases in prices of goods and services continued to impact the standard of living of an average worker. He stressed, however, that states and local governments needed better funding from the federation account to pay wage

increase. Fayose represented by Olugbenga Faseluka, Ekiti State Head of Service, described the current revenue sharing formula as inequitable. “As at the time the present minimum wage came into effect, for instance, the price of petrol was N65 per litre which was later increased to N145 per litre in 2016. The increase has aggravated or triggered increase in prices of other goods and services thereby compounding the already challenged standard of living of the average Nigerian worker”, he said. While noting that the current minimum wage of N18,000 has become unrealistic to support basic standards of living, the governor affirmed the need to increase the wage but argued that this be premised on the ability of employers to pay. In the memorandum, Ekiti proposed a new formula that would see the Federal Government take 30 percent, states 40 percent and local government 25 percent while and 5 percent reserved for other purpose.

Three MTN mast vandals arrested in Ogun

... as notorious robbery suspect nabbed in Katsina RAZAQ AYINLA, Abeokuta gang of three Lagos-based suspected vandals have been arrested in Ogun State, for vandalising a telecom mast belong to MTN at Ode-Remo in Remo North local government area of Ogun. The suspects, BalogunLukman, Sunday Kayode, and Atanda Abiodun, all males, were said to have travelled from Lagos to vandalise the MTN mast at Ode-Remo. They were arrested on April 27 by a police patrol team from Ishara division led by Ysusf Taiwo, a chief superintendent of police. The suspect were said to have gone on the mission in a blue colour Ford Bus with registration number Oyo NRK 842 XA. They were

sighted at the mast around 02:00am with the vandalised parts of the mast, including three heavy duty batteries and small cutters. They were said to have attempted to escape on sighting the police patrol team but were pursued and arrested by the security operatives. Ahmed Iliyasu, Ogun State Commissioner of Police, has ordered a full scale investigation into the case with a view to charging the suspects to court. Meanwhile, the police in Katsina have apprehended a notorious armed robbery kingpin, Dabo Hassan, 60, and five other suspects who have been terrorising residents of Funtua, Sabuwa and Dandume local government areas of the state. Spokespersons of the police Katsina,

Gambo said that the suspects were arrested in Kilawa-Mahuta, Dandume local government area following a tip-off after a gun battle with the police. According to Gambo, the suspects were subdued after a fierce encounter with the command’s Special Anti Robbery Squad (SARS) patrol team. Isa identified other suspects arrested to include Muntari Jibrin, 25, Abdullahi Samu, 20, Tukur Mamman, 20, Babangida Saidu, 27, and Ishaka Yusuf, 20. He said the police recovered one AK 47 rifle with 19 rounds of ammunition, two locally made rifles and four empty magazines of AK47 rifle, army camouflaged, charms and mask from the suspects. He added that effort was being intensified to arrest other fleeing members of the gang and recover their weapons.

group under the aegis of Movement for the Emancipation of Nigerians has staged a protest against what it called ‘marginalisation of Nigerian workforce’ by a Chinese owned GIC Motors, in Lagos, and called for Federal Government’s intervention. Adetayo Adegbemle, the convener of the movement and director, at PowerUp Initiative for Electricity Rights, said the protest at GIC’s premises last Friday, was to draw the attention of the public, to an alleged ‘a new level of slavery’ Nigerians were being subjected at GIC Motors. According to the group, apart from being treated as slaves, Nigerian workers in the company do not have letters of employment, as stipulated under the Nigerian labour laws. The movement further alleged that the company imports labour force from China, with better conditions of service than their Nigerian counterparts. Adegbemle decried the silence of the Nigerian government, especially the federal Ministry of Labour and Employment. Are we about to experience slavery under the Chinese”? He queried. The group therefore made the following demands: That all Nigerians under the employ of Diana Chen at the GIC Motors be given letters of employment with full benefits, as stipulated by the Nigeria labor law. Immediate audit of all Chinese employees under the GIC Motors employ, their visa status, and their educational background, even as it noted that every position occupied by a Chinese has at least 100 capable and qualified Nigerians to fill. However, attempts to get the reaction of GIC Motors proved abortive as the company shot its door against newsmen while two of their employees drove round the protesters taking video shots.

NDLEA destroys 14,360 tons of drugs in Adamawa

he National Drugs Law Enforcement Agency (NDLEA) has destroyed 14, 360 tons of illicit drugs in Yola, Adamawa. Yakubu Kibo, the state commander of the agency who disclosed this during burning of the illicit drugs said that the development followed the unrelenting efforts by the command officers. “We have 14,360 tons of hard drugs seized from March 2015 to September 2017. The drugs are made up of cannabis Sativa, cough syrup with codeine, tramadol tablets and capsules, cocaine among others,’’ Kibo said. Kibo put the monetary value of the drugs at N517 million, adding that between the periods under review, the command arrested 502 suspects, adding that 236 of them were convicted and sentenced to various jail terms. According to him, in addition to two vehicles and an uncompleted building belonging to notorious drugs dealers was forfeited to the Federal Government during the period. Kibo said that 180 drug dependent persons were also counselled, treated and rehabilitated across the state.

Wednesday 02 May 2018

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BUSINESS DAY

FINANCIAL TIMES BP can afford more dividend largesse with fewer calls on its cash

The AI arms race: China and US compete to dominate big data

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World Business Newspaper

US groups plough tax cash into capex ahead of investors

Outlays concentrated in small cluster of companies in tech and energy sectors ANDREW EDGECLIFFE-JOHNSON AND ROBIN WIGGLESWORTH

small group of technology and energy companies is driving a rebound in capital expenditure in the US, bucking expectations that boards would distribute most of the windfalls from recent tax legislation to shareholders. Corporate America is flush with cash after a blockbuster first-quarter earnings season and December’s Tax Cuts and Jobs Act, which included a deep cut in headline corporate tax rates. This has driven a better than expected 20 per cent increase in firstquarter capital spending among the companies that have reported earnings for the period so far, Credit Suisse found. Denise Chisholm, a strategist at Fidelity, argued that the US economy had been overdue an upswing in corporate investment even before Donald Trump’s administration cut taxes, and the windfall appeared to have triggered what she expected to be a “durable recovery” in capital spending. For now, however, the investment revival appears to be concentrated in a few sectors: technology companies have led the splurge, with Google parent Alphabet reporting a jump in capital spending from $2.5bn to $7.3bn, including the cost of new offices in New York. Energy companies have been spurred to spend again by a rising oil price. The median S&P 500 company expanded its investment spending by a more modest 13 per cent year on year, according to Bank of America. Credit Suisse found that just 10 companies accounted for two-thirds of the first-

quarter increase in capital spending, while broader surveys suggested many businesses remained more hesitant about investing. A poll of corporate treasurers for the Association for Financial Professionals found that finance executives who three months ago had been signalling plans to step up their spending instead built their cash reserves over the quarter as White House threats of steppedup tariffs against trading partners made businesses wary. “The optimism generated from corporate tax reform seems to have done little to persuade organisations to spend their cash during the early months of 2018,” said Jim Kaitz, AFP’s chief executive. “The uncertainty stemming from threats of a trade war and geopolitical tension have concerned treasury and finance executives.” The US commerce department reported last week that orders for nondefence capital goods, which are seen as a gauge of business investment, unexpectedly fell in March, marking their third decline in four months. Analysts have been surprised to see the growth in capital spending among S&P 500 companies outstrip the increases in buybacks and dividends. In February, Goldman Sachs analysts estimated capital spending would increase 11 per cent this year — similar to the growth rates for dividends and research and development budgets — but that this progress would be outpaced by a 23 per cent increase in buybacks. Research from Morgan Stanley last week found, however, that more companies were planning to invest some or all of their tax savings in their businesses than to return the cash to shareholders.

US coal groups cash in on overseas demand Trump policies have less impact than appetite from steelmakers for the country’s output ED CROOKS

n the campaign trail in 2016, President Donald Trump often pledged to bring back coal. For mineworkers, that promise remains unfulfilled. The number of jobs in coal mining in the US is up only 800 since Mr Trump’s inauguration in January 2017, and has been on a declining trend since last October. For some investors in the coal industry, however, the past 15 months have been rewarding as some US coal companies have prospered — but Mr Trump’s policies had little to do with it. Peabody Energy, the world’s largest private sector coal producer, entered Chapter 11 bankruptcy protection in 2016. It returned to the stock market in April last year,

having shed $5.2bn of debt, and its shares have subsequently risen by 17 per cent. Alpha Natural Resources, another leading US coal producer, filed for bankruptcy in 2015, and was subsequently broken up, with some of its assets being bought by a new company called Contura Energy, owned by Alpha’s lenders. On Monday Contura and the remnants of Alpha announced that they were merging to reunite the business, albeit in a greatly slimmed-down form. The merged company, which will retain the Contura name, is aiming to list on the New York Stock Exchange by the end of September. Mr Trump’s attack on the climate policies of his predecessor Barack Obama, including plans to withdraw from the Paris agreement Continues on page A2

EU trade commissioner Cecilia Malmstrom has taken a tough line on the tariffs since they were announced by the US in March © Reuters

EU vows not to give in to threats as Trump delays tariffs Brussels digs in for bitter trade fight over US demand for steel concessions JIM BRUNSDEN AND SHAWN DONNAN

he US and Europe dug in for a bitter trade fight after President Donald Trump gave allies only a one-month reprieve from his steel and aluminium tariffs, with Washington demanding concessions from the EU as Brussels vowed not to be held to ransom. Mr Trump’s eleventh-hour decision to give the EU, Canada and Mexico a second 30-day reprieve from the tariffs, which had been due to take effect on Tuesday, failed to defuse transatlantic tensions, with both sides at loggerheads over how to make the exemptions permanent. The dispute, along with the threat of a US-China trade war over Mr Trump’s tariffs, has sent jitters through the financial markets and prompted top officials at the International Monetary Fund and the European Central Bank to warn of a wave of protectionism that could stamp out the global recovery. Following Mr Trump’s decision to delay the duties, France, Germany and the European Commission stepped up calls for permanent relief from the White House, with Brussels warning that it “will not negotiate under threat”. France said it was “ready to work” with the US on addressing overcapacity in the global steel market, while warning “we can only calmly do that once we are certain to be permanently exempted from the threat of a unilateral increase in tariffs”. But Wilbur Ross, US commerce secretary, said the Trump administration did not have “any intention to grant protracted extensions” to the EU, telling CNBC that allowing Europe to be exempt from the tariffs without concessions “defeats the whole purpose” of the duties. Mr Ross insisted, however, that the White House had decided

to grant the reprieve because of “some potentially fruitful discussions about an overall reduction in trade tension”. The US has suggested launching formal talks with the EU, focusing on getting Europe to lower trade barriers to American cars. The new talks would have a more limited scope than the stalled Obama-era Transatlantic Trade and Investment Partnership, with a focus on lowering tariffs on industrial goods. Politicians in Germany, Europe’s automotive powerhouse, have expressed public anger at the demand, with Günther Oettinger, Berlin’s European commissioner, telling national broadcaster ZDF this week “there is no real reason to bring an American car from the US to Germany”. But the German government has emphasised the importance of coming forward with options to address the US concerns, with a government spokeswoman saying it was “of particular importance that the EU has engaged with the US and continues to do so”. The EU is the US’s largest goods trading partner, with that trade across the Atlantic worth more than $700bn last year. But Mr Trump has grumbled regularly about the US’s $151bn trade deficit in goods with the EU, singling out European auto tariffs in particular as unfair. The US sees the steel and aluminium tariff threat as a means of pushing countries to offer more favourable trading terms, but Cecilia Malmstrom, the EU’s trade chief, has insisted Brussels could not offer concessions to secure exemptions from measures it considered illegal. She has said trade negotiations can only happen once the tariff threat is dropped, and that discussions must be of mutual benefit. Officials in Brussels and other European capitals expressed relief Mr Trump had not simply allowed

the previous exemption to expire, a scenario that governments had been braced for after talks with Washington in recent days appeared to yield little headway. The French and German economy ministers met Ms Malmstrom in Brussels on Monday to consider such an outcome, according to officials. The temporary exemption represents a diplomatic challenge for Ms Malmstrom, who has taken a tough line on the tariffs since they were announced by the US in March and has argued they violate World Trade Organization rules. The French government on Tuesday called on the EU to “stay united” in the face of the tariff threat. “There are no reasons which can justify that the EU be subject to a unilateral increase in tariffs on steel and aluminium,” Bruno Le Maire, economy minister, and Jean-Yves Le Drian, foreign minister, said in a joint statement. “France and the EU are allies of the US. We are not at the source of the global overcapacity in aluminium and steel and we fully respect all WTO rules.” Ms Malmstrom has been in contact over recent weeks with Mr Ross to explore options for addressing irritants in the EU-US trade relationship, with the proviso that any talks would have to be “mutually beneficial”. “The EU has consistently indicated its willingness to discuss current market access issues of interest to both sides” once the tariff threat is dropped, the EU said. Despite frustration in most of Europe, the US move was welcomed by the UK government. Liam Fox, UK trade secretary, said he was “delighted” the US had renewed the exemption. He added that penalising British steel exporters — some of whom provided steel for the US military — on national security grounds “would not make sense”.

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Wednesday 02 May 2018

NATIONAL

Ukraine to deploy US anti-tank missiles in defiance of Russia Kiev takes delivery of Javelins but Moscow says move threatens to escalate proxy war ROMAN OLEARCHYK

kraine’s defence minister said he would waste no time in starting to train his troops to use sophisticated Javelin anti-tank weapons supplied by the Trump administration, in defiance of Moscow’s warning that their sale

to Kiev could escalate a four-year smouldering proxy war in the country’s far east. General Stepan Poltorak thanked US president Donald Trump for a “positive decision which helps to significantly increase Ukraine’s defence capability and provide Ukrainian servicemen with modern weapons”.

Training would start on Wednesday, Gen Poltorak said late on Monday, after US officials and Petro Porosohenko, Ukraine’s prowestern president, confirmed the US had provided Ukraine with an undisclosed number of Javelins. “The Ukrainian army has received the long-awaited weaponry,” Mr Poroshenko said on Monday.

The shipments are part of a $47m US Congressional military aid package, adopted in 2017, that envisages Ukraine being supplied with 210 Javelin anti-tank missiles and 37 launchers. There was no immediate reaction from Russia, where officials last year warned that Mr Trump had “crossed the line” in breaking

Goldman to pay $110m over foreign exchange trades

US coal groups cash in on overseas demand... Continued from page A1 and to scrap new regulations on carbon dioxide emissions from power generation, have apparently had little effect. The amount of electricity generated from coal in the US dropped by 2 per cent last year, and is expected to drop by a further 3 per cent this year. Nor do the Trump administration’s attempts to ease the regulatory burden on coal mining yet appear to have had a noticeable effect. Peabody’s US operating costs per ton were up 4 per cent in the first quarter of this year compared with the equivalent period of 2017. The big difference has come from a surge in demand in international markets, for both thermal coal used in power plants and metallurgical, or “met” coal, which is used in blast furnaces to make steel. US exports of thermal coal more than doubled last year, thanks to strong demand from countries including India, South Korea and Japan. But it is met coal that is causing the greatest excitement, throwing a lifeline to Appalachia, the region running from Pennsylvania to Alabama that is the traditional heartland of the US industry. “The plight of the Appalachian producers has been grim,” said Kevin Book of ClearView Energy Partners, a research firm. “And export demand for met coal has been one of the few bright spots.” The reasons have been factors beyond the Trump administration’s control. Cyclone Debbie, which hit eastern Australia in March last year, caused widespread disruption to much of the country’s met coal production, and its industry has been struggling to make up the shortfall. Meanwhile, China has been intermittently curbing its coal production, while its demand has grown. A crackdown on steel production from old-fashioned induction furnaces had boosted activity at blast furnaces and hence demand for met coal, said David Lipschitz, an analyst at Macquarie. The result has been soaring prices for met coal worldwide, including in the US. The S&P Global Platts US met coal price rose from about $80 a ton at the start of 2016 to a peak of $295 a ton last year, and even though it has since fallen back, it is still about $180 a ton today. Met coal production has been lucrative for US producers and for Peabody, which mines it in Australia. Peabody’s first-quarter earnings, published last week, showed a clear divide: at the Australian operations, which principally produce met coal, earnings before interest, tax, depreciation and amortisation were up 23 per cent, while at the US operations, which produce thermal coal, they were down 28 per cent.

with Obama administration policy by arming Ukraine. Long coveted by Kiev, the handheld fire-and-forget precision Javelin systems are intended to help Ukraine’s army repel any attacks by Russian-backed militants, who seized control over eastern industrial regions in 2014 after Moscow occupied the Crimean Peninsula.

Bank accused of putting clients at a disadvantage in carrying out currency BEN MCLANNAHAN

Sushovan Hussain plans to appeal against the convictions

Autonomy’s former finance chief convicted of fraud First courtroom test of Hewlett-Packard’s allegations over deal for software company RICHARD WATERS

he former chief financial officer of Autonomy was convicted of fraud in San Francisco on Monday, in the first courtroom test of claims by Hewlett-Packard that it was defrauded when it bought the British software company. Sushovan Hussain was convicted on all 16 counts of wire and securities fraud after a trial that lasted two months. The federal case was brought after the UK’s Serious Fraud Office declined to pursue the allegations. John Keker, Mr Hussain’s lawyer, said there would be an appeal against the conviction. “Mr Hussain defrauded no one and acted at all times with the highest standards of honesty, integrity and competence,” he added. HP paid more than $11.1bn for Autonomy in 2011 but wrote off $5bn of that value a year later after discovering what it said was a fraud to inflate the company’s earnings ahead of the deal. Autonomy’s founder and former chief executive Mike Lynch accused the US tech company of

making up the fraud claim to hide its mismanagement of the business. Mr Lynch is set for a courtroom battle in the UK next year against Hewlett Packard Enterprise, the successor company to HP, which is claiming $5.1bn in damages from Mr Lynch and Mr Hussain. Mr Lynch has countersued over lost investment opportunities and reputational damage. The US Securities and Exchange Commission has already suggested the fraud reached beyond the chief financial officer, writing in a civil proceeding that “Autonomy’s UKbased senior-most executives” issued “materially false and misleading reports” for two and a half years before the HP takeover. HPE welcomed Monday’s verdict. “As we have consistently maintained, Mr Hussain engaged in outright fraud and deliberately misled the market about non-existent sales through a series of calculated sham transactions,” it said. In summing up for the prosecution last week, Adam Reeves said Mr Hussain had run an “unsustainable Ponzi scheme” that eventually

forced Autonomy to seek a buyer. He was accused of engineering fake transactions to boost the company’s revenues and earnings, often by booking sales to technology resellers who in turn routed money back to Autonomy through matching transactions. “Autonomy manipulated their revenue, and quarterly results, making an accurate valuation impossible,” HPE said. “That Mr Hussain attempted to depict the fraud as nothing more than a misunderstanding of international accounting rules was, and still remains, patently ridiculous — and the jury has now held him accountable for his role in defrauding HP.” During the trial, Judge Charles Breyer ruled against the defence’s attempt to present evidence about what it claimed was turmoil inside HP surrounding the acquisition. Mr Keker said: “Defence evidence of Hewlett-Packard’s conduct in the year following the acquisition, which would have shown the jury that HP was not in fact misled at all, was excluded from evidence and will be one basis for the appeal.”

MetLife finance chief leaves after reserves debacle Insurer is dealing with fallout of failure to pay pensions to 13,500 people ALISTAIR GRAY

etLife’s chief financial officer has been replaced with immediate effect, months after the second-biggest US insurer by assets warned of problems with its reserves and financial reporting. Just a day before MetLife is due to publish its first-quarter financial results on Wednesday, the life and pensions group said John Hele was leaving after six years. The Canadian, 59, was retiring, MetLife said. He was replaced on

Tuesday by John McCallion, the company’s treasurer, although Mr Hele would stay on as an adviser until September. The departure comes after the insurer acknowledged that over a period of about 25 years, it failed to make hundreds of millions of dollars of pension payments to about 13,500 people. MetLife had presumed individuals who were entitled to the payouts “would never respond” if the company’s employees made only two attempts to reach them without success. The practice allowed executives to

boost past profits because the insurer released funds from financial reserves that were supposed to support the pension payouts. Earlier this year the company booked a $550m charge to cover the unpaid obligations. Then, in March, it disclosed new problems. The company had over-reserved for annuity payouts in Japan by almost $900m. “A series of issues that fell within the financial reporting function have been a source of investor frustration,” said Sean Dargan, analyst at Wells Fargo Securities.

oldman Sachs has been ordered by two US regulators to pay $110m for “unsafe and unsound” practices in its foreign-exchange trading business. According to the Federal Reserve and the New York Department of Financial Services, Goldman forex traders routinely shared information about client orders on electronic chat rooms so they could boost profits, sometimes at customers’ expense. From 2008 to early 2013, the regulators said, Goldman traders would use code names to swap information to fix prices and rig bids. In one chatroom, traders referred to certain customers as the “fiddler,” “hat and coat” and “dodgy aussie seller”,while another customer was known as “Satan”. In one exchange cited by the DFS, one Goldman trader flatters a counterpart at another bank by saying: “I remember the old days, your satan info was legendary.” The Fed and the DFS on Tuesday fined the bank $55m each. In its announcement, the DFS noted that a senior member of Goldman’s global forex sales division, based in London, raised concerns in 2009 about the sharing of customer orders. “I would like you guys to give it some thought . . . please,” the executive wrote in an email. “The question stands: ‘Why do the people that you talk to seem to give you so much clearly improper information week after week, month after month, and year after year? . . . are they stupid?’” The DFS noted that the salesperson ultimately did nothing to flag those concerns to the compliance department. In a statement, Goldman said it was pleased to have resolved the regulators’ respective reviews. “We . . . appreciate their recognition that we have already taken significant steps to enhance our policies and procedures,” the bank said. The penalty comes several years after other big banks on Wall Street began settling US regulatory probes into similar allegations of misconduct in the forex market, one of the largest and most liquid in the world. In May 2015, Citigroup and JPMorgan Chase — both significantly bigger players than Goldman in foreign exchange — paid several hundred million dollars each to the Fed and the Office of the Comptroller of the Currency, while Bank of America, Barclays, BNP Paribas, Deutsche Bank, HSBC, RBS and UBS also settled. The joint actions disclosed on Tuesday are the latest blow to the fixed-income, currencies and commodities unit within Goldman, which has struggled to achieve satisfactory returns in an environment of low liquidity and low engagement among big clients such as hedge funds.

Wednesday 02 May 2018

BUSINESS DAY

SHIPPING

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LOGISTICS

Wednesday 02 May 2018

MARITIME e-COMMERCE

Nigeria’s transport infrastructure holds over $3trn investment portfolio, says Bello Stories by UZOAMAKA ANAGOR-EWUZIE

assan Bello, executive secretary of the Nigerian Shippers’ Council (NSC), has called for more private sector investment in the development of transport infrastructure in Nigeria, which he said holds over $3 trillion investment portfolio. Bello, who delivered a paper titled: “Pushing the Boundaries of Public-Private Partnership Initiative for Shipping Industry Development,” at a breakfast meeting organised by the Nigerian-American Chamber of Commerce, said the National Integrated Infrastructure Master plan (NIIMP), provided a veritable platform for PPP in the provision of transport infrastructure in Nigeria. The investment in the transport sector as contained in the NIIMP for 2014-2017 is $0.72 billion; $1.7 billion, $3.2billion and $5.7 billion for between 2014 and 2017, bringing the total investment requirement to about $3.0 trillion from 2014 to 2043. According to Bello, the NIIMP is aimed at raising Nigeria’s core infrastructure stock estimated at between 20 and 25

Rotimi Amaechi

percent in 2013 to a minimum of 70 percent by 2043. “With all these investment projections, the country was still having deficit in infrastructural investment due to over reliance on government funding. “For instance, 2016 federal allocation to the transport sector showed a gap of about N900 billion creating an enormous deficit due to the near total reliance on government funding and mono-economy,” he noted. Bello however pointed that PPP is increasingly becoming a more effective vehicle for delivering transport and shipping infrastructure, compared to the traditional procurement of budgetary appropriations. Under the PPP arrangement, he said, responsibilities are delegated to the private sector while the title in the law

Hassan Bello

and assets remain with the government. Enumerating the benefits of PPP to the private sector, Bello said investors are entitled to free land, protection through appropriate legislation, provision of subsidies and guarantees, provision of right of ways and long-term vision, while the private sector continues to fund and operate the infrastructure provided. According to him, the PPP arrangement is beneficial to both private and public partners as both strive to maximise the use of each other’s strength, reduce development risk, reduce public capital investment, mobilise excess or underutilised assets, improve efficiencies, improve services to the community, improve cost effectiveness, share resources and mutual rewards.

Bello, who noted that the advantages of PPP are enormous, said it would improve service delivery, facilitate faster procurement and bidding process, promote transparency, good governance and anticorruption practices, facilitate effective utilisation of scarce resources, and promote best practices and reforms for better efficiency. “The port reform and the eventual handing over to private, has justified the need to push the PPP arrangement further in the country. Since the ports were concession, ship waiting time had become zero from 21 days; vessels turnaround time had reduced to 41 hours from five days; container dwell time reduced to 14 days from 28 days while operational time had extended to 24 hours every day, including Satur-

days and Sundays, instead of operational period of 9am to 4pm, Monday to Saturdays,” he explained. He described all these as pointers to improved port efficiency occasioned by huge investment in equipment, ports infrastructure, lightening and common user facilities. He also enumerated the ongoing PPP projects in the country as the $2.33 billion Lekki port, the Inland container Deports and Truck Transit Park (TTP) projects. Investment windows, he said, are still open for intending investors on Inland Container Depot, also known as dry ports located at kakuri in Kaduna State, Heipang in Jos; Funtua in Zamfara State; Erunmu-Ibadan in Oyo State; Zawachiki in Kano State, Islalangwa in Abia State and Janri

near Maiduguri, Borno State. The inland container Depot (ICD) is ports located in the hinterland with facilities to load and offload containers. They aimed at bringing shipping services to the doorstep of hinterland shippers. Currently, of all the ICDs, the Kaduna port has the status of port of origin for export cargo and final destination for imports. The council, according to Bello, is currently facilitating the development of Truck Transit Parks (TTPs) on major corridors in Nigeria. TTPs are public rest area located off highways designed to provide temporary rest location for truck drivers. They are primarily a short term safety breaks and longer-term parking services in highway road corridors. Each of the TTP, he said would be provided with a fuel station, restaurants, mechanic workshops, health clinics, hotels and motels and a host of other facilities for drivers and travelers comfort. They are being built in locations including Port Novo Creek in Lagos State, Ogere in Ogun State; Onitsha in Anambra state; Maraban, Jos in Kaduna state; Jebba in Kwara state; Ore in Ondo state; Obollo-Afo in Enugu State; Benin bypass in Edo state; Aviele in Edo state and Illela in Sokoto state.

IMO plans 50% greenhouse gas emission cut by 2050 …as LADOL boss sees target stimulating investment in maritime sector

my Jadesimi, managing director of the Lagos Deep Offshore Logistic Base (LADOL), has said that the International Maritime Organisation (IMO), an organ of the United Nations, has adopted a strategy to reduce the total annual Greenhouse Gas (GHG) emissions from international shipping by at least 50 percent, come 2050. Jadesimi, who doubles as the vice chairman of the Global Maritime Forum, said last week that member states of the International Maritime Organisation has also adopted an initial strategy to reduce the total annual GHG emissions from international shipping in line with the IMO’s target. Research has shown that international shipping accounts for approximately 2.7 percent of world CO2 emis-

sions from fossil fuel combustion while all shipping activities including fishing, domestic and international represents approximately 3.3 percent of total CO2 from fuel combustion. However, IMO projects that CO2 emissions from

international maritime activity will grow through 2050, though this growth may be significantly slowed through uptake in fuel efficient technologies and operating procedures. Speaking prior to the meeting on Carbon Pric-

ing Leadership Coalition (CPLC) of Third High-Level United Nations Assembly 2018, held in Washington, DC, Jadesimi disclosed that the IMO’s target could motivate private investors and operators in the maritime sector, to immediately begin

Amy Jadesimi, managing director of LADOL and vice chairman of Global Maritime Forum flanked by Christine Lagarde, IMF chief and Amina Mohammed, deputy secretary-general of the United Nations and other delegates at the Carbon Pricing Leadership Coalition, (CPLC) Third High-Level United Nations Assembly 2018 held in Washington, DC.

to invest in new sustainable business models. The High-Level Assembly takes place as part of the World Bank Group/International Monetary Fund (IMF) Spring Meetings, and it focuses on the opportunities, benefits and concerns relating to carbon pricing. “This target could strengthen the private investors and operators in the maritime sector to invest in new sustainable business models, assets (such as shipyards and ships to ports) and financial solutions including carbon pricing. Therefore, we urge policy makers to continue setting bold targets and laying out a clear path to zero emissions,” Jadesimi advised. Carbon pricing can be a way in which international shipping can advance its newly adopted strategy on decarbonisation.

It is on this background that the Global Maritime Forum was represented at the High-Level Assembly by the members of the board that include Amy Jadesimi, managing director and CEO of LADOL; Oivind Lorentzen III, managing director and vice chairman of Northern Navigation LLC and SEACOR Holdings; Tom Boardley, executive vice president and global head of corporate and external affairs at Lloyd’s Register, a Strategic Partner to the Global Maritime Forum. The Global Maritime Forum is an international not-for-profit foundation dedicated to unleashing the potential of the global maritime industry. It is committed to shaping the future of global seaborne trade to increase sustainable long-term economic development and human wellbeing.

Wednesday 02 May 2018

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BUSINESS DAY

Tax Issues

Report sees countries attract FDI by lowering corporate tax rates IHEANYI NWACHUKWU

Workers in OECD countries pay one quarter of wages in taxes T

CITN inducts 409 tax professionals STEPHEN ONYEKWELU

BUSINESS DAY

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Wednesday 02 May 2018

C002D5556

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

BP can afford more dividend largesse with fewer calls on its cash Liabilities are decreasing and the price of oil is holding steady MATTHEW VINCENT

il and gas companies’ ability to afford big payouts has proved remarkably enduring. In 2015, BP managed to increase the pay of chief executive Bob Dudley by some 20 per cent, to $19m — even after an annual loss. In that same year, BP’s soon-to-be chairman, Helge Lund, came in line for a £28m payday from his then employer BG — for only 11 months’ work. So how could shareholders doubt BP’s scope to show them largesse, as well? After all, it has maintained their dividends at $7bnplus since 2015, despite not having the cash to cover them in full. But, on Tuesday, investors seemed to doubt BP again. They underestimated its quarterly earnings for the fifth time in a row. Consensus forecasts were a long way off, too: by some 17 per cent. As Barclays put it: “The market does not appear to fully reflect the improvement.” Indeed not. And the reluctance to do so probably stems from that cash conundrum. BP — like its chief executive and new chairman — might have lots of cash, but there are lots of calls on that cash, as well. Although a $67 oil price lifted underlying profit by 73 per cent, to $2.6bn, and cash from operations was 9 per cent higher, ongoing payments for the Deepwater Horizon oil spill amounted to $1.6bn in the first quarter alone. That required an increase in net debt to $40bn, taking gearing above 28 per cent. Meanwhile, quarterly capital expenditure had to be sustained at $3.5bn, to ensure output that was 6 per cent higher was replaced. As a result, earnings per share for the quarter came in at $0.124, barely covering the $0.10 dividend — and analysts noted that cash flow after tax and capex was below the $1.8bn cost of the payout.

However — perhaps unlike its CEO, new chairman and larger shareholders — BP can envisage a time when there are fewer calls on its cash. Consensus forecasts suggest this is not such a long way off, either. Payments for the Deepwater Horizon spill are falling sharply, from $7.5bn in 2016, to $5bn in 2017, and — despite that $1.6bn in the first quarter — to $3bn in 2018. They will be down to $1bn from 2020. Gearing therefore falls towards BP’s mid-20s percentage target, if oil prices hold. Capex at its current rate will be below the expected $15bn-$16bn range. BP will still have to maintain its share buyback programme — at £120m in the quarter — to offset the dilutive effect of paying dividends in shares. Even so, the prospect of rising cash flows led chief financial officer Brian Gilvary to hint at a first dividend increase in four years. It would be a popular move. After 2015, BP changed its pay policy: executives must now take half their annual bonus in shares. McFarlane’s hard act At Barclays’ annual meeting on Tuesday, chairman John McFarlane set out the timetable for his succession, just as the much-tipped Gerry Grimstone ruled himself out, writes Kate Burgess. These were the yet-tobe-knighted banker’s actual words: “With the bulk of our legacy issues behind us . . . we achieved the separation of [the ringfenced bank] . . . under the chairmanship of Sir Gerry Grimstone and Sir Ian Cheshire . . . I mustn’t, however, fail to mention the regulatory investigation into our chief executive, Jes Staley . . . we must avoid any further material mistakes . . . There has been some press speculation about my future . . . I indicated I was prepared to serve for a minimum of four years . . . so while some might wish so, you are not getting rid of me yet . . . managing chair succession, particularly in major banks, can be a difficult matter . . . ”

Private equity investment in Europe reaches decade high Report shows a 29% year-on year increase as investors deploy record amounts of capital JAVIER ESPINOZA

than 1,200 companies.

Michael Collins, chief executive officer of Invest Europe, said the industry has benefited from investors global demand for the asset class in a prolonged period of low interest rates and strong economic conditions. “Investors are looking for ways to get decent returns,” Mr Collins told the Financial Times. “You will see more investors looking at the industry as a place where they can put some of their portfolio to work.” He added that a more mature sector with experienced managers looking to invest in profitable, mid-sized companies in Europe was also an attraction for investors. Pension funds represented 29 per cent of all capital raised in 2017. Other sources of capital came from funds of funds and insurance companies, which invested a mere 8 per cent in the sector, the report found. Consumer goods and services companies in Europe received 18 per cent more private equity investment year-on-year, representing 24.4 per cent of the total. Technology companies reached a 10-year high, with 17 per cent of the total, a 6 per cent increase from a year earlier.

rivate equity investment across Europe reached its highest level in a decade at €71.7bn, a 29 per cent year-on-year increase, as investors come under renewed pressure to deploy record amounts of capital, a new report revealed. Close to 7,000 companies on the continent received investment, 87 per cent of which were small and medium-sized enterprises, representing roughly 1,000 more companies than a year ago. The study by Invest Europe, the association representing private equity and venture capital on the continent, also showed a 12 per cent year-on-year jump in fundraising reaching €91.9bn, the highest amount since 2006. The findings emerged as private equity investors, which include large pension and sovereign wealth funds and family offices, are under renewed pressure to put money to work, leading to concerns that some are overpaying for assets. Roughly 3,800 companies were sold in Europe last year totalling €42.7bn, a 7 per cent increase and a decade high, said the report, which covered activity on more

Dollar marches higher as participants wait for Fed US currency in positive territory for 2018, Treasury yields rise DAVE SHELLOCK

hat you need to know Dollar bulls shrug aside drop in ISM manufacturing index Euro tests $1.20 level, sterling briefly falls below $1.36 10-year Treasury yield edges back towards 3% US stocks drop ahead of Apple earnings, much of Europe shut Brent oil retreats from $75 a barrel mark Overview There was no stopping the dollar’s ascent on Tuesday, with the currency turning positive for the year against a basket of peers, as participants looked past a soft report on US manufacturing and focused on interest rate differentials and central bank policy divergence. Ahead of the conclusion of the Federal Reserve’s May policy meeting on Wednesday, the dollar index pushed above the 92.12 level at which it ended 2017 and climbed to within a whisker of this year’s intraday peak of 92.64. The euro briefly fell below $1.20 to its lowest point since early January and sterling tested $1.36, while the greenback also recorded strong gains against a number of emerging market currencies. The yield on the 10-year US Treasury note crept back towards 3 per cent and the two-year yield topped

2.5 per cent. “The Fed is unlikely to make any policy changes at this week’s FOMC meeting,” said Capital Economics’ Andrew Hunter. “But with signs that underlying inflationary pressures are continuing to build, officials may use the postmeeting statement to hint that they will step up the pace of tightening over the rest of this year.” The Institute for Supply Management’s headline US manufacturing index eased to a nine-month low, although most economists remained sanguine about the outlook for the sector. James Knightley at ING said that while manufacturing growth had slowed slightly overall, it appeared to be more broadly- based. “This means the Fed can have the confidence to continue with its gradual policy tightening, especially with inflation pressures building in the economy, as highlighted by the prices-paid component [of the ISM survey] rising to its highest level since April 2011,” he said. The dollar’s strength unsettled commodity markets, with Brent oil pulling back from the $75 a barrel mark and gold heading for its lowest close of 2018. Energy stocks were a big drag on

the main US equity indices, while broader sentiment on Wall Street was hit by some disappointing corporate earnings reports. Participants were keenly awaiting Apple’s results, due for release after the close. Trading in Europe was limited by holidays in a number of centres. Forex and fixed income The dollar index was last up 0.6 per cent at 92.39, after rising as high as 92.57 earlier in the session. The euro was down 0.6 per cent at $1.2001 after touching $1.1982, while the greenback was up 0.3 per cent at ¥109.70, the highest since mid-February. The yield on the 10-year US Treasury was up 3 basis points at 2.97 per cent, a week after it broke back through the 3 per cent milestone for the first time in four years. The two-year US yield was up 2bp at 2.51 per cent. Sterling, meanwhile, was down 1.1 per cent versus the dollar at $1.3622 after earlier slipping below $1.36 for the first time since January, while the 10-year UK gilt yield ended 1bp lower at 1.40 per cent. The April purchasing managers’ index for the UK manufacturing sector missed forecasts as it fell to a 17-month low. The euro was up 0.5 per cent against the pound at £0.8812, and heading for a six-week closing high.

Wall Street nears key trading level, dollar continues ascent PETER WELLS

S stocks are near their session lows and flirting with key fundamental levels during lunchtime trade in New York. In contrast, the US dollar is having a much better time, turning positive for the year and rising above long-term trading averages. The Dow Jones Industrial Average was down 1.4 per cent to 23,831.36 with industrial and healthcare stocks proving key drags. The gauge dropped as much as 1.5 per cent, which left it just 81.8 points above its 200-day moving average, a key measure of momentum.

The S&P 500 is down 0.7 per cent to 2,629.24, although at its intraday low the gauge was just 12.2 points from its 200-dma. The Dow previously traded below its 200-dma on April 2, while the S&P 500 last traded below that level on April 6. The Nasdaq Composite was down 0.1 per cent at 7,056.757 but has a bit more breathing room with respect to technical levels. Trading above its 200-day moving average for the first time since May last year was the US dollar index. The gauge, measuring the greenback against a weighted basket of global currencies, had pulled back slightly from

that mark, though, to be 0.4 per cent higher to 91.809. The dollar was back in positive territory — by ⅓ of 1 percentage point — for the first time since early January. The dollar and US Treasuries seemed to be relatively impervious to new data out on Tuesday showing that a gauge of manufacturing activity falling to its lowest level since July. The yield on the benchmark 10-year Treasury was up 3 basis points to 2.9662 per cent, while that on the more policy-sensitive two-year note was up 1.6 basis points to 2.5042 per cent. Yields move in the opposite direction to price.

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Wednesday 02 May 2018

ANALYSIS The AI arms race: China and US compete to dominate big data

Beijing plans to be the world leader in the technology by 2030. The contest will come down to who can better manipulate the data LOUISE LUCAS AND RICHARD WATERS

lgorithms trained on mountains of Chinese data may soon be making decisions that deeply affect the lives of people in the US. Take Yitu Technology, a Shanghaibased artificial intelligence start-up that won top honours in two AI competitions in the US last year for its facial recognition technology. The system was built for Chinese law enforcement using data collected by the authorities. Or as the company boasts, it was honed on the “world’s largest portrait system, covering more than 1.5bn people.” Yitu is now looking for customers in the US to put its software to work. “There are a lot of applications for this technology,” says Wu Shuang, who heads its Silicon Valley research group. It is not alone. Shenzhen-based Malong Technologies has also trained its image recognition algorithms on masses of Chinese data — in its case, by analysing hundreds of thousands of photos from fashion shows to identify trends for clients in the garment industry. It says it is now trialing the technology with ecommerce companies in the US. A “key difference in China is there are just more people, more data, more businesses — it’s just bigger,”

says chief technology officer Matt Scott, a former Microsoft researcher who moved to China to co-found the company. “Having access to that data in China, we can export [the technology] around the world.” Algorithms like these are the advanced guard in a battle that will go a long way to determining economic leadership in the era of Big Data — a contest where China is catching up quickly and now vying with the US to be the dominant force. The AI revolution is often thought of in terms of robots or drones that can do tasks once performed by humans. But its impact will also be felt from a less visible source — the ability to sweat the data the hardest. Machine learning systems that can find patterns by analysing large data sets are at the cutting edge of today’s artificial intelligence. For some industries, deep learning — the most advanced form of the technology — has the potential to create value equivalent to as much as 9 per cent of a company’s revenues, according a report in April from McKinsey Global Institute. That translates into trillions of dollars of potential economic value — and the US and

China are the clear leaders. “If you look globally, it’s a twohorse race in AI,” says Michael Chui, a McKinsey partner who led the study. In China, the AI boom has fed the country’s swelling sense of self-confidence in its expanding technology base. President Xi Jinping has made AI one of the central pillars of the Made in China 2025 plan to transform the country’s economy and has set a goal of being the world leader in the technology by 2030. At the same time, China’s advances are also contributing to an opposite paranoia in the US that its technology exceptionalism can no longer

be taken for granted. The Trump administration’s plans for a trade war with Beijing are motivated — at least in part — by fear of China’s advances in new technology. “It’s clear that the US government sees itself in a tech arms race with the Chinese government,” says Robert Silvers, a partner at legal firm Paul Hastings and former assistant secretary for cyber policy at the department of homeland security. “The US is taking the view that these kinds of technologies are so transformative that the country that gets the lead is going to have not just economic or tech advantage but also national security advantage.” One reason the contest over AI is so charged is that it is connected with a race to find a new military edge. As well as answering mundane customer queries and piloting driverless cars, the same technology can also be deployed to synchronise drone swarms, analyse pictures taken by spy drones and control autonomous boats. Dominance in AI could bring a step change in warfare, says Sean Gourley, founder of Primer, a Silicon Valley AI start-up whose backers include the CIA’s venture capital

arm. Technology shifts like this can undermine the military advantage of great powers. “It’s likely to be coupled with the reordering of global power. Whoever is best at this will be in a strong position in 10 years’ time,” he says. Russian president Vladimir Putin found his own way to raise the rhetorical stakes over AI last year: “Whoever becomes the leader in this sphere will become the ruler of the world.” According to most experts, the US still has a clear lead. It takes three things to be a world-class AI power: the most advanced algorithms, specialised computing hardware, and a good supply of the raw material that machine learning systems depend on — data. Last year’s Go match, where a system built by Google subsidiary DeepMind trounced leading player Ke Jie in the ancient Chinese board game, was China’s wake-up moment in AI, says one Google executive. “Only when the Russians launched the sputnik did the US realise how far they had come,” he says. “China had that moment when they lost at AlphaGo.” That view is echoed by some in China. “For top talents, clearly the US will still be the main resource. I think there’s no question of that,” says Rong Jin, head of machine intelligence technologies at DAMO Academy, Alibaba’s research programme. The perception in China is that Americans throw themselves into fundamental research and are heavy duty mathematicians — the disciplines at the heart of AI — while Chinese tend to study coding or engineering. Yet despite those advantages, China is rapidly narrowing the algorithm gap. When it comes to the output of China’s research institutions, “the statistics are definitely rising sharply”, says Oren Etzioni, who runs the AI research institute of Microsoft cofounder Paul Allen. He points to other signs of China’s growing AI capability, from the reading comprehension test earlier this year in which AI newcomer Alibaba tied for top honours with traditional research power Microsoft, to the strong showing of Chinese researchers in the annual ImageNet competition for image recognition. On the second category of hardware development, China has been slower to build the sort of homegrown chip industry needed to put it on the leading edge. That has been partly due to a series of decisions that effectively bar the acquisition of US chip companies, which started under the Obama administration and accelerated under President Donald Trump. It is in the final area — the availability of raw data — where most experts believe China’s AI advantage

A Chinese police officer wears a pair of smartglasses with a facial recognition system in Zhengzhou, Henan province © AFP

lies. China has reams of data on its citizens and is not afraid to use it. This is partly due to a state that monitors everything from birth: facial recognition is so widespread you can be picked up for jaywalking and stopped from stealing tissue at the Temple of Heaven in Beijing. But it is also a tribute to China’s early move online: this is a country where people order, shop, pay and play online, leaving massive data footprints that enable merchants to accurately target ads and promotions. “The density of people is proportional to the density of data,” says a leading Chinese machine intelligence scientist. Chinese attitudes to data privacy are becoming slightly less lax, but regulations are still a million miles from Europe, which is at the other end of the spectrum and will introduce tough privacy rules later this month known as General Data Protection Regulation. Yet American companies like Facebook, Google and Amazon also have masses of data, says Mr Wu at Yitu. That suggests that general-purpose AI applications like facial recognition will be the preserve of

all “the big platforms”, regardless of their country of origin, says James Manyika, a partner at McKinsey. By contrast, more specialised applications could be perfected where the data are the richest. When it comes to manufacturing, for instance, China is “collecting a lot more data”, he says. This data advantage could be greatest in fields where regulation has made access to information harder, or prevented it being collected in the first place, according to some experts. Earlier this year, Google published promising research suggesting it could predict the risk of heart attack by using imagerecognition software to study retinal blood vessels. The research relied heavily on UK Biobank, a database drawing on a detailed study of volunteers in Britain beginning in 2006. Yet only 631 people in the Biobank had medical conditions relevant to the research. That made the data set “relatively small for deep learning”, Google said, reducing the effectiveness of the algorithm it was able to train on the information. Chinese medical AI researchers, by contrast, have been able to tap into far bigger data sets, according to one expert.

BUSINESS DAY

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NEWS YOU CAN TRUST I WEDNESDAY 02 MAY 2018

Opinion Herdsmen: What has happened to the Great Green Wall?

CHIDO NWAKANMA Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@gmail.com.

ith the rising decibel of the national o u t c r y against the serial killings of unarmed citizens by herdsmen, whether fellow citizens or foreigners, Nigerians should be paying attention to measures to tackle the root cause of the predation and changed pattern of interactions. At the root of the crisis between farmers and pastoralists is the search for arable land following the effects of climate change. Nigeria joined the rest of Africa to work at a solution. What has happened to

the Nigerian implementation of the Great Green Wall? Where is the current Minister of State for Environment Ibrahim Jibrin? What did the N10b Nigeria approved for the implementation of the project in 2014 fetch us? How much more moneyis going into the project? The National Agency for the Great Green Wall Project (NAGGW) should be contributing to the conversation on desertification and the herdsmen challenge. Mr Goni Ahmed is Director General and reports to the Minister of Environment. How far so far? On the herdsmen challenge, the Federal Government initially toyed with a purported solution in the creation of cattle colonies. There has been strong resistance, and government itself seems to be backing down. How about seriously tackling existing initiatives, including greening the Sambisa Forest and progressing the Great Green Wall? Nigeria has recovered the expansive Sambisa For-

est. Sambisa hosted a Game Reserve in the past covering from 686sq km to 2258sqkm. Wikipedia states that it occupies parts of the states of Borno, Yobe, Gombe, Bauchi along the corridor Darazo, Jigawa, and some parts of Kano state farther north. It is administered by the Local government areas of Askira/Uba in the south, by Damboa in the southwest, and by Konduga and Jere in the west.” Wikipedia adds: “BirdLife International reported that 62 species of birds hadbeen recorded in the Sambisa Game Reserve, including the guinea fowl, francolin, village weaver, Abyssinian ground hornbill, Arabian bustard, Savile’s bustard, African collared-dove, Chestnut-bellied starling, black scrub-robin and the Sudan golden sparrow. The forest was also thought to be the last remaining site of the ostrich in Nigeria. Seventeen species of mammals were reported in 2010 in the Sambisa Game Reserve including baboon, patas monkey, tantalus monkey, Grimm’s duiker, red-fronted gazelle, African bush elephant, roan

antelope, hartebeest, African leopard and spotted hyenas”. That the Borno State Government ran a game reserve in Sambisa Forest in the past means they can still do so today. Will the Borno State Government take the lead? Then there is the Great Green Wall project aimed at tackling the ecological challenge. The Great Green Wall initiative is a pan-African proposal to “green” the continent from west to east to battle desertification. It aims at tackling poverty and the degradation of soils in the Sahel-Saharan region, focusing on a strip of land of 15 km (9 mi) wide and 7,100 km (4,400 mi) long from Dakar to Djibouti. The Global Environment Facility notes, “Populations in Sahelian Africa are among the poorest and most vulnerable to climatic variability and land degradation. They depend heavily on healthy ecosystems for rainfed agriculture, fisheries, and livestock management to sustain their livelihoods. Unfortunately, increasing population

pressures on food, fodder, and fuelwood in a vulnerable environment have deteriorating impacts on natural resources, notably vegetation cover. Climate variability along with frequent droughts and poorly managed land and water resources have caused rivers and lakes to dry up and contribute to increased soil erosion.” There is a tidy sum of about US$81m involved in this project. One writer, Dylan Thuras, notes that more money is available. He states, “.. International organisations have pledged over $3 billion toward the completion of this massive environmental project, designed to help stop land degradation.” The African Union backs it. “In June 2010, Burkina Faso, Chad, Djibouti, Eritrea, Ethiopia, Mali, Mauritania, Niger, Nigeria, Senegal and Sudan signed a convention in Ndjamena, Chad, to create the Great Green Wall (GGW) Agency and nominate a secretary to develop the initiative further.” Nigeria commenced im-

plementation in 2013 and in 2014 set up the Interim Office of the National Agency for the Great Green Wall with the appointment of an Acting Director General. Nigeria’s GGW programme involves 11 states. Benefitting states are Adamawa, Bauchi, Borno, Gombe, Jigawa, Kano, Katsina, Kebbi, Sokoto, Yobe and Zamfara. It involves the establishment of a greenbelt covering 1500km from Dandi Arewa Local Government Area of Kebbi State to Marte in Borno State. The National Agency for the Great Green Wall says “The mission of the NAGGW is to halt and reverse land degradation, prevent depletion of biological diversity, ensure that by 2025, ecosystems are resilient to climate change and continue to provide essential services that would contribute to human welfare and poverty eradication.” How are the Governors of the North driving implementation of this bold attempt to solve the ecological challenge? Why are other countries doing better than Nigeria in the drive?

Congo and OPEC: A marriage of mutual need NJ AYUK Ayuk is CEO of Centurion Law Firm

heRepublicoftheCongo has suffered dearly during the oil collapse; and Congolese President Denis Nguesso has pledged that the country would no longer be sitting on the side lines — suffering the effects of global decisionmaking in the oil industry without a voice. In an official communiqué announcing the bid for OPEC membership, he stated that he wished to “place our country in the rank of the world’s leaders.” In January, officials from the Republic of Congo announced the country’s application for membership of the Organization of Petroleum Exporting Countries (OPEC). This is no small move. After years of challenges with the collapse in the price of oil, the Republic of Congo is emerging from this period with a renewed agenda, focused on becoming an active voice in the global stage, rather than a silent victim of international oil price swings. For Congo, OPEC membership means greater access to information, partnerships, con-

tacts and a voice at the decisionmaking table. But, perhaps more than ever, it is OPEC that is to benefit from the rise in African political voices, particularly that of Congo. At nearly 2 billion barrels of crude oil of proven reserves in a vastly underexplored territory, Congo represents a sleeping giant amidst African oil producers. An improved business climate has brought profound benefits to the country’s oil industry. New developments by French oil company Total in Congolese territory are set to expand the country’s oil output from 280,000 barrels per day to 350,000 in 2018. An enhanced sector outlook coupled with new discoveries and strong leadership by younger and more capable leaders is rapidly attracting the interest of investors across the world. The election of Thérésa Goma to the position of director general of hydrocarbons in March is an example of a change in mentality, as is the ascendance of Jean Marc Tchicaya to the position of hydrocarbons minister — a younger and more dynamic figure than any of his predecessors. Brazzaville is the host city of the headquarters of the African Petroleum Producers Organization, a club that has been gaining renewed relevance in recent years as African leaders search for intraAfrican cooperation on matters of

energy. Further, Congo has also been expanding its bilateral relationships with the likes of Angola, Nigeria and Equatorial Guinea, moving towards a new policy of gas utilization. The entrance of Congo as an active voice in OPEC can bring a much stronger foothold for the Vienna-based organization in the African oil circle, and reinforce its capability to coordinate production cuts and joint-strategies across the continent when necessary. For OPEC, this means greater representation, greater control over the world’s output, and in the end, greater power. For Congo, the country will sit side-by-side with key oil giants, like Saudi Arabia and Venezuela; as well as Gabon, Angola, Nigeria and Equatorial Guinea, further reinforcing the strength of African voices amongst the cartel. It will be able to learn and contribute to policy and decision-making, and it will be ever more prepared to deal with the volatility of crude prices. Congo’s bid for integration within the cartel also comes at a paramount moment for African foreign policy, as dependence in commodity prices and shifts in the international order have made ever more apparent the need for regional and intra-continental cooperation. African leaders are finally waking up to the fact that their international stand

will not depend on the bilateral agreements they can reach with the likes of the US or China, but on their ability to cooperate and seek continent-wide agendas that can benefit Africa as a whole. A united African voice Let’s take a moment to look at Equatorial Guinea, and what this small nation has achieved in recent months with a change in foreign affairs strategy, with due credit given to the leadership of Gabriel Obiang Lima, Minister of Mines, Industry and Energy. Since it joined the OPEC in May 2017, Equatorial Guinea gained a de facto seat at the international negotiating table. Suddenly, a nation that produces around 130,000 barrels of crude per day (which is less than 2% of Saudi Arabia’s output), is given a say on international production cuts, price-managing strategies and access to a plethora of contacts and close partnerships that would otherwise be beyond its reach. It is no surprise that since then, Mr. Obiang Lima has been much more present in the press, speaking on behalf of his own nation but also as a member of the oil group. His main message is geared towards other SubSaharan African oil producers, and it reads: “Join OPEC, make your voice count”. Through initiatives like LNG2Africa and bilateral partnerships with many African coun-

terparts, Equatorial Guinea has been pushing an African agenda in recent years that is based on the clear understanding that intraAfrican cooperation can have a profound impact in raising the continent’s profile in the international stage. Mr. Obiang Lima knows that a united African voice can be heard much louder than if he speaks for himself, and that African representation in OPEC can further boost the continent as a whole. OPEC’s new breath The successful results of the production cuts by OPEC have shown the cartel is regaining its stand in the international stage, demonstrating flexibility to the new market realities. Certainly, chief figure amongst all in the effort to bring sustainability to the international oil market was Mohammad Barkindo. The Nigerian Secretary General of OPEC spearheaded the landmark December 2016 agreement that saw the oil cartel and 11 non-OPEC members (including Equatorial Guinea at the time) sign on the cut down of 1.8 million barrels of crude oil per day (2% of global output), which has been extended until the end of 2018 and resulted in the progressive rising of crude oil to more sustainable prices that we witness today. When US President Donald Trump attacked OPEC recently for maintaining “artifi-

cially high prices”, his comments were met by a strong stand from Mr. Barkindo: “The Declaration of Cooperation entered into by 24 producing countries in December 2016 and implemented faithfully since 2017 has not only arrested the decline but rescued the oil industry from imminent collapse.” His statement is hard to argue with. However, OPEC cannot sit idle on its own success. The need for coordination with several nonmembers for any global strategy to work also demonstrates how the organization needs to secure a wider net and solidify its position in order to continue to reach its goals. Its agenda is aligned with that of African nations at a time when these players wish to have more control over the commodities they are so dependent on. Congo’s move towards membership of OPEC is a major landmark step that should not only be greeted and celebrated by the cartel, but also be followed by other nations across the continent. As the world’s remaining frontier market for oil exploration, Africa is increasingly positioning itself as the linchpin region for the future of the world’s energy industry. African nations cannot afford to not be at the negotiating table when the great decisions about their future are made, neither can OPEC afford to keep them out.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana. Tel: +233243226596: email: mail@businessdayonline.com Advert Hotline: 08116759801, 08082496194. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.

WEST AFRICA

ENERGY intelligence oil

gas

power

Wednesday 02 May 2018

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BUSINESS DAY

POLICY

Why Egypt is attracting big gas investments, what Nigeria should be doing Page 5 finance people appointments

L- R: Kunle Odusola-Stevenson, head Strategist, Legend & Legacy PR; Nuno Rosa, chief executive, TXB Global Business Consulting, Houston; Sunny Oputa, chief executive, Energy & Corporate Africa; Felix Ayejunikanwa, executive director (Engineering),MORPOL Engineering Services Ltd & Stefano De Stefano, director, SDS & Associates PLLC Houston, during the Annual Sub Saharan Africa Oil and Gas Conference held in Houston Texas ,USA recently.

Debrief

Crude oil market future remains uncertain Shell touts offshore momentum in quarterly report Page 6 OPEC weekly basket price DAY

PRICE

27/4/18

70.92

20/4/18

69.5

13/4/18

67.66

6/4/18

65.11

30/3/18

66.45 Source: OPEC

FRANK UZUEGBUNAM

espite crude oil prices hovering around $70perbarrel, the market outlook remains uncertain. Global benchmark Brent crude futures gained 74 cents to settle at $74.74 a barrel, while US West Texas Intermediate (WTI) crude were up 14 cents to $68.19 a barrel. The differential between Brent and WTI has steadily widened since early March when the gap stood at roughly $3/b. Risks to oil supply remain an issue for traders given the uncertain fate of the Iran nuclear deal and the unfolding economic crisis in Venezuela causing a decline in the

country’s crude output. However, the diplomatic breakthrough on the Korean Peninsula is taking away one source of geopolitical risk, at least for now following the historic summit that marked the first time a North Korean leader has crossed the border into South Korea in decades. North Korean leader Kim Jong Un and South Korean President Moon Jae-in pledged to formally end the war between the two countries and to denuclearize the Korean peninsula. “The environment remains nevertheless volatile with persistent uncertainty around the evolution of global supply,” according to French oil major Total in its quarterly statement. Paal Kibsgaard, Schlumberger

chairman and CEO said it is likely the industry will see supply challenges through 2018 “and a significant increase in global exploration and production investment will be required to minimize the impending deficit.” But the US-Iran relations throws up more uncertainty into the mix. Some oil traders are already steering clear of doing business with Iran as President Donald Trump signals he will ditch the nuclear deal with OPEC’s third-largest producer. Traders are unwilling to sign contracts for Iranian crude and refined products that would be valid after May 12, the deadline for Trump to decide whether to reimpose sanctions. Some of the traders buying Iranian oil said their existing con-

tracts contain clauses allowing them to stop taking cargoes if sanctions are re-imposed. The traders would probably exercise that right to protect their business interests in the US from legal action. However, BP chief executive Bob Dudley has warned about sanctions being “handed out like train tickets” as international pressure builds against Russia and expectations rise that the US could reinstate sanctions against Iran. “There’s a lot of geopolitical tension out there. The uncertainty around sanctions may be one of the bigger factors and secondly the dollar is dropping. We are off the fairway now,” Dudley said, adding that BP was not going to “plan the company” on the basis of $75 oil prices.

02 BUSINESS DAY WEST AFRICA Outlook Niger: Savannah Petroleum hits oil onshore Niger

ritish independent oil and gas company Savannah Petroleum PLC announced that an oil discovery has been made at the Bushiya-1 exploration well, located onshore south east Niger. Preliminary results indicate that the well has encountered an estimated 33 feet of net oil bearing reservoir sandstones across two intervals in the primary Eocene Sokor Alternances objective, according to Savannah Petroleum. The company said wireline logs indicate the reservoir properties in both sections to be of “excellent quality”. Bushiya-1 is currently being suspended for future re-entry. The well was drilled by Rig GW 215 to a total measured depth of 7,217 feet, taking a total of 16 days to reach target depth. Rig GW215 will now move to the Amdigh well site, located four miles from Bushiya, where it will prepare to

spud the Amdigh-1 exploration well. “The development of the oil and gas industry in the Agadem Rift Basin is expected to be transformative for both the Diffa region and Niger as whole and is a national priority for our country. We are therefore delighted that the Bushiya-1 well

has discovered oil, and we welcome Savannah as an oil resource holder in our country,” Foumakoye Gado, Niger minister of energy and petroleum, said in a government statement. “We look forward to working closely with Savannah and other stakeholders to assist in the

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oil

Brief commercialization of Bushiya and any other additional discoveries made by the company over the course of the coming years. We hope and expect Bushiya-1 to be the first of many drilling successes for Savannah in Niger,” Gado added. Steve Jenkins, chairman of Savannah Petroleum, said the discovery of oil at Bushiya-1 was a “significant milestone” for Savannah. “I believe the well has demonstrated all of the necessary ingredients for repeatable exploration success to exist in the R3 Area and look forward with encouragement to the remaining wells in our initial campaign, being Amdigh-1 and Kunama-1,” Jenkins said in a company statement. Andrew Knott, CEO of Savannah Petroleum, said the discovery marked an “encouraging start” for the company’s multi-well drilling campaign in Niger.

Ghana: Tullow resumes drilling at TEN offshore Ghana

he drillshipp Maersk Venturer started development operations for Tullow Oil offshore Ghana last month. The first of four wells planned this year is a producer at Ntomme for the TEN development, likely to come onstream around mid-year, while the second should be a producer in the northeastern part of the Jubilee field. Work continues to finalize the sequence of further wells to maximize production from both Jubilee and TEN, and Tullow and its partners are still considering bringing in a second rig to speed up drilling for both projects. At Jubilee, the FPSO Kwame Nkrumah was shut-down for 19 days during 1Q for first-stage work to stabilize the turret bearing and for unrelated maintenance work. A second shutdown should follow next month

to complete stabilization of the turret bearing, with a third shutdown of around one week toward year-end to rotate the FPSO to its permanent heading and install the final spread mooring anchoring system. Gas production from TEN was used to substitute supply to Ghana National Gas Co. during the shutdown. Permanent gas sales from TEN should start in June. Elsewhere in West Africa, Tullow is participating in a 9,000-sq km (3,475-sq mi) 3D seismic survey offshore Mauritania, due to be completed in June.

“any attempt to conclude the sale prior to this approval would be in breach of the concession contractual agreement”. A government source also said the deal needed formal Libyan approval. Pouyanne said Total was able to move in and rapidly close the unplanned deal because it was willing to take in the political risk of the Libyan situation. Libya, an OPEC member, has been mired in seven years of turmoil that have hit its oil sector. “Total can take these kinds of Libyan risk in our portfolio more than Marathon was willing to keep

them, which is why we did the deal,” he said. Total said the Waha concession represented about 500 million barrels of oil reserves with production of around 50,000 barrels per day. “The cost of access to these barrels was quite attractive due to the political situation. Maybe it created some moves in Libya after they discovered the value of the deal, but the terms of the concession did not change,” Pouyanne said. Seeking to sooth concerns in Libya, Pouyanne said the company was in permanent dialogue with Libyan authorities.

Libya: Total CEO says Libya raised no objections over Waha deal

ibyan authorities were informed before French energy major Total closed a $450 million deal with Marathon Oil to take over the US firm’s 16 percent share in the Waha concession, Patrick Pouyanne, Total’s chief executive said. Pouyanne told analysts during Total’s first-quarter earnings call that despite reports that the deal could hit a snag over Libyan displeasure, Libyan authorities raised no objections before it closed on March 31. “We informed Libyan authorities far in advance that the deal had been

settled between Total and Marathon and we were intending to close it by the end of March,” Pouyanne said. “From a strictly legal point of view, neither in Libyan law nor in the oil concession agreement is there a request for a formal approval,” he said, adding that as of now, the shares of Marathon in Libya were with Total. “We informed them. There was a target for us for the end of March to close the deal, we wrote to them again before, there was no objection and so we decided to close.” Libya is considering whether to intervene

and its options include pushing for better terms, sources said. Libya’s National Oil

Corporation said any such deal “must have the approval of NOC and the Libyan authorities” and

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gas

BUSINESS DAY

WEST AFRICA

ENERGY intelligence

Brief India: India to split GAIL within a year to open up gas sector

ndia plans to split state-run gas utility GAIL by March 2019 to create two companies: one marketing gas, and another operating pipelines that can be used by consumers who buy direct from producers, the head of the sector’s regulator said. GAIL (India) Ltd is the country’s biggest gas marketing and trading firm and owns most of the nation’s pipelines, giving it a stranglehold on the market for the fuel.

By splitting GAIL, the regulator of India’s oil and gas sector hopes to increase the number of gas consumers and attract the billions of dollars needed to expand the pipeline network and build more liquefied natural gas (LNG) terminals. GAIL already keeps separate accounts for its gas pipeline and marketing businesses, making it easier to split them into two entities before a change of ownership, D.K. Sarraf, chairman of India’s Petroleum and Natural Gas Board said. By unbundling GAIL and opening the sector, the government hopes to increase gas use and meet its objective of raising the share of a cleaner, cheaper fuel as a part of the energy mix to 15 percent, from 6.2 percent, in the next 12 years.

Kuwait: Kuwait Energy starts producing natural gas from field in Southern Iraq

uwait Energy PLC has started producing natural gas from Siba, the first gas field to be brought on stream in the south of Iraq, said Kareem Abd Oda, the director general of the joint venture established by Iraq and Kuwait Energy to develop the field. Siba began producing gas at an initial rate of 25 million cubic feet a day (mcf/d), which should rise gradually to 100 mcf/d by the end of the year. The other hydrocarbon reservoirs of southern Iraq that are already in operation produce natural gas alongside crude oil. The gas extracted in several of these fields is burnt off instead of being captured, as the country lacks the capacity to process it into fuel for local consumption or exports. The semi-autonomous

Kurdistan Regional Government has started producing natural gas from fields in northern Iraq. Iraq hopes by 2021 to end gas flaring, which costs nearly $2.5 billion in lost revenue for the government and would be sufficient to meet most of its unmet needs for gas-based power generation, according to the World Bank. Iraq is the Organization of the Petroleum Exporting Countries’ second-largest producer after Saudi Arabia.

West Africa must look to her gas sector potentials for strategic development KELECHI EWUZIE

est Africa holds hundreds of trillions of cubic feet of natural gas under its soil, enough to power itself for decades, not to mention hundreds of billions of dollars in exports to power hungry nations across the globe. Report indicates that until recently, high costs related to exploration and production combined with low prices, limited the economic feasibility of many natural gas projects across the West Africa region. That according to industry close watchers may be a thing of the past as new technological developments through offshore floating liquefaction infrastructure have made the exploitation and transport of those resources much cheaper and quicker to implement. With major discoveries in Gabon and Sen-

egal, added to the major reserves held by Nigeria, Equatorial Guinea has made it even more evident that Natural gas is not a resource to be ignored. In the summation of not a few industry close watchers, as these developments take place, the global export market seems to be headed to a situation of oversupply. To them, the shale gas boom in the United States represented not only the loss of a considerable consumer for West African natural gas but also the emergence of a competing Liquefied Natural Gas (LNG) exporter. Recent finding reveals that West African natural gas production has been almost exclusively directed at exports to the United States and Europe, markets where it is becoming ever harder to compete. It is therefore against this backdrop that Industry experts insist that West African nations must look inwards to make the best of the scenario in front of them, they need to look to

the regions’ own market and promote the development of a natural gasbased market that could be the cornerstone of economic growth. They further opine that the utilisation of natural gas can profoundly transform the region and the lives of its citizens adding that across the region, people and industries still suffer with lack of access to electricity or poor and unreliable connections, despite the vast amount of resources we have. Gas-to-power projects could come a long way in addressing much of the region’s electricity shortfalls, but it will also fulfil the fundamental roll of environmental protection, as it is a much cleaner source of power than diesel. Beyond that, analysts maintain that the use of natural gas would allow nations to cut down on the extremely expensive effort of importing refined oil products from other parts of the world. A shift in the paradigm

of power generation and gas utilization across the region could spur extensive economic development and create hundreds of thousands of jobs. To them, the investment in natural gas fired power plants and transport infrastructure witnessed in the last few years has made the internal market for natural gas consumption grow significantly within the West African domestic market. A country like Ivory Coast is growing increasingly dependent on natural gas to fuel its expansive gas-to-power programme. Also, offshore reserves that had, for decades, been deemed too expensive to extract, are progressively being made feasible. New technologies are making the development of natural gas transport infrastructure more economical. Equatorial Guinea’s success with the Fortuna FLNG development is another resounding example of the impact of these new technological solutions across the region.

04 BUSINESS DAY WEST AFRICA ENERGY intelligence

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Tackling the menace of constant power system collapses

KELECHI EWUZIE

ne reoccurring decimal in the annals of power sector in Nigeria over two decades has to do with the consistent report about national electricity grid collapses. These collapses have in no small ways cost the Nigeria economy a sizeable amount of revenue. As recent as in March 2018, report indicated that Nigeria’s Power sector lost an estimated N1, 042,000,000 in just one day owing to system collapse occasioned by insufficient gas supply, distribution infrastructure, transmission infrastructure and water reserves. According to the report the loss was as a result of the shutting down of some gas turbines which led to insufficient gas supply, limitations in distribution and transmission infrastructure and water management constraints in some of the hydro plants.

Recently, Smart Omo Omoragbon, Assistant General Manager, Operation of the Transmission Company of Nigeria ((TCN), warned about the imminence of another system collapse as a result of the volume of idle power waiting for evacuation. He observed that despite TCN’s existing capacity, load rejection from the DisCos, which causes high frequency and system collapses could still persist unless the DisCos are ready to distribute

Snapshot

7,000MW Estimated transmission capacity in Nigeria

their loads. Technically, transmission capacity is expected to double that of transmission, but in the Nigeria Electricity Supply Industry, distribution capacity is a far cry from the transmission capacity of about 7,000Megawatts (Mw). In February a report from the Power Advisory Team, Office of the Vice President, stated that “despite Federal Government’s efforts to address the nation’s power crisis, as well as mitigate the constant system collapse by the grid, about seven generating plants produced zero megawatts of electricity.” “On February 20, 2018, average power sent out was 3,835MWh/hour (down by 134MWh/h from the previous day) “1175MW was not generated due to unavailability of gas”. “29MW was not generated due to unavailability of transmission infrastructure, while 969MW was not generated due to high frequency resulting

from unavailability of distribution infrastructure” the source said Those who know in the power sector insist that the solution to tackling the incident of incessant system collapse is for adequate investment to be made in order to stabilise the grid. They also observed that another solution to power system collapse is reduction in tripping of critical tie lines by having a well maintained transmission line trace as well as properly coordinated and discriminative line protection schemes. Analysts said replacement of vandalized sky wires that expose the lines to lightning strikes and replacement of obsolete transmission equipment to reduce the incidence of equipment failure to the barest minimum is vital to resolve the problem. It will be recalled that after the collapse in February, Babatunde Fashola, Minister of Power, Works and Housing insisted that the Federal Government was working hard to fix the power sector, stressing that despite the country’s electricity challenges, Nigeria was still exporting power to Republics of Benin, Niger and Togo. Fashola, observe that in terms of population as a function of energy need of a country, “Niger is running on 80MW; Republic of Togo, 200MW, less than Abuja; Ghana is about 3,000MW installed capacity and they are not producing all of that. Lagos alone is getting 1,200MW; one state, half of another country. So we must understand the dynamics of electricity use.”

Wednesday 02 May 2018

power

Renewables: Global wind power market up 95 percent

lobal offshore wind power market scores all time high – market up 95 percent; this is indicated in the Global Wind Energy Council (GWEC)’s Global Wind Report: Annual Market Update. The report highlights a maturing industry successfully competing in the marketplace, even against traditional power generation technologies. According to the study, more than 52GW of clean, emissions-free wind power was added in 2017, bringing total installations to 539GW globally. “Wind power is leading the charge in the transition away from fossil fuels; and continues to blow away the competition on price, performance and reliability”, said Steve Sawyer, GWEC secretary general. “Both onshore and offshore, wind power is key to defining a

sustainable energy future.” With new records set in Europe, India and in the offshore sector, annual markets will resume rapid growth after 2018, it forecasted. Dramatic price reductions for both onshore and offshore wind continue to surprise, stated the report. Markets in Morocco, India, Mexico and Canada range in the area of $0.03/ kWh, with a recent Mexican tender coming in with prices well below $0.02/kWh.

Pakistan: Pakistan lifts fuel oil import ban to address power cuts

akistan has lifted a ban on fuel oil imports to address the problem of planned power cuts as energy consumption rises towards the summer season, an official with the petroleum ministry said. The decision to lift the import ban was made April 17 during a meeting by Pakistan’s Economic Coordination Committee, chaired by Prime Minister Shahid Khaqan Abbasi. Current fuel oil stocks are seen as extremely low, at 335,000 mt. Power producers would need an estimated 18,000 mt/day of high sulfur fuel oil between April and September to meet seasonally higher electricity demand, according to the Ministry of Water and Power. State-run Pakistan State Oil has already bought

420,000 mt of 180 CST HSFO with a maximum sulfur content of 3.5 percent for delivery over May 3-28 to Port Qasim from Bakri, Vitol and Gulf Petrochem. Pakistan has halted power generation from oilfired units with a combined capacity of more than 4,000 MW/day in October and decided to halt fuel oil imports in December.

Wednesday 02 May 2018

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POLICY

BUSINESS DAY

Why Egypt is attracting big gas investments, what Nigeria should be doing ISAAC ANYAOGU

fter a visit last week by Miguel Arias Cañete, European Union Energy Commissioner, the European Union is promising to support Egypt transform into a regional energy hub. This is yet the strongest indicator that the North African country is turning the corner after the Arab Spring disrupted the economy. In order to rejig the economy, the country endured some tough economic prescriptions which included removal of subsidies on food and energy. It also made a giant offshore natural gas discovery in Zohr, which has changed its story. Last week Monday, Egypt and the EU signed a four-year Memorandum of Understanding for a Strategic Cooperation in Energy, which opens up a wide range of opportunities for investment between the two sides in the field of renewable energy. Another deal that will see Cairo become a major gas supplier to Europe is on the cards. Sources say the MOU will cover critical areas including further assistance to the development of the oil and gas sector, continued support for electricity sector reforms, and the “development of the energy hub’’. Additional focus will be on renewable energy. After years of difficult relations between the EU and Egypt, a thaw seems to have set in reports. Europe’s criticisms over the perceived military coup by general Sisi, Egypt’s human rights record and the power of the Muslim Brotherhood had been a major issue. This now seems to have changed due to several major offshore gas finds in the Mediterranean and the growing cooperation between Cairo, Israel and Cyprus. The discov-

ery and development of the offshore Zohr field, estimated to hold 30Tcf of gas, has been

a major factor in the relationship. Not only is Zohr being developed by Italy’s oil and

Snapshot

192TCF Estimated Nigeria’s gas reserves, the largest in Africa, yet it has failed to develop gas for domestic use

gas major ENI, but other European majors such as Shell and BP also have a stake in the megaproject according to oil price report. These factors are helping cede the gas market on the continent to Egypt. In remarks made at the EU-Egypt Sustainable Energy Forum in Cairo, Canete said that Egypt has the potential to become an energy hub, adding that the EU “is keen to support Egypt with sharing of experience, financial and technical assistance, and with the mobilisation of international finance” The discovery and development of the offshore Zohr field, estimated to hold 30Tcf of gas is oiling the relationship. Zohr is being developed by Italy’s oil and gas major ENI, Shell and BP

also have a stakes in the project. Through this deal, Egypt could get a long-term, viable gas customer benefit from technology transfer and financing by European partners of the upstream and downstream oil and gas sector. It will also accelerate its renewable energy ambitions. For Europe, it will lead to increase of its security of energy supplies via diversification of sources, and shore up huge declines in European onshore gas production, as the Dutch Groningen gas field is facing a complete shutdown by 2030. For Nigeria and other African countries, the lessons are strikingly obvious. There are no alternatives to deep economic reforms and good governance.

06 BUSINESS DAY

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Wednesday 02 May 2018

WEST AFRICA

finance people appointments ENERGY intelligence Brief Shell touts offshore momentum in quarterly report

UAE’s ADNOC set to start crude oil, refined products trading unit

bu Dhabi National Oil Company is close to setting up a new crude oil and refined products trading unit, as it presses ahead with plans to build up its downstream sector. The new unit will introduce and manage nonspeculative trading to further maximize value from every barrel of crude oil and refined product that is produced and marketed by the company, ADNOC said in a statement. Currently, all of ADNOC’s crude and oil products are sold on an FOB basis. The new unit could begin selling on a delivered basis, and manage the shipping and logistics of these products to customers. “As ADNOC grows and expands its upstream and downstream business, we will produce more products, and in turn, our marketing, sales and trading functions will play an even more critical role. Engaging in non-speculative trading will allow us to maximize value from our domestic, and over time, international downstream operations,” ADNOC CEO Sultan al-Jaber said in the statement. Philippe Khoury, a former CEO at Total’s trading and shipping affiliate for the Americas, Atlantic Trading & Marketing Inc in Houston, has been appointed as ADNOC’s group

head of trading. However, it was not clear when the new unit will start trading. ADNOC expects to see petrochemicals demand to grow by 150 percent in the new two decades. “To capitalize on this opportunity and make ADNOC more resilient against possible price volatility, our goal is to become a major global downstream player, creating a strong pull for our products, combined with a flexibility to respond quickly to shifting market needs,” Jaber said in the statement. ADNOC now plans to boost its total refining capacity from 922,000 b/d to ensure fuel self-sufficiency as well as growing its petrochemicals portfolio. The plans include the construction of a new 600,000 b/d refinery next to the giant Ruwais complex. ADNOC’s announcement is in line with a regional trend which began a few years ago, where national oil companies started establishing trading arms. Oman was the first with Oman Trading International, a joint venture with Vitol. This was followed by Saudi Aramco, which set up Aramco Trading in 2012 to market refined products, base oils and bulk petrochemicals. Kuwait is also looking to setting up a new company to market its oil products.

s part of its effort to retool the evolving portfolio, Royal Dutch Shell is adding more opportunities in the offshore sector. Shell is the latest in the supermajors to publish results for the first quarter. Shell’s net income was $5.3 billion, up more than 40 percent from the same period last year. Production of 3.8 million barrels of oil equivalent marked a 2 percent increase. The Dutch supermajor’s earnings report came two days after it sold off its refinery business, including its retail service stations, in Argentina for close to $1 billion in cash. “We continue to upgrade our portfolio through performance improvement new projects, divestments, and the development of new businesses,” Chief Executive Officer Ben van Beurden said. As of year-end 2017, Shell said about 80 percent of its proven oil and gas reserves will be produced by 2030, and then 20 percent from then on. The company is retooling its portfolio

following the 2015 megamerger with British energy company BG Group. In January, the company announced one of its largest discoveries ever in the Whale prospect in the deep waters of the Gulf of Mexico. Its total deepwater production is on pace to flirt with 1 million barrels of oil equivalent per day by 2020. In the first quarter, the company took nine explo-

ration blocks put in the auction block for the Mexican waters of the Gulf of Mexico. “This win, depending on future exploration success, gives us a competitive deepwater entry into Mexico and an opportunity to add a new deep-water heartland to our portfolio in the 2020s,” Shell Chief Financial Officer Jessica Uhl said in comments on the quarterly report. “Elsewhere in deep water,

we won four additional exploration blocks in Brazil, and for two of these blocks we will be the operator.” In a new era where oil prices are close to $70 per barrel, 19 of the 29 contracts on the auction block were awarded last month, with supermajor Royal Dutch Shell taking the lead in the tenders. Mexico aims to produce around 3.5 million barrels per day by 2025.

Schlumberger warns of oil supply gaps unless E&P raise CAPEX

il services giant Schlumberger warned of an increasing likelihood the world will face growing oil supply chal-

lenges as cautious upstream producers show capital budget restraint even at current robust oil prices, while the impacts from spending cut during

the recent industry downturn accelerate. Notable year-over-year declines in Mexico, Angola, China, Malaysia, and Indonesia, coupled with Venezuela’s production “freefall” and potential new sanctions against Iran have left Saudi Arabia, the UAE, and US shale oil as the only major feasible sources of short-term supply growth to remedy global production declines, Schlumberger CEO Paal Kibsgaard said during the company’s first quarter earnings conference call. The company, which provides equipment and services to the upstream industry, is typically the first to hold its quarterly call and provides an early

glimpse at the rest of the year’s likely outlook for the sector. Despite “clear signs of a tightening oil market,” no upward revision to 2018 upstream budgets has taken place so far, with North America and the rest of the world still expected to spend just 20 percent and 5 percent higher, respectively, over last year’s levels, Kibsgaard said. “Based on these investment levels, it’s increasingly likely industry will face growing supply challenges in the coming years and that a significant increase in global E&P CAPEX will be required to minimize an impending production deficit,” Kibsgaard said.

07 WEST AFRICA ENERGY intelligence

Wednesday 02 May 2018

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marketinsight

Gasoline builds off West Africa as Nigeria seeks to secures supplies

n unusually large quantity of gasoline is floating off the coast of West Africa as Nigeria boosts imports to avoid shortages before a presidential election early next year. Nearly 1.5 million tonnes of the motor fuel is on ships off West African shores, according to in-

dustry monitor Genscape, the highest level since it began tracking the data in January 2017. The bulk of the gasoline will likely flow to Nigeria according to traders. Sources in Nigeria said tanks on shore were also brimming after a major import push by state oil firm NNPC in the past few months.

“Local gasoline is oversupplied,” one importer said. Gasoline availability is a politically charged issue in Nigeria, an OPEC crude exporter that has to import gasoline and other oil products as it lacks refining capacity. Nigerians expect the government to provide plentiful, cheap fuel. In recent years, Nigeria has faced regular shortages leading to queues at fuel pumps, as private firms have been deterred from importing due to government price caps on fuel sales and because of the difficulty sourcing dollars when a fall in global crude prices hit Nigeria’s hard currency revenues. To fill the gap, NNPC has accounted for more than 90 percent of imports in the past year. With a presidential election due

in February, trade sources said the government was keeping up the pace of imports to ensure ample availability. “NNPC is being overly cautious with the presidential election less than a year away,” another importer said. Traders in Europe said loadings for the region had reached 2.3 million tonnes in the past month, the highest level in two years of tracking the trade. Traders said volumes had started to dip in April. But they added that Nigerian purchases were unlikely to fall off sharply. Indicating NNPC’s continued activity in the market, the state firm awarded a spot tender to buy 10 additional 37,000 tonne cargoes for delivery in May, on top of the shipments it typically receives via swaps for crude oil.

BUSINESS DAY

OPEC Flakes Iran’s Zanganeh says high oil prices could hurt OPEC in mid-term

ran’s oil minister Bijan Zanganeh said the current rally in oil prices could hurt OPEC in the mid-term as it was adding to market volatility. Zanganeh, speaking to Iran’s oil ministry news service Shana, said that if oil prices continued to rise, there will be no need to extend the OPEC/non-OPEC production deal beyond the end of 2018. He also dismissed US President Donald Trump’s accusations against OPEC, saying Trump was pushing oil prices higher with his politics. Brent crude has rallied almost 40 percent since January to fouryear highs above $74/b last week amid growing geopolitical tensions in Middle East which have

OPEC cuts may go deeper as another member sees output slump

Oil prices gain on Iran sanctions worries

il prices gained as the risk of renewed US sanctions on Iran, plunging Venezuelan output, and robust global demand shook off the effects of a strong dollar. Global benchmark Brent crude futures gained 74 cents to settle at $74.74 a barrel, while US West Texas Intermediate (WTI) crude were up 14 cents to $68.19 a barrel. The dollar against a basket of currencies hit its highest since mid-January. A stronger dollar makes it more expensive to buy dollar-denominated commodities like oil. A top adviser to Iran’s supreme leader said Tehran would not accept any change to the 2015 nuclear deal, as Western signatories

prepare a new package in the hope of persuading US President Donald Trump to stick with

the accord. Trump will decide by May 12 whether to restore the sanctions, which

would probably result in a reduction of Iranian oil exports. Brent has gained about 6 percent this month thanks to expectations that the United States could do so. Venezuelan oil output PRODN-VE has already tumbled forty percent in two years, and the European Union said earlier this month it could impose further sanctions on Venezuela if it believes democracy is being undermined there. By end-April, China will likely have taken in more than 9 million bpd of crude - it’s most ever and nearly 10 percent of global consumption. Meanwhile, surging US production, which hit 10.59 million bpd last week, has encouraged record-high US exports.

been exacerbated by the straining of relations between Russia and the West. Last week, key OPEC and non-OPEC ministers met in Jeddah, Saudi Arabia, to review progress in their campaign to reduce global oil stocks. OPEC and Russia, joined by a group of smaller producers, have reduced their collective output by 1.8 million b/d since January 2017 after prices fell as low as $27/b in January 2016.

hile plunging output in Venezuela captures the oil world’s attention, problems are quietly festering in another OPEC nation. Angola, once Africa’s biggest crude producer, is suffering sharp declines at under-invested offshore fields, with output dropping almost three times as much as the nation pledged in an accord with fellow OPEC

members. “Angola has a serious problem, with its decline rates becoming increasingly visible,” said Richard Mallinson, an analyst at consultants Energy Aspects Ltd. in London. “The low figure in June doesn’t look like a pattern of maintenance but points to steeper, structural declines.” The Organization of Petroleum Exporting Countries and its allies have succeeded in wiping out an oil glut through production cuts launched in early 2017, boosting prices to a three-year high above $75/bbl. Their efforts have been aided by accidental losses in member nation Venezuela, which is cutting six times the amount it promised as a spiraling economic crisis batters its oil industry.

08 BUSINESS DAY WEST AFRICA ENERGY intelligence

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Wednesday 02 May 2018

talking points

In association with

How African governments can achieve energy-related SDGs ISAAC ANYAOGU

ccording to the United Nations, the world is not on track to achieving energy-related Sustainable Development Goals for universal energy access and increasing renewables and energy efficiency though considerable progress has been made in global energy access. The number of people without access to electricity fell to around 1 billion in 2016 from 1.7 billion in 2000 says a policy brief published by the International Energy Association (IEA). The number of people gaining access to electricity each year is accelerating, due to strong successes in some countries, including Bangladesh, Ethiopia, India, Kenya and Tanzania. Grid electrification has been the source of almost all energy access gained since 2000 and is likely to remain the most favourable option for many households, especially in more densely populated areas. To deliver universal energy access by 2030, decentralized options are the least-cost option for 60 per cent of people currently lacking access. Public programmes and privatebusiness models providing electricity access with off-grid solar are thriving, and many countries are also exploiting their renewable potential in the centralized electricity mix. â&#x20AC;&#x153;However, having a source of electricity is not a guarantee of full access. To serve the needs of households, schools, health centres and local enterprises, electricity needs to be available at the right time, at an affordable price and with a reliable supply and appliances. â&#x20AC;&#x153;Current progress towards delivering universal access is promising in many parts of Asia and some countries in sub-Saharan Africa, but not in all. Based on recent trends

and policies, the number of people without electricity access is expected to remain over 670 million in 2030, with over 80 per cent of those lacking access concentrated in rural areas of sub-Saharan Africa. Governmentâ&#x20AC;&#x2122;s priority roles The UN says key action is to guarantee leadership, commitment and strategic planning. This can be achieved by elevating universal access to electricity to a high level on the political agenda, backing up commitments with strategic planning, clear policies and regulatory frameworks, and dedicated institutions. Governments especially in Africa need to identify a strong champion institution for electrification programs, with a clear mandate, the authority and resources to fulfil the

mandate, and accountability for achieving that mandate are equally important. To achieve the estimated $52 billion per year in investment necessary to deliver universal access, private investment is needed to complement public spending. Governments need to ramp up investments in de-risking tools, provide affordable financing and a clear enabling policy framework to attract the private capital. Household electrification strategies implemented by governments especially in rural areas should take into account other development goals and opportunities to use energy access to stimulate sustainable economic activity. It should incorporate and support technology development and standards.

Decentralized systems are benefiting from innovative control and payment solutions, such as smart metering, customer data management and communications, and mobile payments. More of this innovation should be encouraged. Electrification planning needs to take into account the dynamic and integrated nature of energy demand and storage, and ensure technical standards and energy efficiency in end-use appliances. Governments should also address affordability, which remains a critical barrier, by lowering upfront costs in providing targeted financing and subsidies, harnessing new business models such as the pay-as-you-go model, integrating energy efficient appliances with electricity access solutions, and creating sound policies and institutions.

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Wednesday 02 May 2018

BUSINESS DAY

LEADING INSURANCE COMPANIES IN NIGERIA

Muhammed Kari, commissioner for insurance/CEO NAICOM

Jide Orimolade, MD/CEO

Oye Hassan-Odukale, MD/CEO

Edwin Igbiti, MD/CEO

Eddie Efekoha, MD/CEO

Rashidat Adebisi, divisional director

Keith Alford, MD/CEO

Val Ojumah, MD/CEO

Funmilayo Omo MD/CEO, African Alliance

Insurance sector and growth initiatives MODESTUS ANAESORONYE

igeriaâ&#x20AC;&#x2122;s insurance industry has metamorphosed over the years into a strong financial services sector that can no longer be taken for granted in governance and economic planning. This comes on the back of a cocktail of reforms over the years and increasing investments into the

sector by local and foreign institutional investors, as well as private equity firms. The sector has consequently become a significant player in the economy contributing to the nationâ&#x20AC;&#x2122;s GDP and is a major employer of labour, providing funds for long term investments, as well as risk management capabilities that have helped many public and private institutions survive disasters and enabled them become sustainable, adding value to their

stakeholders. All of these have been made possible by the efforts and perseverance of leading companies in the industry, which have invested capital into the business and shown professionalism and integrity in this risk management segment of the financial services industry. Over time, there have been a lot of reforms going on towards restoring confidence of the insurance public and larger population of the society to get them to buy into insur-

ance as a modern risk management tool, and wealth protection for the long term. Claims With this at the back of their minds, industry leaders have continued to meet their claims obligation, ensuring that those who take up insurance policies are never disappointed or walk away unprotected in the event of loss occurring. This accounts for why the industry paid claims up to the tune of N110 billion in the 2016 financial year, which is

no mean feat when you consider the challenges associated with accessing funds for business, as well as the associated high interest rates. What is very significant is a change in attitude and processes in the management and payment of claims. We now have a culture where leading companies have the capacity to pay claims and have also simplified the processes to ensure a smooth and seamless process for customers

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SPECIAL REPORT AXA Mansard working to build intimate relationship with customers AXA Mansard Insurance Plc is a major player in the nation’s insurance industry, offering excellent services and meeting customer expectations. Rashidat Adebisi, divisional director, Retail Solutions of the Company in this interview shares her thought on unique services offered by the company, key innovations to drive growth, and future of the insurance industry in Nigeria. Give us an overview of AXA Mansard and what the company does? XA Mansard is a member of the AXA Group, the worldwide leader in insurance and asset management with 166,000 employees serving 107 million clients in 64 countries. AXA Mansard was incorporated in 1989 as a private limited liability company and is registered as a composite company with the National Insurance Commission of Nigeria (NAICOM). The Company offers life and non-life insurance products and services to individuals and institutions across Nigeria whilst also offering asset/investment management services, health management services and pension fund administration through its three subsidiaries AXA Mansard Investments Limited, AXA Mansard Health Limited and AXA Mansard Pensions Limited. You are a major player in the nation’s insurance industry, what is unique about your services? We aim to create an intimate relationship with our customers by partnering with them and this enables us to adequately recognize their requirements and priorities. In line with our core ideals and values, we focus on our customers at all times, seeking to understand their business and objectives, such that we are able to meet and anticipate their needs. What are some of AXA Mansard’s innovations to drive business penetration and growth? Our straight through online motor insurance product, AutoFlex, affords our customers flexibility and allows them to customize and choose the covers they want. Customers can also purchase our travel insurance product, 24/7, online and offline at their convenience. Furthermore, our AXA Mansard retail health insurance plan, Easy

Care, offers access to affordable and quality health care, thus promoting inclusion as it caters to the lower middle class segment of the economy. What is your claims payment culture as an organisation? We are a prompt claims settlement organisation. We settle claims swiftly without compromising our organizational values. Where will AXA Mansard be in the next five years? We will be the leading provider of non-banking financial services in Nigeria through our innovative and creative approach to serving our customers. What words of assurance do you have for your customers? AXA Mansard is particularly committed to nurturing relationships beyond business alone. In this age of automation and innovation, our priority is to evolve along with the ever changing demands of our customers and ensure their satisfaction. We have integrated systems to personalize the customer experience journey because we understand that our customers are unique and deserving of an exclusive service. We have transitioned our business processes to a digital format to enhance this experience: customers can now enjoy on-the-spot solutions to their needs, some of which include easier claim filing and redemption processes. With our 24/7 customer care service, they can reach us whenever they want. Most importantly, we have products to address all classes of people: our goal is to ensure that they are protected in all financial forms without limitations. Through our numerous offerings, our customers can be assured that AXA Mansard is a brand that cares and as such, we will not relent in our efforts to provide the best of services.

The industry is keen to drive different channels to meet the customer as well as emerging technologies being driven by insurtech solutions

Rashidat Adebisi, divisional director, Retail Solutions, AXA Mansard Insurance Plc

What is the future of the insurance industry in Nigeria? The insurance industry in Nigeria today is largely focused on corporate clients. It should however be said that operators are beginning to focus on the retail segment. The regulator, itself NAICOM recently released guideline to regulate the microinsurance industry. Showing their

commitment and belief in the future growth of that market segment. The insurance penetration today is still below 1 percent. This shows that the market can only get bigger and is there for the taking. However it’s one thing to have great and lofty dreams and aspirations, it’s another to find the means to achieve them. The industry is keen to drive differ-

ent channels to meet the customer as well as emerging technologies being driven by insurtech solutions. With strategies focused on technology – mobile and big data, and in addition to the increased support we are getting from the regulators, we expect Insurance’s contribution to the GDP to grow exponentially in the coming years.

BUSINESS DAY

How FBNInsurance can help you enjoy the rest of 2018

018 is almost half way. Were there plans and aspirations you set out to achieve at the beginning of the year? How well have you done on those? Remember, the choices you make today will aid your realities tomorrow. Now the question is: Are you having the kind of 2018 you wanted for yourself and your loved ones? Or are you simply following the tide, leaving everything to chance? How can we help you get the best of the rest of the year? Come, let us show you what we can do and how you would benefit from having an FBNInsurance policy. At FBNInsurance, we have an array of innovative products designed with you in mind. From individual plans to group policy packages, we have something just for the best of you. Come, let’s explore a few of these products. We all know the importance of education in every man’s life. Are you a parent or guardian? Does the education of the little ones you have been blessed with matter to you? If it does, then you need to take up a FlexiEdu policy for them. At maturity, our FlexiEdu policy ensures you never have to worry about your children/wards’ tuition every time it is due. It is a simple long-term plan that helps you prepare for any eventuality. This is one of our highly sought after policies. Surely, the majority cannot be wrong; get one for your wards today. Many times we plan to save for a certain, future event. Usually, our people join a group savings they call Ajo or Esusu, where they do a rotational savings plan. As much as the benefits of those are clear, the uncertainties are enormous. Cases abound of defaults and outright disappearance of contributions. Why expose your hard earned cash to such risks? Why not take up our

EasySave plan? EasySave is a one-year plan that helps you put aside some money at regular intervals for short term projects with a preagreed interest on your savings. That is, whatever you save in the course of a year is remitted to you at the expiration of the policy with a delightful interest. Isn’t that a cooler way to save than any buddy savings? What about long term savings or a staggered kind of savings plan? We have those too. Our Flexi Save provides you with a creditable avenue for medium to long term savings and a lump sum at the end of your preferred duration. FlexiCash on the other hand gives you the double benefit of a life insurance plan with easy liquidity of your savings via periodic lump sum payments when you need it. For our older customers and those planning for retirement, we have a responsive annuity plan we call Guaranteed Lifetime Retirement Income Plan (GLRP). It is not enough to simply buy annuity because it is what is in vogue for retirees, it is more important to buy from a tried and trusted insurer like FBNInsurance. Your retirement lump sum is not the kind of cash you leave to chance; invest it wisely and you would be glad you did. Our annuity plan offers more than most. Why should you choose us, you may ask? Simple; we do what we say. While others avoid paying claims, we actually look to make good our promises on same. Our testimonials are in the public space, our heritage has made us. 2018 can still be your best year yet. Reach out to us today. Visit our website www. fbninsurance.com; or simply track us down on social media: @fbninsurance/@ fbngeneral on twitter and FBNInsurance on facebook. For us, YOU are all that matters!

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SPECIAL REPORT

FBNInsurance: Unwavering commitment to retail penetration

t was a cool Wednesday morning and the famous Balogun market was at its busiest. Anyone who has ever ventured into the market, located downtown Lagos Island, would tell you of its relentless crowd of impatient shoppers and ambitious sellers. Assembled at a strategic junction of the market are a team of enthusiastic young men and women donning blue and golden yellow tees with FBNInsurance inscriptions. For them, it was not just another Wednesday; it was a Market Storm. They would comb the nooks of the busy market and sell various insurance solutions to traders and buyers using a one-on-one sales approach. Experts agree this is the boldest sales strategy. However, this team of salesmen and women is undeterred. A few hours later, these salesmen would return to their offices, tens of policies sold and scores of premium deposited in the company’s account; job well done. Various sources agree that insurance penetration in Nigeria is less than 1%. For FBNInsurance, the challenge is not an awareness issue but a dearth of a sellable value proposition. Little wonder the FBNHoldings Company associated with the Sanlam Group SA adopted penetration of the retail space as a key corporate strategy for growth. With retail marketing, the business is able to bring a touch of humanity into its sales drive. It also helps to break the common brand-customer barrier, the pitfall of many a business. Has the strategy worked? The figures testify. Established in 2010 to transact life insurance business in Nigeria, FBNInsurance’s growth has been phenomenal. In her first year of operations, the company made N20.4m in Gross Premium Written (GPW). At the end of the 2017 financial year, the company made N19.6bn in GPW while the company’s total assets stood at N46.95bn, up from N29.5bn in 2016. These figures are clear confirmation that the company’s retail drive works. With a growing sales force of over 2,000 agile men and women, the company has not slowed down its investment in the retail segment to achieve its corporate goals. In the past few years, the company has continued to spread its tentacles and now boasts a total of 42 sales outlets pan Nigeria as at December, 2017. However, there is a standing scepticism about insurance in Nigeria. The scepticism, driven by years of disappointment in the industry

Valentine Ojumah, mangaging director/CEO, FBNInsurance

Beyond simplified documentation and a friendly claims payment structure, the company has also done well to bring succour to various segments of its target audience

and cultural nay religious biases, has remained a barrier to the growth of the insurance industry. But as a scion of two hugely successful financial powerhouses, FBNHoldings and Sanlam SA, gaining the people’s trust was a strategy FBNInsurance understood too well. Chief of these initiatives is a commitment to simplifying the insurance and claims payment processes. Speaking in London to World Finance, organisers of the prestigious World Finance awards, the company’s Managing Director/Chief Executive Officer, Val Ojumah, summarised how the

business has been able to earn customers’ trust: “We have decided to simplify the insurance policies so that the gap between what we are trying to say and what they see in our document is eliminated as much as possible. Over time, we have paid claims as due; engaged communities in a different way (all in a bid) to make people have a memorable insurance experience with our company,” Ojumah concluded. Beyond simplified documentation and a friendly claims payment structure, the company has also done well to bring succour to various segments of its target audience. In three years, the company donated two dialysis machines and an ultrasound scan machine to Gbagada General Hospital. 250 indigent students of a sleepy community near Abraka in Delta State were awarded scholarships while a trading town near Umuahia in Abia State has had a central borehole commissioned for the people’s use. In collaboration with the Rotary Club of Omole Golden, FBNInsurance sponsored a free breast and cervical cancer screening for 750 women and girls while over 3000 students have benefitted so far from the Jakin NGO Dress-A-Child-For-School project supported by FBNInsurance. These glowing achievements have brought FBNInsurance to the attention of those that matter. The National Association of Insurance and Pension Correspondents (NAIPCO) named the companyas the fastest growing insurance company in Nigeria; World Finance has recognised FBNInsuranceas the best life insurance company three times in the last four years while the company has won the foremost SEM Nations Cup twice (2013 and 2017) in its 8-year existence. According to the competition rules, “the SEM Cup of Nations is designed to motivate the staff of the various country operations to overachieve and exceed the set targets/budgets, to deliver sustainable growth over the previous year’s results, and to foster a spirit of competition between the various businesses in the Sanlam Emerging Markets (SEM) cluster.” “We will continue to deepen our retail footprints until every insurable Nigerian has an FBNInsurance policy,” Ojumah said.Clearly, this corporate mindset is the reason various FBNInsurance sales teams would gather at high-traffic markets in Nigeria on a typical Market Storm armed with policy documents that are sure to bring succour and deliver value to a diverse range of customers.

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A disaster at home is what no one prays for. AIICO Fire & Burglary Policy will protect you from significant loss.

Wednesday 02 May 2018

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SPECIAL REPORT Gbenga, AIICO Insurance customer shares his joy for taking fire&burglary insurance

Edwin Igbiti, managing director/CEO, AIICO Insurance Plc

To help you protect your business against such uncertainties, we have the competence and experience to help and protect you. Standard risks covered are fire, lightning, explosion, storm, flood

benga, a graduate of civil engineering, works in a mid-sized construction company located in Port Harcourt, where he has lived after graduating from the university in 1994. The young man was determined to take charge of his life and future, having come from a polygamous family where, as the first son of his mother, the responsibility of seeing his other siblings successfully through school and caring for his aged mother were firmly on his shoulders. Despite these, Gbenga was still determined to cater for his future. So, from his monthly salary he took care of them and also saved part of it for a long term project. By 2009, Gbenga has succeeded in seeing all his siblings out of higher institution and with that burden off his shoulders, he decided to build a house where he will stay with his immediate family of five, and also generate some income from rents. The dream finally came through for Gbenga, his wife and their three children when in 2013 they moved into their house in one of the highbrow estates in Port Harcourt. He also earns some income from three tenants who occupy the other flats. One of the evenings that year, Gbenga had followed a friend who work with one of the second generation banks in PortHarcourt to a restaurant and as drinks were being served, a staff of AIICO Insurance who came to engage another potential client at the bar, approached him with a flier on fire and burglary cover. After listening to the insurance sales person, he became interested and asked the agent to come to his office three days later. But getting home and telling his wife about taking insurance for their new house, he was discouraged and told that insurance only collects money and don’t pay claims. But when the sales person came three days after to Gbenga’s office as previously agreed, he assured Gbenga that AIICO is strong, stable and has been in business of protecting assets for over fifty years. Gbenga reluctantly agreed but kept it a secret from his wife because she was not going to agree to anything insurance. Gbenga bought the insurance and was determined to keep it running. One fateful afternoon in 2015, Gbenga and his wife left for work

early in the morning as usual. Their three children were all in school; two of them in a university in Lagos and the eldest studying in the UK. Incidentally, a house-help of one of his tenants left food on fire, while running some errands. Before she returned, the food had got burnt and the fire spread to other parts of the building. Before the neighbours could help, nearly the entire building had been burnt. Thankfully, no life was lost. A few properties from Gbenga’s flat were salvaged. When Gbenga and his wife returned home and saw what had become of their life investment, it felt like the world has come to an end. To add to his tragedy, his wife collapsed and was only resuscitated at the hospital hours later. After recovering from the shock and his wife discharged from the hospital, reprieve came their way through the insurance. Gbenga was pleasantly surprised when he got a call from AIICO empathizing with him and his family and also assuring him that his claim for his house and its contents were valid and would be paid. “Dear Mr. Gbenga…, be rest assured that AIICO is here for you and will pay your claim to enable you get your house back because you purchased AIICO’s fire&burglary protection insurance policy.” Gbenga and his wife jumped in excitement. They have since moved into their new house and have begun to refer their families and friends to AIICO. AIICO said “we understand how you’ve put a lot of time, hard work and considerable money into building your estate and business. We also understand your needs when the unexpected happens.” “To help you protect your business against such uncertainties, we have the competence and experience to help and protect you. Standard risks covered are fire, lightning, explosion, storm, flood, etc.” AIICO Insurance Plc., is the leading life insurer in Nigeria. Founded in 1963, AIICO provides life,general and healthinsurance, investments and pension management services as a means to create and protect wealth for individuals, families and corporate customers. AIICO has the largest agency workforce in the industry and has branches in over 20locations across Nigeria.

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SPECIAL REPORT

Consolidated Hallmark delivering efficient service, creating value

Eddie Efekoha, managing director/CEO, Consolidated Hallmark Insurance Plc

We have built a reputation on professionalism, integrity and excellent service delivery, leveraging on the capabilities and unique skills of the entire group, we provide premium risk management solutions to our clients

onsolidated Hallmark Insurance (CHI Plc), as leader in the nation’s insurance industry is not a surprise. The company, a leading general insurance company in Nigeria with over 10 years underwriting experience is built on integrity and driven by a passion to serve its customers and deliver efficient service. In the 2017 financial year ended 31st December, CHI Plc reported a 108 percent leap in profit. In its results, which were submitted within the regulatory timelines and recently approved by all regulators, including the Capital Market, the company posted a profit after tax of N406.21 million when compared with the N194.99 million of the 2016 financial year. Also, profit before tax grew by 74 percent from N368.13 million 2016 to N641.05 million in 2017. Further details of the results made available to shareholders of the company show appreciable progress in investment activities as well. Income from this arena grew from N472.3 million to N796.2 million in 2017. Meanwhile the total assets of the company have risen by 27 percent from the N7.44 billion of 2016 to N9.49 billion. Revenue reported for the period through gross premium written was N5.68 billion, while a net underwriting income of N4.05 billion was recorded. The company continues to fulfil its obligations through prompt claims settlement as gross amount paid out in this regard during the year under review was N3.35 billion. The positive result is an affirmation of the recent assurance by the Managing Director of the company, Eddie Efekoha to shareholders that they should expect more returns in the nearest future from Consolidated Hallmark Insurance even as recent capacity expansion and growth initiatives will help to grow revenue. Plans are already afoot to hold the Annual General Meeting, where in line with its policy of rewarding shareholders for their steadfastness, dividend payment will be proposed to shareholders for approval. CHI Plc has paid dividends seven times in the last ten years. While also ensuring that its customers who take insurance go home to sleep and do their business without fear, CHI has put in place simple and seamless claims structure. In the last five years, the Company paid claims totalling over N8 billion. An analysis of the claims payment from the company’s published financials show a movement from N1.08 billion paid in 2013 financial year to N3.35 billion at the end of December 2017, indicating an 800 percent increase. A further analysis of claims expenses trend of the company from the five year financial summary shows that claims payment increased to N1.23 billion in 2014; increased to N1.34 billion in 2015; and in 2016 it rose to N1.73 billion.

CHI Plc, in a move to ensure that its seamless service offerings are within the reach of its rapidly growing clientele and potential customers recently unveiled a new website -www.chiplc.com. The new website has been designed to present an utmost user-friendly experience alongside hassle-free navigation and improved functionalities. It enables users, with a click, access to information on various classes of general insurance business to take decisions based on available options and forms of protection desired. With a very easy and friendly on boarding process, the website enhances the purchase of insurance products online through the aid of premium calculators. It also facilitates payments with Bank Debit Cards and online payments via specified bank accounts with several tier one and two banks. Also, through a Unique Customer Dashboard available for new and existing customers, they can view online real-time the status of their policies, and transactions. The functionality of the new website is further evident in the provision for clients to report and lodge in their claims, send supporting claims documents by uploading pictures and relevant forms as well as track the status of their claims. Built for the digital age, the website is easy to navigate and very suitable for the multi-device social networking customer. Efekoha attributed the painstaking efforts of several weeks deployed in building the website to the determination of the company in ensuring insurance services are made available with ease to the end users. According to him, the closer insurance services are to the end users, particularly via desktops and mobile devices, the better for higher insurance penetration with the attendant positive effects on revenue growth. Deployment of latest technology is an integral part of the strategic plan of CHI Plc in its quest to emerge as a leader in the Nigerian insurance industry. Following a merger in 2007, Consolidated Hallmark Insurance Plc is one of the top ten General Business and Special Risk Insurance underwriters in Nigeria. “In the last ten years, we have carved a niche for ourselves through big-ticket transactions in the Aviation, Oil and Gas, Marine Cargo and Hull Business as well as our motor insurance business.” “We have built a reputation on professionalism, integrity and excellent service delivery, leveraging on the capabilities and unique skills of the entire group, we provide premium risk management solutions to our clients.” Our commitment to serving you better has seen us make key investments in our people, technology and processes, having become the second insurance company in Nigeria to obtain the prestigious ISO 9001:2015 (Quality management systems), the company said.

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Wednesday 02 May 2018

SPECIAL REPORT Old Mutual: Enabling positive futures

ld Mutual has been at the forefront of enabling p ositive futures across the African continent for over 173 years. The African financial services champion brought its rich heritage into the Nigerian insurance industry in 2013 through the provision of customer-centric savings, life assurance and protection product offerings. A core tenet of the organization is the belief thatPositive Futures are enabled by sound financial information. By receiving Great Advice, individuals are empowered to achieve their short and long term goals. This is at the heart of Old Mutualâ&#x20AC;&#x2122;s operations in Nigeria. By leveraging on its robust wealth of experience and financial knowledge garnered across the continent andadapting to the local market needs through its experienced staff, Old Mutual drives to ensure excellent customer service delivery and innovative product offerings. Demonstrating its commitment to empower citizens to make sound financial decisions, Old Mutual has

Japhet Duru, Ag. MD /ED, Technical, Old Mutual General insurance Company Nigeria

Keith Alford, MD, Old Mutual Nigeria Life Assurance Company Limited

offered over 250 free Financial Education Workshops to various private and public organizations and has trained over 15,000 individuals on Financial Education since its entry

customers through prompt claims payment, supporting their financial well-being and walking with them through the various seasons of their lives.

into the Nigerian market. To underscore its commitment to being a certain friend in uncertain times, Old Mutual continues to enable positive futures for its

Old Mutual operates in Nigeria as Old Mutual Nigeria Life Assurance Company Limited and Old Mutual General Insurance Company Nigeria Limited.

Wednesday 02 May 2018

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SPECIAL REPORT Law Union & Rock strong and committed to meeting claims obligations

aw Union & Rock Insurance Plc. is one of those insurance companies that have stood the test of time. For over 65 years the company has delivered consistent service to their esteemed customers. With a reputable and responsive management team of astute professionals and insurance practitioners, the company has evolved as a dynamic risk adviser, risk bearer and most importantly a customer centric organization that pays attention to the salient needs of its customers and prospects. Law Union & Rock is an efficiently run organization and this shows in our 2017 Audited accounts where the company recorded a PAT of N1.099 billion despite the harsh economic conditions prevalent in the country during the year under review. A significant growth was equally recorded on our topline as our gross premium grew by 8 percent to N4.25billion from N3.94 billion. Underwriting profit declined by 6 percent from N1.25 billion to N1.18 billion while our profit before tax grew by 52.43 percent from

N658.64million to N1.003billion. A significant improvement was recorded on our balance sheet. Total Assets grew by16.9 percent to N10.03billion from N8.58 billion while our shareholders’ fund grew by 28 percent to N6.46 billion from N5.04 billion. LUR is truly solid as ever and is well positioned to deliver on its promises to its customers, which at the top of the list is prompt claims settlement. A significant milestone was recorded in the implementation of our five-year strategic plan with our stated goals of achieving profitability, increasing market share and improved ranking among general insurance companies. In 2017, your company moved from negative retained earnings of N24, 388,000 in 2016 to a positive value of N704, 178,000 which will enable us to declare dividends for our shareholders.In recognition of the brand visibility, LUR won the Global Quality Excellent Award – Insurance Category on the World Quality day 2017 and Africa CEO Award in 2017. These contributed immensely to its

Jide Orimolade, managing director/CEO, Law Union & Rock Insurance Plc

brand value among its competitors. The company also sustained “A“Credit Paying Ability with positive outlook assigned by the Global Credit Rating Company of South Africa in 2017, which has enhanced our competiveness in business acquisition and bidding opportunities. As part of the organization’s transformation and restructuring process, Law Union & Rock Insurance’s business is structured using the sartorial model of operation. This is to enable the organization align its offerings to the unique needs of the various sectors of the Economy. The organization has also adopted various E-payment platforms to enable clients pay easily and avoid the rigors previously associated with premium payments. All this is in line with our strategic initiative to create value for our stake holders, improve customer intimacy and achieve operational excellence. The future is extremely bright for Law Union & Rock and Rock Insurance Plc, join us today, as we navigate our way to the top of the General Insurance Industry, the Company said.

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SPECIAL REPORT

Leadway Assurance standing strong and creating value

Oye Hassan-Odukale, Leadway Assurance, managing director/CEO

Leadway is aware of its customers’ financial security. It ensures that its insurance risks are carefully backed up with world-class reinsurance arrangements

eadway Assurance Company Limited (‘Leadway’) is one of Nigeria’s foremost insurance companies, with a reputation for service efficiency and customers’ reliability. Leadway was established in 1970 by Sir Hassan O. Odukale (beate memoriae). It commenced business in 1971 and started out as a direct Motor Insurer with a passion for customer service. The business expanded into other areas of general business until it became a composite company underwriting both life and general insurance business. From a modest capital base, the company’s financial capacity grew over time and now, it can boast of an ability to underwrite risks of very high magnitude as regards heavy industries, such as Oil and Gas and big manufacturing concerns. It also offers subsidiary financial services like Bond, Secured Credit, Miscellaneous financial losses and Fund/ Portfolio management. Presently, it is an active player in providing good local security under the local content arrangement of the Oil and Gas Industry. For over 4 decades, Leadway has honored its underwriting commitments and has earned its reputation of excellence in claims handling. The reputation enjoyed today by Leadway has been attained by the continuing pursuit of improvements, as regards its financial, underwriting and service profiles. The evolution of Leadway since 1970 has mirrored the dramatic expansion of indigenous insurance service providers, with Leadway remaining in the forefront as an insurer of repute. Our core values are iSCORE meaning; integrity, service, costumer-focus, Openness, respect-for-the-individual and excellence. The reputation enjoyed by Leadway has been attained by the continuing pursuit of improvements to maintain competitive advantage. Presently, Leadway has a Shareholders Fund of N47.06 billion. To reposition and take advantage of opportunities in the changing environment, Leadway has a policy of increasing its paid-up capital steadily. Over the years, the com-

pany has recorded steady growth in its business operations. As at 31st December 2017 the company had a total asset base of over N271.94 billion and a premium income of about N 84.1 billion. It has no loan stock and internally generates funds for capital projects. The Company holds a sizeable number of blue chip stocks spread across banking, insurance, manufacturing, finance etc. Its total managed fund as at December 31, 2017 was N140billion. Within the money market, it has an average of N22billion deposit placement and leases in reputable banks and discount houses. Leadway also has a remarkable claims paid record of over N91billion naira claims paid in 6 years which is the highest figure of claims paid in the industry. Leadway is aware of its customers’ financial security. It ensures that its insurance risks are carefully backed up with world-class reinsurance arrangements. For over two decades, the company has maintained a good business relationship with Swiss Reinsurance Company and Munich Reinsurance Company. These two widely known international reinsurance companies lead on the company’s major Treaties. Other participating companies are Africa Reinsurance Corporation, Continental Reinsurance Company Limited, GIC Reinsurance and Scor Reinsurance Company Limited The Company has a highly computerized work environment with major offices on-line. This enables a timely dissemination of information to clients on any risk assumed. The Company’s decision to invest heavily on computerization is part of its corporate strategy to take advantage of the benefits offered by technology as a service enhancement tool and the Company’s preparedness to follow the trails of e-commerce into the next century. Leadway’s Registered and Corporate Offices are located in Kaduna and Lagos respectively with 23 Branches spread all over the country. Martin Luther Agwai, retired general is the Chairman of the current Board of Directors while Oye HassanOdukale, is the managing director of the company.

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SPECIAL REPORT African Alliance looking to make insurance part of every Nigerian home Players in the insurance industry are no doubt showing strong commitment to building confidence and restore the trust of Nigerians to consumption of insurance. Fumilayo Omo, managing director/CEO, African Alliance Insurance Plc in this interview bares her mind on ongoing innovations in her company to entrench insurance culture amongst Nigerians. Let us into African Alliance Insurance Plc, and what the company does? frican Alliance Insurance Plc was incorporated on the 6th of May 1960, shortly before Nigeria gained her independence. African Alliance today is one of the few surviving insurance firms among its contemporaries, registered for the business of insurance prior to Nigeriaâ&#x20AC;&#x2122;s Independence in 1960. African Alliance Insurance Plc being the first registered life office in Nigeria is widely recognized as the most experienced and strongest specialist life assurance office given our pedigree. Our experience, expertise and professionalism largely count in the industry. What is unique about your services, particularly in the life segment where you operate? Our services are unique in the industry. This is largely attributable to the nature of our products, which are tailored to serving thousands of customers with personalized insurance needs for each stage of their lives. Our clients choose us for our excellent customer service delivery and prompt claims settlement. What new products do you have in the market that meets consumer expectation? We have various products that meet the insurance needs of Nigerians, ranging from the Compulsory Group Life, Individual Policies, Takaful, Esusu and multiple Investment Plans. The most recent product in our staple is the Alliance Investment Plan, which is an invest-

ment product designed for individuals who desire to accumulate funds for specific projects that cut across various life events. Specifically, the AIP integrates the feature of Life Assurance and Targeted Savings, which give our customers that unique opportunity to save for the future as well as plan for the unexpected. How can customers access your products, even from the comfort of their homes or offices? We have leveraged on information technology to deliver most of our products. Our products are accessible from our website and there are contact lines, which is available to our customers anytime of the day. Tell us about your claims payment culture as an organization? As earlier stated, our clients choose us because of our excellent customer service delivery and prompt claims settlement. In fact, in 2016 financial year alone, we paid an estimated N6.5 billion in settlement of various claims. We do this with strong commitment to give comfort to our customers. In fact, our claims payment is one of our major strengths and we are known by our customers for this great feat. What assurances do you have for your customers and why they should remain with you? We assure our customers of excellent services and professionalism in the manner we conduct our business. We are working to make them feel at home whenever they approach us while assuring them of our total resolve to providing

The future of the industry is looking bright especially given the amount of commitment from the industry stakeholders to welcome both innovations and regulatory reforms

Fumilayo Omo, managing director/CEO, African Alliance Insurance Plc

answers to their needs through our various products. What are our future plans? We plan to continue to deepen insurance penetration, by ensuring that everyone in Nigeria of adult age who has dependants, realizes the need to take insurance as a financial plan. Until as an industry we are able to impact on families by entrenching culture of insurance, where people

see insurance as part of their life, then we still have a long way to go. This is our vision as company to champion this course and make sure insurance takes deeper root in the life of the citizens. What is the future of this industry? The future of the industry is looking bright especially given the amount of commitment from the

industry stakeholders to welcome both innovations and regulatory reforms. The level of compliance to industry regulations is high. The government on the other hand has demonstrated commitment in the recent times to improve insurance industry growth. The combination of these factors is greatly restoring consumersâ&#x20AC;&#x2122; confidence and public trust.

BUSINESS DAY

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Wednesday 02 May 2018

SPECIAL REPORT Budget 2018: Insurance and economic activities Many experts have said that the 2018 National Budget holds a lot of potential for the economy if consciously implemented. Funmi Babington-Ashaye, managing director/CEO, Risk Analysts Insurance Brokers and president, Chartered Insurance Institute of Nigeria (CIIN) in this article(published in part) looks at the relevance of insurance and how the 2018 budget will affect the sector.

nsurance is an intangible product which provides comfort to investors and risk takers. It restores the policyholder to the position he was before the occurrence of the disaster he hedged against. In this manner, insurance takes away the fear of the unknown and encourages the potential policyholder to take advantage of opportunities in line with his risk appetite. In this way, insurance oils the wheels of business and commerce. In the public sector, insurance would help to secure assets as well as protect personnel engaged in risky but people-oriented services like security and defiance. Expectedly, when the economy is growing steadily, economic activities will also increase in number and value raising the need for insurance protection. Indeed, economic growth leads to more insurance business as more risky investments are undertaken requiring insurance cover. Put differently, a byproduct of economic growth is a booming Insurance Industry with diverse products created to cater to the needs of consumers. For instance, with a booming economy, a number of employment opportunities will be created, contributory pensions by employees will increase, life assurance (whether group or personal) will increase, motor and other insurance policies may increase, the quantum of premium income will

Funmi Babington-Ashaye

rise and investible funds will grow. 2018 budgetary provisions for payment of insurance premium In 2018, the government desires to stimulate economic activities through its budget deficit spending. It is expected that such spending will trickle down to various sectors of the economy. For the

insurance sector, the government demonstrated its faith in the sector by making an aggregate provision of over N15billion for the payment Life Assurance and other insurance premiums by all Ministries, Departments and Agencies (MDAs) including the provision to take care of all the country’s foreign missions

around the world. Besides the fact that public sector spending stimulates economic activities, the safety and security of public assets and personnel are also very key, particularly in the face of pervasive threats from Boko Haram and other terrorists organizations. Managing the associated risks is the domain of the insurance sector. It is therefore apt that the government is persuaded that the insurance industry is a critical partner in the business of driving growth in the country, hence the huge provisions. The 2018 capital budget estimates and the insurance sector It is also worthy of note that the capital expenditure for 2018 is higher than that of 2017 by 12%. In fact, both in real and absolute terms, the capital budget for 2018 is better because inflation rate is also on the decline. Effectively, therefore, the government should be able to execute more capital projects (infrastructural projects) this year for the benefits of the citizens and the real sector. In terms of the impact on Insurance Sector, the marked growth in capital expenditure is very important. It is common knowledge that the demand for insurance services is a derived demand. When economic activities are taking place in large scale, the demand for insurance will increase. In 2018, the government plans to spend N2.428trillion on

capital projects. Since the law requires contractors to procure insurance policies for sites and other locations, we should expect a lot of activities in insurance products like Contractors’ All Risks, Erection All Risks, Group Personal Accidents and Workmen Compensation. In the housing sector, there should be a lot of activities in the Fire and Public building insurance products as housing estates with building of two or more floors will be constructed. We expect that a lot of activities will be stimulated in the group accident as well as workmen compensation insurance products to protect workers and visitors to the various sites. Conclusion The budget 2018 estimates hold a lot of promises for the Insurance sector particularly with the increased allocation to capital expenditure and huge provisions for the payment of insurance premium by various Ministries, Departments and Agencies. We urge the National Assembly to expeditiously pass the budget so that the tempo of economic activities will continue to increase to enhance the nation’s exit from recession. The past experiences where the budget year was unwittingly shortened because of delay in passage should be set aside. The budget should be allowed to run its course from January to December to enhance planning by the real sector.

Insurance sector and growth ... Continued from Page 1 making claims. Penetration and innovation Efforts to increase market penetration through development of new products as well as repackaging existing ones remain a major focus of key players in the industry. There have been strategic efforts to deepen penetration through new investment in technologies, partnership with telecommunication companies, as well as adoption of micro insurance license, agric insurance and Takaful, which are being promoted by the National Insurance Commission (NAICOM). While penetration stands at 0.03 percent and has not kept pace with GDP growth, many of the country’s leading insurers have been turning a consistent profit and rewarding shareholders with dividend. Even with relatively high expense ratios, profit margins are favourable – above industry average for many of the industry’s key players, with

some insurers reporting net profit margins well beyond previous year figures, year after year, from their annual accounts. Therefore stimulating innova-

tion, creating customer value and embracing the changing insurance landscape, requires collaboration between the operators and the regulators. The regulators must be

on the same page with operators, by all working together to create an enabling environment that will help to facilitate innovation that encourages market development and enhances customer value, while also ensuring consumer and data protection. Insure-Tech is going to bring a major disruption in insurance services and requires that all stakeholders share the vision. Growth opportunities With a growing population of 170 million and penetration still low, Nigeria’s insurance sector holds much latent potential in demographics alone. For investors who see an attractive market for insurance in the country, such considerations are enough to outweigh the relatively small size of the sector, as well as the obstacles created by legal and regulatory shortcomings. According to a report by Ernest and Young, significant population growth, rapidly rising incomes and the relatively low penetration of insurance products, suggest great

potential for both life and non-life products. There are also openings for insurers to introduce innovations in motor insurance, end-toend mobile insurance purchases, consumer education and fraud prevention. While insurers will need to address challenges involving talent, market volatility, regulation and technological capacity, among others, there are opportunities for growth of insurance in Nigeria and Sub-Sahara Africa. The huge potential in the nation’s retail insurance industry put at an estimated annual premium of N6 trillion buoyed by the country’s population, as well as the opportunity for annuity business coming from the growing size in pension market is the attraction of many foreign investors into the insurance industry in Nigeria. This, according to industry statistics, is already impacting on market depth and penetration, as insurance policies have grown from 500 million in 2007 to 1.8 billion policies presently.