BusinessDay 02 Sep 2019

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news you can trust I **MONDAY 02 SEPTEMBER 2019 I vol. 19, no 384

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FG’s lethargy traps $462.5bn in Nigerian gas finds igeria’s huge gas finds with an estimated market value of $462.5 billion have been left trapped and unproductive for decades, on account of lethargy by a government that is unable to create the policy environment to turn this huge resource into prosperity dividend for the country and its people.

The discovered gas resources, located in the South-South geopolitical region of the country, have become mere assets on paper, and they continue to be in the firm control of government bureaucrats whom analysts say are without a clue on how to unlock them to energise the economy.

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INSIGHT

New agric minister Nanono, Daura and Kyari reunite for first time since AIB collapse ...CBN revoked banking licence in 2013 LOLADE AKINMURELE

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abo Nanono, Nigeria’s new minister for agriculture, shares a connection with Mamman Daura and Abba Kyari from their time together at

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Inside NNPC DSDP: Masters Energy has capacity for big oil P. A2 contracts

L-R: Sanni Bello, board member, MTN Nigeria; Moolman Ferdi, CEO, MTN, and Ernest Ndukwe, chairman, MTN Nigeria plc, at the launch of MTN’s MoMo Agent network to drive financial inclusion, in Abuja. Pic by Tunde Adeniyi.

UBA delivers 21% growth in profit, 21.7% Return on Average Equity P. 21

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news Nigerians living from hand to mouth as discretionary spending collapses …bursts 200m consumer market bubble ISRAEL ODUBOLA & SEGUN ADAMS

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L-R: Emmanuel Ijewere, CEO, Best Foods Group; Remi Oni, executive director, corporate banking, First Bank of Nigeria Limited; Adesola Adeduntan, MD/chief executive, First Bank of Nigeria Limited; Sabo Nanono, minister of agriculture and rural development, and Akin Olotu, senior special assistant to the governor of Ondo State on agriculture and agribusiness, at the FirstBank Pic by Pius Okeosisi 2019 agric expo in Lagos.

ABC Orjiako may lose assets to AMCON over Court ruling ....fears over his holdings in Seplat Our Reporters

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illionaire businessman, ABC Orjiako is at the verge of losing his assets to Asset Management Corporation of Nigeria (AMCON) following a recent ruling by the Federal High Court in Abuja which granted the application of the ‘Bad Bank’ to take over his assets.

Orjiako has been battling with AMCON over an undisclosed multi-billion debt which the later is yet to recover.

The Federal High Court order, issued on August 15, was accompanied with the letters to the Managing Directors of 29 commercial and merchant banks in Nigeria where Orjiako and his allies have accounts.

The banks were all directed to prevent all further withdrawals of funds and other debit transactions from the accounts.

Orjiako is the Chairman of SEPLAT Petroleum Development Company, a company listedon both the London and Nigerian Stock Exchanges.

In an August 30 letter to the Nigerian Stock Exchange (NSE) signed by Edit Onwuchekwa, company secretary, Seplat denied being part of the litigation. Meanwhile, Seplat shares dropped from record high of N441 as at August 26 to N397.7 at the close of trading on August 30.

SEPLAT Petroleum is a Nigerian independent oil and gas company operating a portfolio of oil and gas assets in Nigeria’s Niger Delta region.

The court ordered the take over of the assets of two of Orjiako’s affiliate companies, Shebah Exploration & Production Company Limited and Allenne Limited..

The order followed an application by Mojisola Owoseni of Lexavier Partners, legal practitioners, legal counsel to

AMCON in suit number FHC/ ABJ/CS/945/19 against ABC Orjiako, Shebah Exploration & Production Company Limited, with RC No 499348, and Allenne Limited.

In the application, AMCON asked the court to grant Francis Chuka, a Senior Advocate of Nigeria, right to exercise its function as Receiver/ Manager of Orjiako’s assets in Nigeria and abroad, including Shebah Exploration & Production Company Limited.

AMCON had on July 30, 2019 appointed Chuka as Receiver/Manager with the mandate to take possession of and preserve all its assets and undertakings by Orjiako.

While granting AMCON’s application, the FCT Federal High Court presided by Justice Taiwo Taiwo, gave the Receiver/Manager judicial protection to take over and manage Shebah Exploration & Production Company Limited till the full determination

of the case.

The assets and undertakings include Orjiako personal properties at Nos. 10C and 25A Lugard Avenue, Ikoyi, Lagos; an oil vessel, MT Trinity Spirit, used as a floating, Production, Storage, and Offloading (FPSO) facility in Ukpokiti Oil Field belonging to Shebah Exploration & Production Company Limited.

Also included are all movable and immovable assets of Shebah Exploration & Production Company Limited in and outside Nigeria, including the oil production facilities and other assets belonging to Shebah Exploration & Production Company Limited and located in and around Ukpokiti Oil Field.

Also, the court permitted the Receive/Manager to take over all shares belonging to Orjiako and his affiliate companies, Shebah Exploration & Production Company Limited, and Allenne Limited, which they own directly or

new study on the consumption pattern of Nigerian households which tells an old story of deep-seated poverty and living on the tethers of squalor suggests the country’s “large domestic market” is big for nothing.

Nigeria is Africa’s biggest economy with a population of 200 million.

But Nigerians have low discretionary income – income left after settling basic necessities such as food, shelter and clothing – according to SBM Intel, a leading geopolitical intelligence platform in Nigeria. In other words, there is next to nothing left for saving, investing or spending on nonessentials needs.

The amount left over after Nigerians meet their essential needs contradicts talk of a big local market, SBM Intel said in its report.

The country’s true market size is “really the number of people who are able to spend discretionarily once they get past spending on the essential commodities”, and that number, SBM Intel estimates,

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angladesh, a South Asian country of over 160 million people, has moved from an underdeveloped third world country to the world’s largest pharmaceutical base and the second-largest garment exporter globally, after China.

Bangladesh’s garment industry is valued at $33 billion and the country is food-sufficient. The largest jute grower in the world, the country also produces 90 percent of the pharmaceutical products it consumes, locally.

From using carts as a means of transportation, Bangladesh now builds ships and has less than 3 percent dependence on foreign aid with an average gross domes-

tic product (GDP) growth rate of 6 percent per annum since 2005.

Interestingly, 300 Bangladeshi business visas are granted to Nigerians monthly, said Shameem Ahsan, Bangladeshi High Commissioner to Nigeria, during an official visit to The Brook, BusinessDay’s headquarters in Apapa.

“There is enormous potential for collaboration between Nigeria and Bangladesh in terms of trade and commerce, especially. Trade between the two countries was a paltry $15 million last year. Some Nigerian military personnel have also been trained in Bangladesh,” Ahsan said.

This has not always been the case for the South Asian country. After the 1971 war of independence, 11 years after www.businessday.ng

Nigeria’s, Bangladesh had the highest rural population density in the entire world, and an annual population growth rate between 2.5 and 3 percent, chronic malnutrition for perhaps the majority of the people, and the dislocation of between 8 million and 10 million people who had fled to India and returned to independent Bangladesh by 1972.

The new nation had few experienced entrepreneurs, managers, administrators, engineers, or technicians. There were critical shortages of essential food grains and other staples because of wartime disruptions. External markets for jute had been lost because of the instability of supply and the increasing popularity of synthetic substitutes.

Foreign exchange resourc-

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Ghana’s gain is Nigeria’s loss as Toyota set to open assembly plant …as fears over AfCFTA begins to materialise MICHAEL ANI

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igeria’s position as Africa’s most populous nation is still not enough for some large global investors to stake cash in its economy.

That’s after Toyota last week entered a Memorandum of Understanding (MOU) with Nigeria’s West African neighbour, Ghana – an economy that is one tenth the populaContinues on page 46 tion and eight times less Nigeria’s market size – to establish an assembly plant in the country by 2020, despite lobbying

by President Muhammadu es were minuscule, and the Buhari to get the investment banking and monetary system deal into Nigeria. was unreliable. Although BanThe assembly plant will gladesh had a large workforce, enable the car manufacturing the vast reserves of underfirm to cater for its West African trained and underpaid workers were largely illiterate, un- market, including Nigeria, skilled, and underemployed. for the assembling of Toyota Commercially exploitable and Suzuki products, accordindustrial resources, except ing to a statement by Ichiro for natural gas, were lacking. Kashitani, president and chief Inflation, especially for es- executive officer of Toyota sential consumer goods, ran Tsusho Corporation, during between 300 and 400 percent. the signing.

The war of independence Kashitani noted that the had crippled the transporta- decision to set up the car astion system. Hundreds of road sembly plant in Ghana was and railroad bridges had been destroyed or damaged, and necessitated by the favourable rolling stock was inadequate economic climate prevailing in and in poor repair. The new the country.

“I am very happy that we country was still recovering from a severe cyclone that hit have reached the consensus and principal agreement to Continues on page 46 start the Toyota and Suzuki

Bangladesh’s silent industrial revolution shows how poor populous nations can prosper STEPHEN ONYEKWELU

is under 37 percent of the population.

In its estimation of the market size, however, an exception is made for producers of essential commodities in Nigeria who would have a market in providing basic needs.

In the report by SBM Intel, 63 percent of respondents said after spending on food, they had nothing left to spend.

About 71 percent of households sampled earned between N30,000 and N120,000 every month.

The report gives flesh to an already known fact that Nigeria is now the poverty capital of the world with about five people falling into the poverty trap every minute adding to the existing 94 million people, according to World Poverty Clock.

Survival is essential in Nigeria and most of the population is at the base of Abraham Maslow’s pyramid of the hierarchy of needs.

“I just wake up and pray to God to provide for my family today. Tomorrow would take care of itself,” said Emmanuel Alabi, 42, a private school teacher in Lagos and a father of four.

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assembly plants. We are planning to kick off the project immediately, and, hopefully, we will have first car made in Ghana this time (August) next year,” he said.

Nigeria is Africa’s biggest market with a gross domestic product of $440 billion and with a population of over 200 million people, according to the United Nations estimate.

But being Africa’s giant, the economy is still faced with infrastructural challenges ranging from power, inadequate road network and stiff regulation.

The World Bank in its Ease of Doing Business report for 2019, a metric which investors use or look out for when making investment decision, ranked Nigeria 146th among 190 countries and cited the aforementioned challenges as responsible for the low ranking.

Aside from the issue of infrastructural challenge, the country has an automotive policy that encourages the importation of used cars at the expense of newly produced cars, which has also been fingered as deterrent to investment.

Currently, there is import tax (duty and levy) of 70 percent on new vehicles while that of used cars is 35 percent.

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news FG to resume 3rd Mainland Bridge repair as others get facelift

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ederal Controller of Works in Lagos State, Adedamola Kuti, says traffic arrangements underway to begin another phase of major repairs on the Third Mainland Bridge.

Kuti told the News Agency of Nigeria in Lagos on Sunday that results of investigative tests on the bridge were ready and that contractors would move to site at the completion of the traffic management architecture.

“Any moment from now, once I get our traffic plans approved, we may be announcing to the world again that we are now ready to fix Third Mainland Bridge, based on investigative tests we had last year.

“Meanwhile, we have already completed the resurfacing and the markings, such that you can now drive on Third Mainland Bridge smoothly.

“We are also going to repair some of the piles or pillars carrying the bridge; that is the next phase that we are doing. So work will soon begin on Third Mainland Bridge.’’

Kuti said that the Muhammadu Buhari administration was committed to fixing bridges in Lagos.

He said that this was evident in the number of bridges that had been repaired in the state, with many more receiving attention.

“This government has very good plans for bridges. Since I came on board, about a year ago, we have completed maintenance and repair works on Leventis Bridge, damaged by fire in 2016 where a whole deck collapsed.

“We have also completely repaired the Ijora-7Up Bridge.

Coconut Bridge repair has been completed; the burnt Marine Beach Bridge repair has been completed and as I speak, maintenance work is ongoing on the Independence Bridge on the Island.

“Work is ongoing on the Dorman Long Bridge, you can drive smoothly on it now and all the guard rails and expansion joints are being replaced.

“Work is ongoing on the Ojuelegba Bridge as well as Alaka Bridge,’’ he stated.

According to him, although procurement issues affected project delivery, there are enough materials from Alaka Bridge expansion joint works to repair adjoining bridges on the ApapaIjora axis.

The controller said he had given instruction to a contractor to move to site to rehabilitate a portion of the Apapa Bridge.

“I have a project on the Alaka Bridge. Work is going on there.

Alaka Bridge goes into Iganmu, the contractor has done a lot of work there. They have done the resurfacing; they have milled the old asphalt and are replacing the expansion joints.

“There is another expansion joint beside it. If you are coming in from Surulere and going to Alaka, the intersection is between Iganmu and Eko Bridge, I gave instruction to fix it.

Nigeria’s capital market gets FinTech innovation hub by Q3’2020 IHEANYI NWACHUKWU

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ig er ia’s S e cur ities and Exchange Commission (SEC) is expected to commence an all-important journey from the fourth quarter (Q4) of 2019, which will end in the third quarter (Q3) of 2020, when an innovation hub for financial technology (FinTech) startups will be created.

These and many more are the recommendations made in a report by a 30-mem-

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… as start-ups funding hits record high of N64bn ber Committee on FinTech Roadmap of the Nigerian Capital Market headed by Ade Bajomo, chairman, Fintech Association of Nigeria.

They asked SEC to work with other regulators to create a centralised committee of all the impacted regulators charged with the responsibility to formulate and ratify policies and regulations for FinTechs. This is in addition to creating clear and specific licensing regimes for differ-

ent FinTech businesses in Nigeria.

The committee’s report seen by BusinessDay highlights the current application of FinTech in the market, opportunities, challenges and recommendations.

With this newest move, Nigeria is transitioning into a dynamic ecosystem offering FinTech start-ups a platform to succeed and potentially grow into multimillion-dollar businesses. FinTech is a

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technology being ushered into the financial services sector.

Investors have continued to demonstrate confidence in Nigerian start-ups as their total funding in 2018 amounted to $178.440 million (N64bn), representing 56 percent increase compared to start-ups investments in 2017, which stood at $115 million (N41bn).

FinTech start-ups accounted for 58 percent of the funding

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received in 2018 amounting to $103.410 million (N37bn).

Despite its huge potentials and the convergence of pertinent growth indicators in Nigeria, the Nigerian capital market is not perceived as attractive to FinTechs compared to China, Singapore, US, UK, and other European FinTech hubs.

The SEC had at its third quarter (Q3) Capital Market Committee meeting held on November 14, 2018, inaugurated a FinTech Roadmap Committee for the Nigerian Capital Market (NCM).

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Forex ban: Has Nigeria attained full food security?

ADETOLA ODUSOTE

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he recent directive by President Muhammadu Buhari to Godwin Emefiele, the Governor of Central Bank of Nigeria (CBN), to stop providing foreign exchange for food importation has been received by key stakeholders with mixed feelings.

In a statement issued on Tuesday, August 13, 2019, by Garba Shehu, presidential spokesman, the president ordered the apex bank not to give a cent to anybody for food importation, saying by so doing, there would be a steady improvement in agricultural production and attainment of full food security.

On the surface, the intent seems genuine but the implication of the implementation of that order would be convoluted in many areas. First, the order is against the independence of the CBN. According to Article 1(3) of the CBN Act 2007, ‘In order to facilitate the achievement of its mandate under this Act…the CBN shall be an independent body in the discharge of its functions’.

Kingsley Moghalu, a professor of political economy and former deputy governor of the CBN who was a presidential aspirant in the last general election, has faulted the presidential order which he described as

political interference. “The issue here isn’t whetherornotCBNshouldallowaccessto forex for food imports; it is about whether such an economic policy of a central bank should be imposed by a political authority.

A major reason for our poverty, instability and weak economy”,stated Moghalu.

On June 23, 2015, the CBN, in its renewed effort at sustaining the stability of the foreign exchange market and ensuring efficient utilisation of foreign exchange, excluded importers of some goods and services from accessing foreign exchange at the official market in order to encourage local production of these items.

This policy implies that those who import these items can no longer buy foreign currency from the official window to pay the overseas suppliers. Rather, they will have to source forex from the parallel market or bureau de change to pay for their imports.

Unfortunately, the Nigerian Customs later classified these restricted products into the 44 items banned from importation. These include food items such as live or dead frozen poultry, pork, beef, bird’s egg, refined vegetable oils and fats, including mayonnaise. Others are cocoa butter, cane or beet sugar and chemically pure sucrose in solid form and in retail packs, spaghetti/noodles, fruit juice in retail packs etc.

To attain food security, there are fundamental indices for measuring the capacity of a nation to be self-sufficient.

These indicators include the percentage of citizens and available resources in such area of needs. For instance, what is the level of participation in arable farming and industrial agriculture?

How much has the nation grown in the agro-allied industry; which includes food

processing and packaging?

Basically, there is no economic sense in importing what we have the capacity to produce in abundance. But such capacity must be seen and measurable.

While we are not against the decision to make Nigeria self-sufficient in foods and other basic needs, the president must not be deceived with reports that are fraught with unfounded or exaggerated facts. Many of the so-called farmers are into subsistence farming. The decision of the government should be based on independent research findings of third parties such as the World Bank, IMF or consultancies like PriceWaterCoopers.

In the new directive, President Buhari stated that some states like Kebbi, Ogun, Lagos, Jigawa, Ebonyi and Kano had already taken advantage of the federal government’s policy on agriculture with huge returns in rice farming, urging more states to plug into the ongoing revolution to feed the nation. Much as this is laudable, a survey of the impact of the output as against what is required must be established.

The government should come up with policies that will include incentives for private sector investment in agriculture. We should partner with nations that are self-sufficient in food, whose economy is driven by industrial agricultural business with a huge value chain.

Nigeria currently spends between $1.2 billion and $1.5 billion annually on milk imports and the CBN has just told lenders to stop processing milk imports on a credit basis and is ready to ban access to forex for the imports in order to spur local production.

As good as this may sound, we must

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How much has the nation grown in the agro-allied industry; which includes food processing and packaging? There is no economic sense in importing what we have the capacity to produce in abundance.

But such capacity must be seen and measurable

not put the cart before the horse. Milk production has many layers. Before a ban, an independent survey must be conducted to know the gaps. What is the available capacity; where are the areas of intervention, what policy(ies) needed to be put in place to increase local capacity and attract direct foreign investments?

The Ministry of Agriculture and the CBN should not try to impress the president with scorecards that are questionable. The welfare of Nigerians must not be sacrificed on the altar of politics.

President Buhari should be politically sagacious enough to avoid being deceived.

With all the acknowledged strength of the US in agriculture, it still imports food items which it lacks the capacity to produce. These include live meat animals, fish and shellfish, dairy, vegetables, fruits, nuts, coffee, tea and spices.

The government also needs to consider implication of this new directive on the recently signed African Continental Free Trade Agreement (AfCFTA) treaty.

That deal seeks to create a continentwide free trade zone where tariffs on most goods are eliminated, and a level playing ground for free imports and exports created. No member nation is expected to take undue advantage of the other.

Finally, all efforts must be put in place to stave hunger from the land.

We can’t ban what we don’t have the capacity to produce while we still import petrol when we have our God-given crude oil that can be processed for local consumption.

Odusote is a Deputy Director at Re-Ignite Public Affairs Limited, publishers of ENGAGE NIGERIA Analysis

Hard work ahead for beleaguered state governments

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n aggregate terms, the public finances of the state governments (including the FCT) are in a mess. Internally generated revenue (IGR) has settled on a plateau, at least according to the CBN data; the states are therefore dependent upon the monthly payout from the federation account, and in good measure the fluctuations in oil revenue; capital spending is inadequate in the context of development needs; the debt burden of N3.85trn and $4.23bn at end-2018 is sizeable, even unserviceable in some cases, despite five separate FGN programmes of debt relief in 2015 and 2016; and enhanced regulatory supervision has belatedly reduced states’ access to new financing.

While IGR has been stuck in a range between N740bn and N770bn over the past three years, total revenue for states increased from N2.47trn in 2016 to N3.73trn last year due to an improvement in the oil price and, to a lesser extent, production.

(We will avoid the territory of the level of NNPC payments into the federation account.) States would have welcomed the higher payout of course but just 34 per cent of their revenue in 2018 could be considered independent (i.e. IGR or their share of the VAT pool).

States’ aggregate spending in 2018 was 73 per cent recurrent and 27 per cent capital. The capital allocation came close to the FGN’s minimum budget target of 30 per cent yet it’s insufficient developmentally, as any observer on the ground can see.

Insufficient IGR, insufficient capital spending and excessive indebtedness mark

states’ finances. Their aggregate domestic debt soared from N1.66trn to N2.50trn in 2015, when the burden of Lagos state actually diminished: the annual increases have since slowed to plus or minus N500bn due to the combination of debt relief and tighter FGN control over their borrowing.

For a minority of states, domestic debt is about twice annual IGR although the multiple can rise to 20 and beyond for others. All external, and much domestic, debt service is deducted from the monthly payouts. If we take the most indebted state, Lagos, and the distribution this June from May revenue in the federation account, we find a gross allocation of N4.81bn, which became N1.88bn after debt service and rose back up to N10.49bn on the back largely of its share of VAT. In the case of Enugu, which is moderately indebted and not an oil producer, the comparable figures were N3.61bn, N3.33bn and N4.73bn. Lagos, therefore, had a far higher bill for debt service but also, by virtue of its size and relative wealth, access to a much larger share of the VAT pool.

We cite aggregate data because we will draw some conclusions about the workings of the federal system. In passing we note the acute differences between states.

Lagos achieved an IGR-to-total revenue ratio of above 60 per cent in 2018 for the fourth year in succession, while Rivers and Kwara finished second and third according to the CBN data. Bayelsa finished bottom of the table with a ratio of just 3.9 percent. In this case, the revenue from the 13 percent www.businessday.ng

derivation formula may have acted as a disincentive to boost IGR. States have been active in promoting investment to create jobs and increase household consumption. Some have allocated land to new ventures. This is easiest when they have established electronic land registers, which have become sources of stable flows of IGR. To give a few examples of new investment plans: transport and a modular refinery with Chinese backers, plantations and an industrial park in Edo; a dairy business in Ekiti; rice mills and sesame processing in Jigawa, along with hopes of granting long leases over grazing land; and talks on cooperation in development between Lagos and Kano states.

These are isolated examples but we see that a state has more or less potential to raise IGR in consequence of the size of its workforce and of its “investibility”. This reality has fuelled discussion of more radical solutions to overhaul battered state government finances. Not so long ago, the FGN could have authorized a drawdown of the excess crude account but the impact today would be negligible since at the balance at the last count was just $240m.

One solution would be to adjust the formulae governing the distribution of funds in the federation account and the VAT pool between the three tiers in favour of the states. The impact in naira terms would be sizeable, particularly if the FGN does raise the standard rate of VAT. Such an adjustment would surely come with a transfer of additional responsibilities from the FGN to

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GREGORY KRONSTEN

the states, however.

We would be wary of such a move for fiscal reasons. Without an improvement in management skills and financial control, the additional resources could be spent on bureaucracy and vanity projects, for which there is undeniably precedent. If the decentralisation brought worse finances, the FGN, not least as the guarantor of states’ external debt, would have to pick up the bill in the last resort. We hear an argument that the FGN does not have a glorious record in fiscal management. We acknowledge it but the FGN is at least subject to some regulatory and judicial supervision. Hard work and transparency offer the safer, if boring, escape from the mess of state government finances.

Gregory Kronsten is the Head, Macroeconomic & Fixed Income Research FBNQuest

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What is the fair value of MTN Nigeria?

PATRICK ATUANYA

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hree months ago in a piece titled “Like Microsoft, Like MTN?”, I predicted that “in 18 months or less MTN… will leapfrog Dangote Cement to become Nigeria’s largest listed Company.”

Well it looks like the article was right but a little less bullish than the markets, as it has come to pass some 15 months earlier than expected.

As of the close of trading on Friday August 30, MTN Nigeria (MTNN) had a market capitalisation of N2.87 trillion ($7.86 billion), while Dangote Cement was valued at N2.76 trillion ($7.56 billion).

MTNN has surged some 56 percent since its listing on the Nigerian Stock Exchange (NSE) in May, as bullish investors seek exposure to one of Nigeria’s still growing sector (Telecoms) with massive potential to pull millions into the digital world, while helping to solve problems like financial exclusion through mobile money.

This is even as investors overlook the still significant regulatory, security and other headwinds the company faces in the country.

So where does the stock which traded at N141 per share on Friday go from here, after piercing through the Dangote Cement valuation ceiling?

We believe valuation should be much higher with the round number resistance around N200 per share looking like the next natural target price for the stock to settle at (over the next 18 months) for a N4 trillion market capitalisation, equivalent to 3.3x estimated forward (2019) sales.

In that sense MTNN may be trading at significant discount to fair value, which is somewhat justified until the major cloud hanging over the company is resolved, chief of which is the claim by the Attorney General of the Federation, that MTN was owing $2 billion in back taxes, for which the AGF is demanding instant payment.

The case remains in court and until it is settled amicably, we expect significant headline risk which will bring some volatility to the stock in the medium term. More risks to the stock and other Telco’s would be a move to institute a tax on telephone recharge/airtime, which a fiscally challenged Federal Government may contemplate.

There is also the perennial attacks and picketing of MTNN by some activists in retaliation for perceived Xenophobia meted out to Nigerians living in South Africa, never mind that MTNN is 99 percent staffed and run by Nigerians including the board of Directors.

MTN Group should probably have

sold a small part (say 30%) of its 100 percent ownership of MTNN to a wider set of Nigerian shareholders a long time ago, despite the narrow private placement it undertook in 2008.

This would have earned the firm more goodwill from vocal local investors, and helped to protect it from the excesses of overzealous regulators and accusations of being a foreign entity bilking Nigeria’s commonwealth.

Nevertheless MTNN is now listed and promises to undertake a proper IPO in coming months, which should help reduce some of the unnecessary/unhelpful assaults against the company.

When we compare MTNN against the Group valuation it even gets more interesting. MTN Group (the parent company of MTNN with operations in 21 countries) has a $12.57 billion market cap, meaning the Nigerian operations now command a valuation equivalent to 62.5 percent of the entire group valuation, even though it makes up roughly 36 percent of revenues.

Of course MTN Group is suffering from the classic conglomerate discount, an economic concept describing a situation when the stock market values a diversified group of businesses and assets at less than the sum of its parts.

With the Nigerian operations still growing fast, MTN Group may soon find itself in a similar situation as Naspers Ltd., Africa’s largest company, whose 31 percent stake in Chinese firm Tencent Holdings alone is worth over $122 billion, eclipsing Naspers’s own entire market cap of $100 billion.

MTNN grew revenues by 12.12 percent to N566 billion in the half year period (Jan – Jun 2019), keeping

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Of course MTN Group is suffering from the classic conglomerate discount...a situation when the stock market values a diversified group of businesses and assets at less than the sum of its parts

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

Shut the borders! There is too much rice in the land

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hat if I told you there was a sure-fire way to stop all crime?

A virtually fool proof way to ensure that the crime rate dropped to zero.

Would you be interested? Are you curious to hear what this genius idea is about?

Well it is very simple. Just lock everyone up in solitary confinement indefinitely. If we do this, I can guarantee that the crime rate will drop to zero. There would be no killings, no robberies, no kidnappings, no scamming and so on. The “solitary” is very important though, since apparently people can scam others from prison.

If we want to stop crime, and we know that locking everyone up in solitary confinement will stop crime then why don’t we do it? We don’t do it because it makes no sense. For sure we don’t like crime and we would all like a zero-rate crime level, but we care about the costs of whatever strategy we choose to achieve it.

Is fighting crime worth sacrificing all our freedoms for? Of course not. Regardless of the zero-crime benefits, the costs are so much more. In this extreme example of benefits versus costs analysis, we will always choose to take our chances and try some other crime-fighting strategy.

For over a week now most of the border posts on the western part of the coun-

try have been shut, and if government reports are to be taken seriously will stay shut for at least 28 days. Why have they been shut? Apparently, rice smuggling on the Benin border is alarming. “The country has saved huge sums of money which would otherwise have been expended on importing rice using our scarce foreign reserves. We cannot allow smuggling of the product at such alarming proportions to continue”. Officially the borders are not completely shut and people with valid travel documents can still pass through, but nothing besides human beings are officially allowed through.

You probably already know my views on importing food but before we get to that, let us talk about the costs of closing the border. The Seme and Idiroko borders are perhaps the most important land border crossings for all sorts of economic activities. I know, some of this is smuggling but much of these activities are legitimate.

Since the Lagos ports turned into the stuff of nightmares, the port at Cotonou has served as a viable alternative for people to import or export legally and easily.

Let us also not forget that trade with Togo and Ghana and large swathes of West Africa also pass through those borders. www.businessday.ng

ECONOMIST

What are the costs of effectively shutting down cross-border economic activity?

Are those costs higher than the perceived benefits from trying to stop rice imports?

I say “trying” because the border between Niger and Benin Republic is over 700 kilometres, and hundreds of border posts along the way; some official and some unofficial. As long as the rest of the world is able to produce rice, ship it halfway around the world and have it arrive at the Benin borders at half the price the same rice sells in Nigeria, there will be smuggling.

Let us not forget that we have a significant fraction of people living in poverty and any opportunity to earn extra money will be seized, especially when there really is no moral justification for not doing it. The real problem is not that rice is being smuggled, but that the same rice has two different prices depending on which side of the border you are standing on.

And the reason is the policy options we have chosen. Policy that has not focused on improving the productivity of our rice farmers but continuously tries to use the shortcut of banning competition and channelling profits to preferred players.

So, what will be the likely outcome of shutting the borders? The prices of rice

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it on track to report Full year numbers above the N1 trillion mark for the second year running.

Operating profits came in at N190.4 billion compared to N136.5 billion in the earlier period, equivalent to a 39.49 percent increase.

Free Cash Flow (FCF), defined as EBITDA minus Capex came in at a healthy N199 billion for the period.

For a company growing so fast and throwing out such impressive FCF, MTNN’s valuation is still pretty cheap, with estimated Price to earnings (PE) ratio of 14. Regional peers such as Emirates Telecommunications Group or Etisalat of United Arab Emirates, trades at a P/E of 16.36, while mature names like Mexico’s America Movil trades at 14.19 times earnings.

If you value MTNN as a growth stock and model a P/E ratio close to the growth multiple (profit after tax grew by 35 percent to N98.9 billion in H1), or between 20 - 30 times earnings you get a valuation between N4 trillion and N6 trillion for estimated 2019 year end net income.

Whatever the case MTNN is a long term play over the next 10 years. Last week it launched its super- agent network service - MoMo Agent - which is expected to cater for the over 36million unbanked people in the country.

It recently announced board members that include Ernest Ndukwe (that shepherded Nigeria’s telecoms revolution), Ifueko Okauru, and Andrew Alli.

It is a stock that even Warren Buffet may be tempted to buy at these levels!

NONSO OBIKILI

and other tradeable goods will go up, leading to a bigger spread between prices in Nigeria and prices across the border.

This will incentivise people to take even bigger risks and devise more ingenious ways to smuggle things across the border.

In the meantime, we can expect to take a GDP hit as the western part of the country, which is an important economic centre, will find life that more difficult.

The costs from this border closure are likely to fair outweigh any perceived benefits. Will we learn anything from this exercise? Probably not. We still have not learned a basic lesson about human behaviour: if your policy requires human beings to behave irrationally to succeed then it has probably already failed.

Dr Obikili is Chief Economist of BusinessDay

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

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GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

Why is NERC uneasy about pricing electricity right?

T

he speed at which the Nigerian Electric ity Re g ulatory Commission (NERC) disowned media reports about a possible increase in electricity tariffs, speaks to more than just a regulator willing to be right on messaging but one scared of the message.

On August 22, the regulator published a report, Minor tariff Review of MYTO 2015 and Minimum Remittance Order, on its website. Media reports soon circulated alerting the public of a possible tariff review and the regulator went into overdrive to contain the message.

The next day, it scrubbed the reports from its websites and followed up with a press release to denounce it had approved a tariff increase.

Then it ended up confusing everyone, when it noted that it would “continue to undertake periodic reviews of electricity tariffs in accordance with the prevailing tariff methodology.”

While NERC has put back the minor review reports on its website, the organisation’s desperation to contain the message of a tariff review does not enhance its reputation.

It has already held consultations with stakeholders over a tariff review and, in previous releases, taken great pains to explain that current electricity tariffs do not guarantee commercial return.

Investors in the distribution companies (DisCos) fed up with poor returns already have arrangements with selected customers willing to pay a higher tariff for a more constant supply. Customers and small businesses are relying on captive power and alternative power solutions, where they pay double the current tariff rates for more meaningful supply.

So why can’t the regulator allow a cost-reflective tariff?

It is for the same reason, the price of petrol in Nigeria is N145 and over N300 in the rest of the sub-continent, yet only Nigerians suffer petrol scar-

city and nerve-racking queues, and why public universities charge pittance and nurture ignorance as lecturers spend more time fighting over pay than teaching.

The motive behind the refusal of NERC to move the needle on cost-reflective tariff is that politics will always trump market realities with a government shorn of creative economic ideas and peopled in every stratum by those whose management ideas are suited for the last century.

While a legal ruling truncated the previous price review effort, the Commission is still not doing enough to prevent another legal obstruction. This is because the DisCos have argued that pricing power below the cost of production imperils their ability to improve performance. This argument takes the wind out of the sail of a regulator who should be enforcing sanctions for errant behaviour.

DisCos for example remit less than 40 percent of market invoice for power but this is

not all due to a non-cost reflective tariff. The tariff modelling of NERC showed that even if cost-reflective tariffs were in place since 2015, DisCos would still be indebted to the tune of N196.9billion based on market shortfalls attributed to their poor collection ability, electricity theft and power lost through a poor grid network.

So the discussion on tariff review or lack thereof prevents a wider, more desperately needed discussion about fixing a broken electricity market.

The electricity market in Nigeria cannot attract viable investments because government subsidies are crippling it. Yet, the government is sozzled on debt, spending more on interests than it spends on education and health and leaves the economy in a tailspin.

We call on NERC to grow a pair and fix the broken electricity market; it starts with pricing electricity right. This is what can give it the moral courage to compel operators to behave well and call itself a regulator.

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Age-old ideology drives Buhari’s food-import ban amid hunger GLOBAL PERSPECTIVES

OLU FASAN

E

conomic rationality is about actions that maximise utility or welfare. Thus, when a country bans food imports when it lacks the capacity to meet its food requirements locally, economists would describe its behaviour as utterly irrational, especially amid widespread poverty and hunger.

To ban food imports in those circumstances would certainly hike food prices, thereby further deepening poverty and hunger.

But economists also know that not everyone acts rationally. For instance, you would not expect a president driven purely by ideology and utopia, rather than by evidence, to pursue rational, welfare-maximising policies.

The renowned economist John Maynard Keynes famously said that “when the facts change, I change my mind”.

But those driven purely by ideology never change their minds even if the facts change. They are path-dependent, totally resistant to change!

That, let’s face it, is the best way to explain President Muhammadu Buhari’s recent decision to ban the imports of all food items into Nigeria by denying their importers access to foreign exchange from the official window. It’s path dependency; the old Buharinomics is making a dramatic comeback.

Anyone who wants to know why Buhari would ban food imports, despite the excruciating poverty and hunger in this country, must understand the stubborn persistence of his age-old economic worldview. And what I want to explore here is the staying power of the old Buharinomics, despite its demonstrable failure and the fact that its ideological root, communism or Marxism, died as an organising philosophy after being totally discredited in countries where it once held sway.

So, what’s the trajectory of Buhari’s

economic belief that lies behind his food-import ban? Well, let’s from the mid-1980s when, as a military dictator, General Buhari first imposed his economic philosophy, Buharinomics, on Nigeria. As many would recall, General Buhari’s regime controlled what Nigerians ate, what they wore, how much money they could take out of Nigeria, what products could be imported into the country, what exchange value the naira could have, how much goods could be sold for in the market, well, how Nigerians could live their lives. It was a pretty closed, command-andcontrol economy.

Truth is, Buhari’s military regime denied Nigerians what Adam Smith, the father of economic liberalism, called the “system of natural liberty” under which citizens could pursue, without undue state interference, their aspirations for a higher standard of living. After all, as Aristotle said, politics is “primarily concerned with the development and actualisation of human flourishing” and “the pursuit of the higher good of living well”.

But Adam Smith’s philosophy of human liberty and Aristotle’s doctrine of human flourishing were alien to Buhari’s ideological orientation, derived from his fondness for the then Soviet Union. In fairness, Buhari believed he was acting in the best interests of the nation and of the common man. After all, so, too, did the Soviet Union, which believed that by owning the means of production and controlling individual liberty and economic freedom, the State could serve its interests as well as those of the proletariat.

However, in 1991, the Soviet Union collapsed, thanks to the internal contradictions of its economic and political systems. Mikhail Gorbachev, the Soviet’s last leader, precipitated the collapse with his policies of glasnost, “openness”, and perestroika, “restructuring”. Russia, its successor, abandoned the collectivisation of agriculture and state planning. Far-reaching market economic reforms followed, including privatisation of the so-called commanding heights of the economy, floating of the Russian currency and trade liberalisation. Russia soon became a strong and growing market economy. One scholar described the post-Soviet Russia’s market economic reform as a “capitalist revolution”!

President Buhari said that he became a “converted democrat” after seeing the collapse of the Soviet Union.

Presumably, then, the collapse of the Soviet Union had a transformational effect on him. But if you look for any lesson of the Soviet collapse that Buhari has imbibed, you will find none; not glasnost or openness, not perestroika or restructuring. And certainly not market economy reform. But why?

Well, the reason is that Buhari is driven by ideology and nostalgia about the past. He hankers after the time when one naira could have bought you one dollar; he dreams of a past when Nigeria was a net exporter of agricultural products. And he wants to bring back those halcyon days.

In 2016, Buhari said in an interview that he was “shocked” when he learnt that “what we’ve been buying with foreign exchange is all food items”, adding: “I didn’t believe it and still didn’t believe it”. Of course, Nigeria has not been spending all its foreign exchange on food items, but President Buhari, a mercantilist, is ideologically opposed to Nigeria importing any food item. He believes Nigeria should be self-sufficient in food production, and he wants to achieve this not through market reforms but by dirigiste diktats, particularly through Soviet-style collectivisation of agriculture and import substitution. Of course, collectivisation and import-substitution are key elements of the old communist or socialist policies that failed to produce efficient and welfare-maximising outcomes in several countries, including the old Soviet Union and in Latin America.

But these failed policies, designed to drive local production and lead to self-sufficiency, were the rationale behind the Central Bank’s decision in 2015 to classify 41 items as “Not valid for foreign exchange” and ban their importers from accessing foreign exchange from the official window.

The CBN forex exclusion list was later expanded to 43. Now, however, driven by the same policy of self-sufficiency, President Buhari has decreed that all food importers must be denied access to foreign exchange through the official window!

According to a statement from Buhari’s spokesman, Garba Shehu, the president “ordered” the CBN: “Don’t

‘

President Buhari said that he became a “converted democrat” after seeing the collapse of the Soviet Union.

But if you look for any lesson of the Soviet collapse that Buhari has imbibed, you will find none; not glasnost or openness, not perestroika or restructuring.

And certainly not market economy reform

give a cent to anybody to import into this country”. And why? Well, he said “Nigeria has achieved food security.”

But really? Where is the evidence that Nigeria is food secure? Recent analysis by this newspaper shows that local productions of many food items, such as chicken, wheat, tomato and fish, fall well below 40% of the requirements.

And where is the impact assessment to support the food-import ban policy?

In a statement, the Manufacturers Association of Nigeria, MAN, said that the Central Bank “will have to do assessment of where we are in practical terms and realistically weigh its options before embarking on such a far-reaching policy”. The fact that President Buhari decreed that policy without an impact assessment underlies the problem of having an ideologically-driven president who makes policies on a whim without considering the evidence or their impacts.

Of course, everyone knows that Nigeria is nowhere near being food secure.

Indeed, which country in the world is so food secure as to ban food imports?

Brazil is the world’s most efficient agricultural country, yet it imported $10bn worth of food in 2016, about 7% of its total import. Britain, another efficient agricultural country, imports nearly 50 per cent of its food requirements.

Yet, despite Nigeria’s lack of capacity to meet its food requirements locally, and despite widespread poverty and hunger in the country, President Buhari puts ideology above evidence to self-declare Nigeria as food secure and to effectively ban all food imports. This is a wrong-headed way of making policy and it would hurt more Nigerians.

The Brookings Institution said six Nigerians drop into extreme poverty every minute! Sadly, Buhari’s foodimport ban would force more Nigerians to join their ranks. How any president could put ideology above the welfare of his people defies economic rationality.

But with President Buhari, a pathdependent, socialist ideologue, that’s hardly a surprise!

Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

Resources, geopolitics and the coming recession: Is Africa sleeping at the wheels?

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he coming recession portends dire socio-economic implications for Africa.

It could prove a useful crisis or path further down the fiscal and development abyss. Will the continent be better prepared this time? Government complacency is likely to prove costly for the livelihoods of citizens.

Collapse in energy and commodity prices will exacerbate existing African vulnerabilities.

When the global headwinds hit, weaker markets for oil, iron ore and copper etc. will throttle economies. The impacts may be more severe than the last African recession of 20142017, also triggered by commodities. States are still recovering from that slump. Today, there is the escalating US-China trade and currency war. Quantitative easing in the advanced countries after the 2008/09 recession distorts markets. The world seems to be at an inflection point.

A question of time The Sino-American sparring over trade, technology and pretty much else that helped energise the decades-long advance of globalistion is already wreaking havoc. The Chinese currency dropped below the sensitive level of seven yuan to the US dollar last

month. Stock markets have fallen, including the NASDAQ and Hong Kong’s Hang Seng.

Oil prices, too, appear jittery, wrong-footing the price benchmarks in the 2019 African budgets. Nigeria and Angola, respectively the first and third largest economies in subSaharan Africa, are in the crosshair. If global aggregate demands falter, expect a follow through in much lower oil prices and devaluation pressure on currencies such as the naira. Beyond energy resources, African mineral producers including South Africa, Tanzania, DRC and Zambia have also been in the throes since at least this year.

Ironically, counter-cyclical policy measures which can stabilise finances in commodity exporters seemed to have thrown out of the window. Incipient smoothening steps were gradually jettisoned by some policymakers – just when doing the opposite would have been prudent. From the first signs of return to aggregate growth in African economies around 2017, expansionary fiscal policies became mainstream; despite broadly sluggish revenue growth, stagflation in parts, and still flailing fiscal buffers. These needed disciplined repair in the aftermath of a screeching www.businessday.ng

halt to the commodity super cycle in 2014.

What to do now?

It appears that leading African states may be shutting the stable door after the fiscal horse has bolted. Some respite came between 2017 and 2019 but growth has been largely tepid for the biggest players. Immediate action is needed on three complementary fronts if the worst is to be avoided next year. These should include aggressive fiscal recalibration, prioritisation of investment in areas like mineral geo-data acquisition (with ambitious licencing for new oil exploration), and a more clear-eyed geo-economic mindset in Africa.

If not, we will again become passive drifters in a turbulent world order.

First, sensible fiscal precautions will require balancing expenditure to revenue, fiscal restraints to provide for a rainy day, and better debt optimisation. In all of the bigger African economies, the pressure is building. With oil prices at about $55 per barrel, Nigeria’s budget benchmarked at $60 and Ghana’s at $ 66.76 are out of kilter. Angola conservatively benchmarked at $55.

With widening gaps between revenue forecasts and export receipts in a number

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OLA BELLO of countries, 2019 has seen the alarm bells ringing. Sustainable social spending and the needed infrastructure boost may suffer – when Africa should be expanding social investments to accelerate Sustainable Development Goals.

Note: the rest of this article continues in the online edition of Business Day @https://businessdayonline.com/

Dr Bello is Executive Director, Good Governance Africa (GGA). He holds first class BSc Honours and MPhil and PhD degrees from University of Cambridge. Ola is a member African Union’s technical advisory group on mining

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Monday 02 September 2019

BUSINESS DAY

REAL SECTOR WATCH

Resuscitating Nigeria’s textile industry Stories by ODINAKA ANUDU

N

igeria’s total nonoil export earnings from more than 25 commodities in 2018 was $3.3 billion (N1.19 trillion), according to the National Bureau of Statistics (NBS), but Bangladesh, once one of the poorest countries on earth, earned almost ten times as much as that from exporting one product — textiles.

India earned $37.4 billion from exports of textiles and cotton in 2017. Total textile and clothing exports between April and September 2018 stood at Rs. 1.30 trillion ($18.56 billion), according to public data.

Bangladesh has 5,000 garment factories, employing about 20 million people, mostly women, which pushed the extreme poverty in the Asian country down to 12.9 percent, according to the World Bank, compared to Nigeria’s nearly 50 percent.

Ya l e e c o n o m i s t A h m e d Mushfiq believes that Bangladesh’s recent economic success is in part attributable to the flourishing garment manufacturingindustry.

There were things Bangladesh did right. The South Asian country de-emphasisised the primary product—cotton— and paid attention to the entire textilemanufacturing value chain.

The raw material for yarn is cotton but in Bangladesh only five percent of cotton needs are met by local production and the rest are imported, according to an SNV report done by the Kingdom of the Netherlands.

For knit products, 80 percent of the yarn requirements are met by domestic suppliers because the country has a competitive advantage in that area.

However, only 20 percent of the woven requirements for the garment sector is catered by local firms.

The country’s parliament passed a bill specifying the level

of quality which all export firms must meet in order to beat China to number one in competitiveness.

Hence emphasis was laid on competitiveness, with the government providing market access for companies through trade negotiations targeted at removing international barriers.

More so, some of Bangladesh citizens were sent to China and Europe to acquire the skills needed to run the mills.

Again, the country paid a closer attention to the use of modern technology to lower costs and save the environment.

Big brands such as Walmart, H&M, Benetton, Gap and Zara were lured into distributing Bangladeshi ready-made garments.

Stitch Dairy, a local Bangladeshi publication, said that that the South Asian country was able to enjoy duty-free advantage to export garments to the European Union, the US and Malaysia.

Experts equally attribute Bangladesh’s success to a convivial business environment with minimal government influence and low taxes, which attracted Chinese and Vietnamese firms to Bangladesh.

Textile Today reported in 2015 that firms from Singapore, Japan,

Taiwan and South Korea, which had traditionally relied on low-cost production in China, were shifting out of China and making their way to Bangladesh as a result of well developed Bangladeshitextile value chain that guarantees three to five years return on investments.

Another key factor in Bangladesh is cheap labour with minimum monthly wage of a garment worker at $197, which makes it the last but one lowest wage among 21textile-making countries in the world.

However, Nigeria has even more advantage than Bangladesh in terms of labour cost as its recent minimum wage hike to N30, 000 amounts to only $83.3 per worker.

“Export Subsidies are policy tools to encourage exports of a nation. The government of Bangladesh provides cash incentives as export subsidies, amid other supporting policies, to promote exports in various business sectors. There is no alternative to the export-led growth of the economy to achieve its goal of becoming a middle-income country by 2021,” said two researchers, Afsana Arafin and Belalur Rahman, in a paper entitled,

“Cash Incentives for Export Oriented Industries of Bangladesh: A Critical Evaluation’.

However , the number of fullfledged textile mills in Africa’s most populous country has whittled down to two, from over 180 in 1985. Industry players say the number of players is 24, but findings show that most of them are manufacturers of rugs, handkerchiefs, sweaters, towels and stockings.

“Some of the mills have even gone into receivership as they could not repay their loans. The lesson is that we should deal with the fundamental issues of production competitiveness in our economy. The textile industry needs to be saved from the excruciating burden of high operating and production cost,” Muda Yusuf, director-general of the Lagos Chamber of Commerce andIndustry (LCCI), said.

In India today, raw materials for textiles are available. The population is helpful as it provides a ready workforce for the industry.

But cost of power is cheaper in India than in many other textile export countries, which makes production cheap. There is also increased investment in research

and development, with technology playing a major role. Like in Bangladesh, the government of India provides incentives for exporters and manufacturers and encourages them to enter new markets.

According to Textile Today, there is massive support from central and state governments in the form of textile parks, research centres, international collaboration with foreign institutes and laboratories, training facilities, all of which are playing a significant role in the sector’s progress.

In Nigeria, in contrast, analysts say no textile firm can survive due to issues around smuggling, high production cost and penchant by government agencies that are now ‘revenue raisers’.

Smuggling has turned textile hubs in the main cities of Kano, Kaduna and Lagos into solitary camps and event centres, the Manufacturers Association of Nigeria (MAN) said.

“The hitherto manufacturing hubs in Kano, Kaduna and Lagos are now solitary camps with most of their factory sheds now used as event centres and warehouses to store smuggled textile materials,” MAN, which is an association of over 2,500 manufacturers in Nigeria, said in its review of 2018 performance of the sector.

Hamma Kwajaffa, directorgeneral of Nigeria Textile, Garment and Tailoring Employers Association (NTGTEA), told BusinessDay that the problem is importation and smuggling.

“The level of importation and smuggling in this country are killing the few surviving companies. They used to run three shifts but they have closed down these shifts.”

“The Executive Order 003, for instance, has been pronounced, but it is not being implemented.

So we have low patronage in the industry,” he added.

There are textile mills in Nigeria, but many of them no make caps, sweaters, polos and stockings.

MAN eyes improvement in value chain as 47th AGM starts today

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he Manufacturers Association of Nigeria (MAN) is paying a closer attention to value chain improvement at its 47th annual general meeting which begins today at Lagos Oriental Hotel.

The three-day AGM encompasses exhibition of madein-Nigeria products; the 4th Manufacturers Annual Lecture/ Presidential Luncheon; road show by Afreximbank; private session by members to review the performance of the association, and an interactive session with the comptroller- general of

Nigeria Customs Service.

The theme of the AGM is ‘Improving Value Chain in the manufacturing Sector for Competitiveness and Job Creation’.

Speaking with newsmen in Lagos, Mansur Ahmed, president, MAN, said the theme was borne out of the need to highlight the significance of improved manufacturing value chain linkages in the efforts to make the sector competitive, contribute more to the Gross Domestic Product and create the muchneeded jobs in Nigeria. www.businessday.ng

He said Muhammadu Buhari, Nigeria’s president, will be the special guest of honour, while Benedict Okey Oramah, president and chairman, board of directors of Afreximbank will be the guest speaker.

“The choice of the speaker is based on his pedigree and antecedent of over 25 years in the economic and financial sectors,” Ahmed said.

Ahmed charged Adeniyi Adebayo, newly appointed minister of industry, trade and investment, to formulate a comprehensive industrialisation policy

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that would drive backward integration programmes and create linkages for various value chains in the manufacturing industry.

He stressed the need for a coherent industrial policy that would drive small and medium enterprises (SME) sector while also scaling up the present administration’s ease of doing business mandate.

“There is a need to link the agriculture sector to the manufacturing sector and also the need to work on some of the constraints that have made the @Businessdayng

Nigerian manufacturing sector uncompetitive and this has to do with infrastructure,” he said.

“We will work with the ministry to ensure that these issues are addressed and the ease of doing business which is a core objective of the present administration is scaled up considerably,” Ahmed stated.

He said there will be over 100 exhibitors, cutting across 10 sectors of MAN and they would be showcasing the best of made-inNigeria products that meet local and international standards.

Monday 02 September 2019

BUSINESS DAY

15

REAL SECTOR WATCH

Manufacturing exporters count losses as closure of Seme border bites ODINAKA ANUDU

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igeria’s manufacturing exporters are counting their losses as the ill-advised closure of Seme border between Nigeria and Benin Republic cripples their business.

Many of them who spoke with BusinessDay weekend said their raw materials were stuck at the border, incurring demurrages and crippling production at factories.

They added that it crippled their export transactions, thereby hurting projections and putting them in more jeopardy.

Ede Dafinone, chairman, Manufacturers Association of Nigeria Export Group (MANEG), said the losses that will be incurred by genuine exporters will further cut Nigeria’s non-oil export projections.

‘I understand that the government has closed the borders in order to catch those who are smuggling various goods into Nigeria.

“If this is indeed true then it is unimaginable that a solution could not be found to this problem that did not penalise all genuine traders (import-

ers and exporters alike) for the sake of catching those smugglers operating through the land borders,” he said.

“Who will be responsible for the additional demurrage to be paid or on the perishables that have now spoilt? The government would not be closing all banks because of the discovery of bank fraud and similarly should not close all land borders to catch those that are smuggling,” he reasoned.

President Muhamadu Buhari, on

Wednesday, August 21, ordered the closure of the Seme border between Nigeria and Benin Republic to check smuggling of rice and wheat.

Analysts wonder why such an illadvised step could be taken without paying attention to its hazardous implication.

Muda Yusuf, director general of Lagos Chamber of Commerce and Industry (LCCI), said the action does not address the lapses in state institutions that should check smuggling,

Aba leather industry awaits government support as unemployment soars ODINAKA ANUDU

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he Aba shoe industry is important for creating jobs and growing the gross domestic product (GDP. Such businesses are responsible for creating 59.647 million jobs in the Nigerian economy, contributing 50 percent to the GDP and 7.64 percent to export receipts, according to a recent report by the National Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).

Many Nigerians underestimate the potential of the Aba industry. One million pairs of shoes are produced by more than 80,000 leather makers in Aba each week. With 48 million pairs produced each year at an average price of N2,500 a pair, the industry is said to be worth up to N120 billion.

Traders from West African neighbours storm the industrialcity every week to buy different product designs, just as Southern African schools are beginning to place orders directly from the shoe makers. Canadians, Europeans and the Chinese are also in the party, placing orders themselves directly or through their Nigerian proxies, BusinessDay was told in Aba.

“We are already struggling to meet demands,” said Ken Anyanwu, secretary of the Association of Leather and Allied Industrialists of Nigeria (ALAN), who produced Nigerian armed forces shoes in 2016.

The business is going digital, with sales now online.

The Aba leather industry is made up of shoes, trunk boxes and belts. It provides employment for tens of thousands, with many specialising in different stages such as designing, patterning, cutting, skiving, stitching, peeling and finishing. It is made up of clusters such as Powerline, Imo Avenue, Bakassi, Aba North Shoe Plaza, Omemma Traders and Workers, ATE Bag, and Ochendo Industrial Market, comprising input supplers, among others.

However, the industry is in thriving in chaos as the majority of shoe makers in the industrial city are poorly structured and are not registered at the Corporate Affairs Commission. Exports are made informally, making tracking and planning difficult.

Their machines are crude and much of their work is still done by human labour. Some of their designs are not in tune with current trends.

“This is where the problem www.businessday.ng

lies. We in Aba have no good machines,” Anyanwu of ALAIN said.

He said this is why the majority of Aba shoe makers are not meeting demands and are overworking themselves once orders are placed.

“It is a problem already for us because if a customer comes and we can’t meet demand, he will go elsewhere. Theindustry needs retooling,” he said.

Aba shoe makers import animal skins from China and many parts of Africa and Europe.

“What happens is that the tanneries in Kano and Kaduna process animal skins and sell them as leather in the globalmarket, earning foreign exchange,” said Chinatu Nwagbara, coordinator of Made-in-Aba Project, who produced shoes for Olusegun Obasanjo in 2016.

“So we go to China and other countries to buy. Sometimes, we buy our products and re-import,” he said.

Nigeria’s unemployment rate is estimated at 23.1 percent, according to NBS data, and analysts say Aba alone can take thousands more out of the streets.

“Provide the industry with support and you will see what happens in a couple of years to come,” Ike Ibeabuchi, a manufacturing sector analyst, said.

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leaving innocent citizens to suffer.

“Border closure does not offer a sustainable solution. It only penalises small players in the informal sector. It also disrupts the supply chains and exports transactions of many big firms that do business across the subregion,” Yusuf said.

A manufacturing exporter, who did not want her name in print, said the closure will likely erode her margins at the end of the financial year.

“When you close borders, you prevent inputs or raw materials from coming in. They stay there for ‘no-one-knows-when’ and incurs demurrages. All these are costs,” she said.

“Those that are exporting goods through the land borders will also have problems. So, where is this taking us to as a nation, especially when all businesses are facing challenges due to economic mismanagement?” she asked.

Buhari’s policies to force homegrown production of food without the right conditions continue to fuel poverty and strain economic growth, analysts say.

The border closure is constraining

trade which contributed about a fifth of Nigeria’s GDP at 17.16 percent in 2018 and breeding untold hardship to small businesses who depend on cross-border trade to survive.

“The closure of the border without any formal notice to businesses and companies who use the corridors further imperils Nigeria’s ease of doing business ranking,” said Vincent Nwani, an investment and business consultant based in Lagos.

Nwani said that Nigerian borders cannot be closed by a mere order without any protocol and despite a subsisting West Africa Trade Protocol Agreement that allows for mutually opened borders. It poses both economic and reputational risks for the country.

Nigeria’s economic growth slowed in the first quarter of 2019, after the oil sector, the country’s biggest foreign-exchange earner, contracted.

Gross domestic product in Africa’s largest oil producer expanded by 2.01 percent in the three months through March from a year earlier, the National Bureau of Statistics (NBS) said in May. That compares with 2.4 percent expansion in the fourth quarter (Q4) of 2018.

Exporters canvass reduction in border rejections as AFCTA nears DAVID IBIDAPO

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igerian exporters want reduction in the number of rejections at the borders of destination countries in the light of the upcoming African Continental Free Trade Area (AfCFTA).

They stress the need for a synergy between regulations and trade to drive exports.

At a 2019 symposium of the Export Group of the Lagos Chamber of Commerce and Industry (LCCI), exporters said rejection of most Nigerian goods arises from the inability of the products to meet country-specific standards.

They stressed the need to tailor necessary export documents and certifications to requirements demanded by those countries.

“Most rejects are caused by delays, wrong documentations, multiple approvals by different agencies with perceived overlapping responsibilities,” Ademola Agboola, chairman, Export Group, LCCI, said last Thursday.

The Nigerian export sector is facing a plethora of challenges evident in a slump by 0.2 percent year-on-year to N1.452 trillion in March 2019, amid declines in sales of raw material by 20.5 percent, solid minerals by -43.1 percent and energy goods by -4.8 percent.

“The institutional framework is still weak,” Olumuyiwa Aiyegbusi, CEO of Olu Olu foods, said.

He said this is why some of the nation’s goods at the global markets are rejected.

“Only strong institutions would make our goods competitive at the international stage and until we address @Businessdayng

this, our goods will continue to face high level of rejections in Europe and other parts of the world,” he said.

According to data by the National Bureau of Statistics (NBS), crude oil contribution to total export was 82 per cent in Q1 2019 against 13 percent of non-oil export in Q1 2019.

“We need to close gaps in the export process and procedures in order to be more efficient and save cost,” Agboola stated, while speaking on getting Nigeria ready for the African Continental Free Trade Area (AfCFTA).

Africa has a market of 1.32 billion people, with an expected 42 percent growth in youth population by 2030.

While this positions the continent as a good market to expand into, only a well-positioned economy in Africa will attract investors and free movement of goods.

“The Nigerian manufacturing industry has to wake up to the reality of the Africa trade agreement,” Kolawole Awe, chairman, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) Export Group, said.

“If we do not do that, most of our SMEs we see today, we won’t see them again.”

According to him, about 80 percent of the 1.32 billion people in Africa are looking at the 200 million population in Nigeria, while the 200 billion have to develop their products to meet demands.

“For the SMEs to survive now, there is a wake-up call for all associations now and enough of ‘I can do it all by myself,” Awe concluded.

“We need increased working relationship between exporters, local traders, and the regulatory agencies,” Aiyegbusi concluded.

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Monday 02 September 2019

BUSINESS DAY

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Monday 02 September 2019

BUSINESS DAY

In Association With

A diamond in the rough

A NotBalkan fallen yetbetrayal

The battle of Botswana’s big men

Italy’s Five Star Movement has a deal to form a new government

Rare turbulence in one of Africa’s most successful states

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LEPHANTS EXCITE most children,” says Timex Moalosi, the chief of Sankuyo, in northern Botswana.

“But not ours.” Since the country’s former president, Ian Khama (pictured, left), suspended gamehunting in 2014, pachyderms have besieged the village, stomping crops and scaring kids. The destruction upset residents, as did the loss of income from selling permits to gun-wielding tourists.

So when Mokgweetsi Masisi, Botswana’s current president (right), reversed the ban in May, Sankuyo rejoiced.

Others were unhappy. For Mr Khama, the decision was seemingly the straw that broke the elephant’s back. The ex-president said he should not have anointed the “immature” Mr Masisi in 2018.

In May Mr Khama left the Botswana Democratic Party (BDP), which has ruled since independence in 1966, and endorsed a new party, the Botswana Patriotic Front (BPF). The BPF is loosely allied to the main opposition coalition, the Umbrella for Democratic Change (UDC). Elections are in October.

At first glance it is a personal feud. Mr Masisi has ditched flagship policies of Mr Khama’s, like the hunting ban. He has cut his predecessor’s privileges, such as flying on official aircraft. He has dismissed Mr Khama’s allies, including Isaac Kgosi, the intelligence chief. It is rumoured that Mr Masisi broke a promise to appoint Mr Khama’s younger brother, Tshekedi, as vice-president. But for all the elements of soap opera, the drama is deeply serious.

Botswana, arguably Africa’s most successful state, is in unprecedented flux.

When it became independent it was one of the world’s poorest countries. The southern African state, almost the size of France, had 7.5 miles of paved roads; 22 citizens had degrees. In the parliament of the outgoing colonial power, Britain, a speaker warned of “the appalling difficulties which will confront this young republic”.

Botswana proved its doubters wrong. It has held regular elections, avoided civil war and devel-

A new coalition leaves the far-right Northern League in the cold

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I U SE PPE CO N T E i s poised to boldly go where no Italian technocrat has gone before. Independent prime ministers in Italy either bow out at the end of their governments or get shoved aside by the voters if they try to hang on. But on August 29th President Sergio Mattarella asked Mr Conte to form a second coalition, this time teaming the anti-establishment Five Star Movement (M5S) with the centre-left Democratic Party (PD).

M r C o nt e ha s s p e nt 1 4 months heading an all-populist oped into one of the richest countries in sub-Saharan Africa. Its GDP per person is $18,650, higher than South Africa’s ($13,870) and similar to countries such as China, Costa Rica and Serbia. Botswana, writes one historian, “stands out as a unique example” in Africa.

How to explain its success? Its small population (2.25m) and a shared culture help. But it has more people than Equatorial Guinea, a kleptocratic petro-state, and is more diverse than people assume.

Today academics focus on its institutions. If Zimbabwe fascinates economists for all the wrong reasons, Botswana interests political scientists for all the right ones.

It has largely avoided the “resource curse” that has led mineralrich African states to corruption and conflict. After diamonds were found in 1967 in Botswana the government enacted laws to share the proceeds and spend them on infrastructure and education. The partnership between the government and De Beers, a diamond company, predates independence; neither has taken the other to court. Botswana’s is a story of “well-managed good luck”, says Keith Jefferis, a consultant.

Institutions do not, however, emerge from thin air. They reflect

political cultures. Botswana drew on fairly pluralistic precolonial institutions, such as the kgotla, or council. It had an elite that subscribed to the rule of law. This was partly out of self-interest: property rights suited the cattle-owning nobility. But there were also unusually enlightened leaders. Sir Seretse Khama, Botswana’s first president and Ian’s father, was the “paramount chief” in the area where diamonds were found. But he passed laws preserving mineral rights for the nation, not his chieftaincy.

In some eyes Ian Khama’s moves repudiate his father’s legacy. Mr Khama is also the “paramount chief ” of the Bangwato, who populate the country’s central district. Unlike his father, who stressed that chiefs and politicians must not mix their roles, the ex-president is using his tribal authority for electoral gain. “He is eroding our norms,” says one businessman. Mr Khama may consider that worth it. One-third of Botswana’s 57 parliamentary seats are in his district. All but one are held by the BDP, which has 37 MPS in total. If Mr Khama gets supporters to ditch the ruling party, he could be kingmaker in a coalition.

That worries some Batswana.

As president, Mr Khama built up the country’s spy agencies and surrounded himself with securocrats, who appointed allies to top jobs, such as head of the main anti-corruption body. Human-rights groups accuse the authorities of intimidating journalists and NGOs. “The space for civil society has shrunk,” says Alice Mogwe, a lawyer.

Mr Masisi says he was once a “bootlicker”, but is now his own man. So far, that seems to mean making rash populist pledges in order to shore up the BDP’s support. The repeal of the hunting ban has impressed rural voters, but hurt tourism bookings nationwide. A proposal to build electric cars in Botswana is unrealistic.

The election campaign does not bode well for Botswana’s reputation for sound policy. That matters as the country tries to reduce its dependence on diamonds, which make up roughly the same share of exports today (73%) as they did in 1992 (71%). Botswana still has enviable institutions. But there is a sense among Batswana that what made their country special is at risk. “Botswana’s exceptionalism?” ponders David Sebudubudu of the University of Botswana. “That’s history now.”

government that yoked the Five Stars to the hard-right Northern League. The League’s leader, Matteo Salvini, ill-advisedly pulled the rug this month, thinking it was under his allies’ feet, when in fact it was under his own. The M5S has around a third of the seats in parliament, and can command a majority with the help of the PD and independent lawmakers.

In his resignation speech on August 20th, the popular Mr Conte excoriated the League leader to his face, calling him disloyal and irresponsible. The former university law teacher’s performance endeared him to the Five Stars, to the point that Continues on page 19

Monday 02 September 2019

BUSINESS DAY

19

In Association With

Who you gonna call?

How Parliament can stop Boris Johnson’s no-deal Brexit The prime minister has sidelined Parliament and set a course for no-deal. MPs must act now to stop him

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NE BY ONE, the principles on which the Brexit campaign was fought have been exposed as hollow. Before the referendum, Leavers argued that victory would enable them to negotiate a brilliant deal with the European Union. Now they advocate leaving with no deal at all. Before the vote they said that Brexit would allow Britain to strike more free-trade agreements. Now they say that trading on the bare-bones terms of the World Trade Organisation would be fine. Loudest of all they talked of taking back control and restoring sovereignty to Parliament. Yet on August 28th Boris Johnson, a leading Leaver who is now prime minister, announced that in the run-up to Brexit Parliament would be suspended altogether.

His utterly cynical ploy is designed to stop MPs steering the country off the reckless course he has set to leave the EU with or without a deal on October 31st (see article). His actions are technically legal, but they stretch the conventions of the constitution to their limits. Because he is too weak to carry Parliament in a vote, he means to silence it.

In Britain’s representative democracy, that sets a dangerous precedent (see article).

But it is still not too late for MPs to thwart his plans—if they get organised. The sense of inevitability about no-deal, cultivated by the hardliners advising Mr Johnson, is bogus. The EU is against such an outcome; most Britons oppose it; Parliament has already voted against the idea. Those MPs determined to stop no-deal have been divided and unfocused. When they return to work next week after their uneasy summer recess, they will have a fleeting chance to avert this unwanted national calamity. Mr Johnson’s actions this week have made clear why they must seize it.

Of all her mistakes as prime minister, perhaps Theresa May’s gravest was to plant the idea that Britain might do well to leave the EU without any exit agreement.

Her slogan that “no deal is better than a bad deal” was supposed to persuade the Europeans to make concessions. It didn’t—but it did persuade many British voters and MPs that if the EU

offered less than perfect terms, Britain should walk away.

In fact the government’s own analysis suggests that no-deal would make the economy 9% smaller after 15 years than if Britain had remained. Mr Johnson says preparations for the immediate disruption are “colossal and extensive and fantastic”. Yet civil servants expect shortages of food, medicine and petrol, and a “meltdown” at ports. A growing number of voters seem to think that a few bumpy months and a lasting hit to incomes might be worth it to get the whole tedious business out of the way. This is the greatest myth of all. If Britain leaves with no deal it will face an even more urgent need to reach terms with the EU, which will demand the same concessions as before—and perhaps greater ones, given that Britain’s hand will be weaker.

Mr Johnson insists that his intention is to get a new, better agreement before October 31st, and that to do so he needs to threaten the EU with the credible prospect of no-deal. Despite the fact that Mrs May got nowhere with this tactic, many Tory MPs still see it as a good one. The EU wants a deal, after all. And whereas it became clear that Mrs May was bluffing about walking out, Mr Johnson might just be serious (the fanatics who do his thinking certainly are). Angela Merkel, Germany’s chancellor, said recently that Britain should come up with a plan in the next 30 days if it wants to replace the Irish backstop, the most contentious part of the withdrawal agreement. Many moderate

Tories, even those who oppose no-deal, would like to give their new prime minister a chance to prove his mettle.

They are mistaken. First, the effect of the no-deal threat on Brussels continues to be overestimated in London. The EU’s position—that it is open to plausible British suggestions—is the same as it has always been. The EU’s priority is to keep the rules of its club intact, to avoid other members angling for special treatment. With or without the threat of no-deal, it will make no more than marginal changes to the existing agreement. Second, even if the EU were to drop the backstop altogether, the resulting deal might well be rejected by “Spartan” Tory Brexiteers, so intoxicated by the idea of leaving without a deal that they seem ready to vote against any agreement. And third, even if an all-new deal were offered by the EU and then passed by Parliament, ratifying it in Europe and passing the necessary laws in Britain would require an extension well beyond October 31st. Mr Johnson’s vow to leave on that date, “do or die”, makes it impossible to leave with any new deal. It also reveals that he is fundamentally unserious about negotiating one.

That is why Parliament must act now to take no-deal off the table, by passing a law requiring the prime minister to ask the EU for an extension. Even before Mr Johnson poleaxed Parliament, this was not going to be easy. The House of Commons’ agenda is controlled by Downing Street, which will allow no time

for such a bill. MPs showed in the spring that they could take temporary control of the agenda, when they passed a law forcing Mrs May to request an extension beyond the first Brexit deadline of March 29th. This time there is no current legislation to act as a “hook” for an amendment mandating an extension, so the Speaker of the House would have to go against precedent by allowing MPs to attach a binding vote to an emergency debate. All that may be possible. But with Parliament suspended for almost five weeks there will be desperately little time.

So, if rebel MPs cannot pass a law, they must be ready to use their weapon of last resort: kicking Mr Johnson out of office with a vote of no confidence. He has a working majority of just one.

The trouble is that attempts to find a caretaker prime minister, to request a Brexit extension before calling an election, have foundered on whether it should be Jeremy Corbyn, the far-left Labour leader whom most Tories despise, or a more neutral figure.

If the various factions opposed to no-deal cannot agree, Mr Johnson will win. But if they needed a reason to put aside their differences, he has just given them one. The prime minister was already steering Britain towards a no-deal Brexit that would hit the economy, wrench at the union and cause a lasting rift with international allies. Now he has shown himself willing to stifle parliamentary democracy to achieve his aims. Wavering MPs must ask themselves: if not now, when?

Italy’s Five Star Movement has a deal...

Continued from page 18

they made his continuance in office a condition for a deal with the PD. A second Conte government will please officials in Brussels.

They feared that Mr Salvini’s plans for drastic tax cuts, in a country already saddled with a debt equivalent to 134% of GDP, could panic the markets and jeopardise the euro. It will also delight Donald Trump, who tweeted his support for his “highly respected” buddy, “Giuseppi” (sic).

But there are snags. The M5S intends to seek its members’ approval in an online ballot. If they vote against the alliance, it will probably force a general election. Italy can ill afford that.

It could take until November to hold the vote, and parliament has to approve a budget by year’s end. That will be tricky: €23bn ($25bn) in deficit cuts are needed to meet EU limits.

Otherwise, value-added-tax rates will have to be raised.

Moreover, in over a week of negotiation, the Five Stars and PD seemed to have agreed on little more than the prime minister’s name. The M5S’s founder, Beppe Grillo, suggested the cabinet might include other technocrats.

Perhaps most important, the two parties have sharply different cultures. Though most Five Star activists lean left, they disdain the liberal elite and see the PD as its embodiment. That was not a problem with the League, though it backed some policies they disliked. The fate of Italy’s new government may show which is the stronger bond—ideological affinity or a populist temperament.

20

Monday 02 September 2019

BUSINESS DAY

In Association With

The plots thicken

New fronts open up in the conflict between Israel and Iran Israel is taking the threat of an attack by Hizbullah seriously

A

N EXPLOSION AND subsequent fire in the early hours of August 25th in Beirut’s Dahiye neighbourhood led to fevered speculation. Were they caused by two quadcopter drones, one of which was captured in a shaky video moments before? Were the drones Israeli or Iranian? Was the intended target a media office of Hizbullah, as the Lebanese militia suggested?

Or was the target Iranian-supplied equipment to improve the guidance systems of Hizbullah missiles, as anonymous “intelligence services” claimed? One thing seems sure: the episode is part of a broadening of the battlefields between Israel and Iran.

Lebanon was one of the earliest frontlines. Iran helped found Hizbullah there in 1985 to fight the Israeli army, which had invaded its northern neighbour. More recently the conflict has expanded to Iraq. A series of explosions there has been ascribed to Israel. “Iran doesn’t have immunity anywhere,” said Binyamin Netanyahu, Israel’s prime minister, neither confirming nor denying responsibility. Israel accuses Iran of spreading missile and attack-drone technology. The sites targeted in Iraq are bases of Iranian-backed militias which may have been storing Iranian missiles.

The explosion in Beirut came just hours after an Israeli air strike near Damascus, where a team of Iranian

and Hizbullah operatives were said to have been preparing to launch drones against Israel, apparently in retaliation for the attacks in Iraq.

This time Mr Netanyahu was quick to acknowledge responsibility. (Lebanon’s state media claimed that Israel also struck the base of a Palestinian organisation aligned with Iran and Hizbullah near the Lebanon-Syria border on August 26th.)

The world’s attention, meanwhile, was on diplomacy. France’s

president, Emmanuel Macron, engineered a surprise visit by Iran’s foreign minister, Muhammad Javad Zarif, to the G7 summit in Biarritz.

Mr Macron has been trying to salvage the nuclear deal signed by Iran and six world powers in 2015. The agreement limits Iran’s nuclear programme in exchange for the partial lifting of sanctions. President Donald Trump withdrew from it last year and embarked on a policy of “maximum pressure” to cripple Iran’s economy.

Mr Macron dangled the prospect of a summit between Mr Trump and his Iranian counterpart, Hassan Rouhani. Mr Trump seemed tempted by the idea. So did Mr Rouhani, at first.

“If I know that by meeting someone, the problem of my country will be solved, I will not hesitate,” he said in a speech. But, under pressure from hardliners, he later backed away, saying that there can be no meeting unless America first lifts its sanctions on Iran.

Israel is keen for America to maintain pressure on Iran. It worries about the strategy of regional expansion championed by Iran’s Revolutionary Guard Corps and supported by the country’s supreme leader, Ali Khamenei. In recent weeks Israeli officials have warned that this strategy now includes a full rapprochement with Hamas, the Palestinian Islamist movement in Gaza. Ties between them were cut off in the early years of the Syrian uprising when Iran backed Bashar al-Assad’s regime, which was butchering Hamas’s Sunni coreligionists. With the war in Syria all but over, normal service has been resumed.

Iranian support for Hamas is reckoned to be as much as $100m a year.

But the Iranian network may have become overextended and easier for rival espionage agencies to penetrate. Israel has carried out hundreds of air strikes on Iranian targets in Syria. Senior Israeli officers claim they have succeeded in preventing Iran from establishing missile bases there.

Until recently Israel maintained a policy of “opaqueness” regarding its strikes against Iranian targets. Mr Netanyahu, however, has taken to extolling Israel’s intelligence-gathering and operational successes in surprising detail, as well as openly saying it carried out the latest air strike in Syria. Some of his critics in Israel’s security and political establishments are uncomfortable with this.

Cigarette-making

Philip Morris and Altria want to merge Investors are cool on the deal to create a $210bn tobacco titan

A

DECADE AGO Altria, which makes Marlboros, span off its non-American business, Philip Morris International (PMI). The split was driven partly by Altria’s share price, which had been languishing below its sum-of-parts value, but also by regulatory hounding of Big Tobacco over its role in causing cancer. When British American Tobacco made a bid for Reynolds American, maker of Camels, in 2016, Bonnie Herzog, an analyst at Wells Fargo, a bank, urged PMI to reunite with its former parent. It took longer than expected. But on August 27th the two said they were in talks to merge. Their combined market value just before the announcement was $210bn.

Ms Herzog still thinks the merger makes sense, given the benefits of scale and geographical reach in what she calls the “global arms race” for “reduced-risk” products, which use fewer harmful chemicals. Last year Altria spent $12.8bn on 35% of Juul Labs, a maker of popular high-nicotine vaporisers. It paid $1.8bn for 45% of Cronos Group, a cannabis company from Canada (which,

may expose PMI to regulatory risks from Juul, whose controversial devices are a worrying hit with teenagers. Altria could also be a drag on PMI’s profitability, which has exceeded its parent’s since the split. PMI’s share price fell by 7.8% on the news. The deal may yet go up in smoke.

along with some American states, has legalised pot). PMI has spent $6bn since 2008 to develop IQOS, a smoke-free device which heats tobacco and is expected to represent 40% of its sales by 2025, up from 14% last year. In April it won approval from the Food and Drug Administration (FDA) to sell IQOS

in America, starting next month (under an existing licensing agreement with Altria).

Worldwide cigarette sales fell by 4.5% in 2018, to $714bn, and may continue to decline. The FDA’s proposed rules on nicotine content, to make smokes “minimally addictive”, could cut profits

of American tobacco firms by half, say analysts at Morgan Stanley, a bank. By contrast, e-cigarette revenues may grow by more than 8% annually over the next five years, from $11bn today, according to Mordor Intelligence, a research firm.

For all that, merging with Altria

Monday 02 September 2019

BUSINESS DAY

MTN hits 3-month high, up 8.46% from May lows

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COMPANIES & MARKETS

21

COMPANY NEWS ANALYSIS INSIGHT

BANKING

UBA delivers 21% growth in profit, 21.7% Return on Average Equity ... declares N0.20 Interim dividend LOLADE AKINMURELE

U

nited Bank for Africa Plc, a leading financial institution, has announced its audited half year financial results for the period ended June 2 0 1 9 , s h ow i n g g row t h across key performance indices as well as a significant contribution from its African subsidiaries.

In spite of the increasingly unpredictable environment in some of its countries of operations, the pan African financial institution delivered double digit growth in its profit before tax as it rose by 21 per cent to N70.3bn for the half year to June 2019, up from N58.1bn recorded in the similar period of 2018, just as Profit after Tax also improved to N56.7 billion, a 29.6 percent growth compared to N43.8

billion achieved in the corresponding period of 2018.

The profit for the first half of the year, translated to an annualised return on average equity of 21.7 per cent.

According to its results filed with the Nigerian Stock Exchange, UBA recorded a 14 percent year-on-year rise in top-line, with gross earnings of N293.7 billion, compared to N257.9 billion recorded in the corresponding period of 2018. Analysts say that this performance emphasizes the capacity of the Group to deliver a strong performance through economic cycles in spite of the overall challenging business environment.

As at 30 June 2019, the Bank’s Total Assets grew by 4.8 percent crossing the N5 trillion mark to N5.10 trillion. Customer Deposits also rose by 4.8 per cent to N3.51 trillion, compared to N3.35 trillion as at December

2018. This growth trajectory underscores UBA’s market share gain, as it increasingly wins customers through its revitalized customer service culture coupled with innovative digital banking offerings.

The bank’s Shareholders’ Funds remained strong at N542.5 billion, reflecting its strong capacity for internal capital generation.

In line with its culture of paying both interim and final cash dividend, the Board of Directors of UBA Plc declared an interim dividend of N0.20 per share for every ordinary share of N0.50 each held by its shareholders.

“I am pleased with the half performance of the Group, having delivered 14% growth in gross earnings and 21% growth in profit before tax,” the Group Managing Director/CEO, Kennedy Uzoka, said.

Despite the subdued yield environment in some

of the lender’s large markets, it achieved a 9% growth in interest income.

The bank also saw a 39% growth in electronic banking revenues, as it reaped the reward of broadening and deepening its digital banking play across Africa.

Revenues from the bank’s remittance and funds transfer businesses grew 69% and 53% respectively.

These factors attest to the efficacy of the bank’s strategies and the resilience of our business model, according to Uzoka.

He further stated “I am very optimistic that the ongoing Group-wide transformation program, will in the quarters ahead, enable the Bank deliver substantial operational efficiencies and best-in-class customer service, which will ultimately boost earnings. We sustained our asset quality with the NPL ratio down to 5.62%,

from 6.45% as at 2018FY. We will continue to adopt best practice standards to grow and manage the portfolio in the quarters ahead.”

Also speaking on UBA’s results, the Group CFO, Ugo Nwaghodoh said; “We had a strong start in the year given the prevailing macroeconomic environment across our various markets. There is better diversification in profit contribution as our banking subsidiaries across Africa contributed 38% of the profit before tax, whilst our recently repositioned UK business contributed 4%. We expect this dispersion to continue, as the subsidiaries consolidate on their share of the various markets.”

“I am particularly delighted that the key ratios are trending in the right direction. The net interest margin is trending upwards and will continue to improve

as we responsibly grow the risk asset portfolio and realign the funding mix to lower our cost of funds. The cost-to-income ratio trended down to 60% with our focus on balance sheet and operational efficiencies which should enable us deliver our medium term CIR target. Capital adequacy ratio increased to 28% from 23.6% in December 2018, providing a very strong buffer for asset growth,” he stated.

United Bank for Africa, Africa’s global bank, was founded 70 years ago in Nigeria and today, operates in 20 African countries and in the United Kingdom, the USA and with presence in France. UBA serves over 17 million customers across the globe with more than 1000 branches and touch points.

In 2018, the bank received the award of Africa’s Best Digital Bank by the Banker’s magazine.

PHARMACEUTICALS

Mid-year performance trend shows listed Nigeria drug makers are ‘sick’ SEGUN ADAMS & OLUFIKAYO OWOEYE

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n mid-year 2019, profit of pharmaceuticals lost steam as cash-strapped Nigerians’ self-medication on cheap smuggled drugs and preference for alternative medicine, among others, significantly worsened the already floundering growth of listed drug makers.

Listed players pared profit by 29 percent in the first six months of 2019, dashing hopes of the industry raking nine figures after it had driven midyear profit near a billionnaira mark last year.

The combined profit of five Nigerian drug firms, with half-year numbers publishe d, plung e d to N653.44 million compared to N923.22 million in the same period last year as the companies made a Uturn on the back of dwindling sales growth.

Fidson Healthcare,

GlaxoSmithKline, Morison Industries, Neimeth Pharmaceuticals, though with a different calendar year, and Pharma Deko Company made a combined revenue N18.63 billion, 5.47 percent more than N17.66 billion a year ago.

The industry is struggling to grow as the increase in sales has steadily slowed in the last 4 years.

Revenue grew 85 percent

in 2016, 37 percent in 2017, 17 percent in 2018 and dropped to single digit in 2019.

Glaxo Smith Kline maintained a lion share of the drug market after it posted the industry’s b i g g e s t re v e n u e j u m p of some 16 percent, but PharmaDeko and Morison were a drag on the sector’s performance.

While the other four players pared profit, GSK

grew bottom-line by 2.76 percent although Fidson had the highest net-margin, making N3.74 as profit from every N100 revenue.

Neimeth had the least direct cost margin with 53.82 percent of revenue expended on producing drugs.

Drugmakers in Nigeria, like their peers in other sectors, have been struggling lately. The 2016 economic recession dealt a

big blow on the performance of most players

while consumers shifted to cheap and smuggled substandard drugs. There has also been a shift to traditional medicine by most low-income households.

A Common E xternal Tarrif (CET) in 2016 had provided some 5 percent to 20 percent tariff for the importation of pharmaceutical raw materials and excipients for local manufacturers while the trade arrangement opened Nigeria’s borders to finished medicines produced abroad which hampered domestic producers’ com-

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: Samuel Iduh

Continues on page 23

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COMPANIES&MARKETS

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Business Event

TELECOMS

MTN hits 3-month high, up 8.46% from May lows …clinches market leadership once again for now DAVID IBIDAPO

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he Nigerian biggest foreign direct investment (FDI) and biggest telecommunication in Nigeria at the end of trading on Friday rose to its highest price in the last three months and a week to N141 growing its market value by N223.85 billion representing a 8.46 percent increase during the period under review.

Amid market rout which saw the Nigerian All share index (ASI) plunge 12.42 percent year to date, the Telco giant’s stock introduced in May have rallied 42.42 percent during the same period.

This is shortly after the Telco’s announcement of the launch of its super-agent network service named ‘MoMo Agent’ expected to cater for over 36 million unbanked people in the country, and particularly drive the financial inclusion project of the Central Bank of Nigeria (CBN).

“We are fortunate to be part of the telecoms industry which underpins the digital economy and is critical to inclusive development and the future economic growth of this great nation. The launch of the YDFS MoMo Agent is especially significant to us,” Ferdi Moolman, the Chief Executive Officer of MTN Nigeria said.

As at 2018, 36.8 percent of Nigerian adult populations were reported to be excluded from the financial services net. This translates to 36.6 million people who at the time were not in the financial cycle.

However, the central bank plans to drive the exclusion rate to 20 percent by the year 2020. Less than 5 months to the deadline, the regulator has about 16.8 percent gap to close if it is going to achieve its target.

Investors’ reaction stood positive as the stock picked up 1.55 percent against N138.85 closing price of the previous day. This saw MTN clinch again market lead-

ership for now which was initially short-lived after the biggest cement producer Dangote Cement displaced the Telco a day after.

The Telco’s market capitalization stood at N2.870 trillion after trade on Friday N109 billion above Dangote cement’s market value of N2.761 trillion.

Since inception, MTN has witnessed 3 major catalysts to growth in stock price from investors’ excitement upon listing by introduction, inclusion into MSCI index and its move to boost financial inclusion, which all saw positive responses from investors.

However, the race for market leadership still continues as both MTN and Dangote Cement remain worthy competitors amongst peers in the Nigeria NSE30 index.

Dangote Cement on Friday slumped marginally to its lowest price in the last 16 months closing at N162, worsening year to date returns to investors by 14.60 percent.

L-R: Bennedikter C Molokwu, independent non-executive director, Dangote Sugar Refinery Plc and Nigeria Deposit Insurance Corporation; Philip Obioha, chairman, board of directors, Computer Warehouse Group Plc; Lamin Manjang, CEO, Standard Chartered Bank Nigeria Limited (SCB); Gladys O Talabi, executive director, legal services, Global Comm Nigeria Limited, and David Idoru, head, retail banking, (SCB), at a client breakfast meeting with the CEO organised by the Bank recently.

BANKING

Fidelity Bank’s profits soar by 16% to N15.1bn in H1 … Gross Earnings hit N103.7bn HOPE MOSES-ASHIKE

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espite the country’s challenging and fiercely competitive business environment, Fidelity Bank Plc delivered a solid financial performance in the first half of 2019, recording double-digit growth in key revenue lines whilst achieving significant traction in digital banking uptake.

Details of the audited halfyear result for the period ended June 30, 2019, released at the Nigerian Stock Exchange (NSE) on Thursday showed a 15.7 percent rise in Profit Before Tax (PBT) from N13.0 billion in the earlier period to N15.1 billion in the reporting period.

Profit After Tax (PAT) rose by 15.6 percent to close at N13.6 billion from N11.8 billion recorded in 2018, whilst gross earnings increased by 12.3 percent from N92.3 billion to N103.7 billion. In other indices, Total Assets rose by 12.8 percent to N1.940.2bn from N1,719.9bn in the previous period.

Total Deposits; a measure of customer confidence, increased by 12.0 percent to close at N1,097.0 trillion from N979.4 billion in 2018 Financial Year (FY).

Commenting on the results, Fidelity Bank CEO, Nnamdi Okonkwo expressed delight with the bank’s financial performance. According to Okonkwo, the bank remained

focused on the execution of its medium-term strategic goals and targets for the 2019FY whilst promising that the bank would continue to sustain the momentum and deliver another strong set of results for the 9M 2019.

He said, “Gross Earnings increased by 12.3 percent to N103.7bn driven by a 52.4 percent growth in our fee-based income and a 7.2 percent growth in Interest Income. Digital Banking, Okonkwo stated has continued to gain traction driven by new initiatives in retail lending segment and increased cross-selling of its digital banking products.

“We now have 45.0 percent of our customers enrolled in the bank’s mobile/internet banking products, 82.0 percent of total transactions now done on digital platforms and 29.0 percent of fee-based income now coming from digital banking”, he added.

The Fidelity CEO pointed out that retail loans were steadily on the rise after the launch of the bank’s new digital lending product dubbed Fidelity Fastloan, further adding that the bank has deepened lending partnerships with select Financial Technology (FinTechs) companies.

Buoyed essentially by innovative digital technologies, Fidelity Bank’s retail strategy has become a major gamechanger for the business. This was again evident in the H1

2019 results as savings deposits now account for about 22.6 percent of total deposits - a clear sign of the bank’s increasing market share in the retail segment. “We are on course to achieving the 6th consecutive year of double-digit savings growth”, he stated.

Total Deposits however increased by 12.0 percent to N1,097.0bn from N979.4bn driven by double-digit growth in both local and foreign currency deposits. Non-performing Loans (NPLs) Ratio improved to 5.4 percent from 5.7 percent in the 2018FY due to the growth in the loan book.

With regulatory ratios such as the Capital Adequacy Ratio at 17.0 percent, Liquidity Ratio at 34.8 percent, well above required threshold, Okonkwo was optimistic that the bank will sustain this sterling performance in the second half of the year.

Fidelity Bank is a fullfledged commercial bank operating in Nigeria with over 4 million customers who are served across its 240 business offices and various digital banking channels. The bank which focuses on select niche corporate banking sectors as well as Micro Small and Medium Enterprises (MSMEs), has in recent times won accolades as the Best SME Friendly Bank, Best in Mobile Banking and the Most Improved Corporate/Investment Bank among several industry awards and recognition.

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L-R: Seyi Oyewunmi, assistant director, marketing, Federal Radio Corporation (FRCN); Femi Adefowokan, MD, Maximedia Global Communication Limited, and Seyi Iwayemi, senior group head/ director, Channels Management, at the Media Partners Round-table organised by Maximedia in Lagos.

L-R: John Ugbe, CEO, MultiChoice Nigeria; Tony Agenmonmen, president/chairman of NIMN, and Joshua Ajayi, publisher/editor-in-chief, Brand Communicator, and executive head, corporate affairs, MultiChoice Nigeria, at the 2019 Women In Marketing & Communications Conference/Awards (WIMCA) in Lagos.

L-R: Paschal Dike, 2016 president of JCI/CEO, Dega Multi Concept Limited; Chidera Ogbu, founder/CEO, Olaedo Naturals Limited; Adetola Juyitan, national president of JCI Nigeria/CEO, Glitz Group of Companies, and Grace Ihejiamaizu, founder, iKapture Centre for Development, at the ongoing Tokyo International Conference on African Development (TICAD) in Yokohama, Japan.

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COMPANIES&MARKETS PRESS RELEASE

Sapphire Scents celebrates 4 years of making Nigerians smell good

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ENDURANCE OKAFOR

t was exactly four years in August2019 since Sapphire Scents, one of the most respected perfume companies started providing Nigerians and Africa with good fragrance.

Established with N30, 000 naira in 2015, Sapphire Scents specializes in crafting luxurious perfumes, watches and accessories.

“Our perfumes are not the conventional type.

They are oud, frankincense, and myrrh and they are rare. It’s not what you walk into any store and

buy,” Adewale Aladejana, CEO of Sapphire Group said.

The 4th year anniversary lasted for three days; from August 16 to 18 2019.

The event kicked off with a meet and great between over 200 Sapphire Scents distributors who came to Abuja from all over Nigeria and West African countries like Abidjan and Cameroun.

This was followed by a dinner party which also witnessed the unveiling of Regina Daniels as the new brand ambassador. The 3rd day was a Thanksgiving service.

Other brand Ambassadors of Sapphire Scents are Tonto Dike, Teddy A and Williams Uchemba.

Sapphire Scents started has grown to become a top perfume brand in Nigeria. Recently they diversified into watches called Sapphire Time, jewellery called Sapphire Jewels, an eye wear line called “Oju

by Sapphire” and an apparel line.

The CEO of Sapphire Group in his closing remarks said in the near future “you would not be able to sleep, eat or look good without a Sapphire product.”

Mid-year performance trend shows...

Continued from page 21 petitiveness.

The combined effect of a devaluation of the naira increased cost for drugmakers and saw the exit of some creating a gap that could be filled with imported drugs as local production and exp or t faltered.

B u s i n e s s D ay i n Ju l y reported a plunge in export earnings of industry players up to 91 percent between 2014 and 2018 while naira weakened 80.9 percent from N199/$ in 2014 to N360/$ in 2018.

Many Pharmaceuticals are also bedevilled by poor infrastructure and paucity of funding. Many debt-ridden operators have shut down operations.

In 2017, French pharmaceutical multinational firm, Biogara, a subsidiary of Servier the number 2 French pharmaceutical group that specializes in generics, acquired Nigeria’s leading drug maker, Swiss Pharma Nig Ltd. In October 2017, Evans Medicals was taken over by the defunct Skye Bank (now Polaris Bank) and tier-one First Bank of Nigeria in 2017 over a loan default.

This was after the firm had obtained the sought-after World Health Organisation (WHO) prequalification,

which allowed it to participate in international bids.

More recently the government in a bid to stem the abuse of Codeine cough syrups placed a bad on the importation of the substance with an adverse effect on the financial performance of drug makers which had invested in the product lines utilizing the chemical.

On the heels of the industry’s woes, GDP of the sector which grew 55 percent in 2016 shrunk some 34 percent in 2017 and grew marginally by 0.6 percent last year.

In spite of challenges, Fidson Healthcare is a stand-out performer in the pharmaceutical space. In recent times the company has continued to ramp up on volumes following its capacity expansion.

The drugmaker has also successfully penetrated the low end of the market to support top-line with robust product offering with over 250 drug products to its credit.

Fidson recently signed a strategic partnership with leading Japanese pharmaceutical company, Ohara Pharmaceutical company limited.

Earlier this year, GlaxoSmithKline plc (GSK) announced the transfer of its www.businessday.ng

wellness and respiratory products to Fidson with effect from the third quarter of 2021.

For Neimeth, a foreign exchange crisis that only abated in 2017 meant that access to foreign exchange to buy raw materials was difficult worsened by a fire at its Oregun warehouse cost the company raw materials. It, however, ended the third quarter for the period ended 30th June on an impressive note, as turnover increased 6percent to N1.41bn.

Revenue from its Pharmaceuticals segment increased slightly to N1.35bn from N1.32bn in the same period in 2018 while revenue from its animal health segment ballooned to N59.7bn from N18.65bn in the period of review.

To m i s i A k i n y e m i , a pharmacist at HealthPlus Limited, said local pharmaceutical companies are shutting down in Nigeria while more importers are coming up.

“Most people now say that they don’t want chemical drugs but herbal supplements. Demand for herbal supplements is on the increase. Now, most companies import natural herbal supplements than the chemical ones,” he said https://www.facebook.com/businessdayng

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insurance today

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E-mail: insurancetoday@businessdayonline.com

Africa Re gets industry recognition for market development in Nigeria Modestus Anaesoronye

A L-R: Misbahu Yola, managing director, FCMB Pensions; Ronke Adedeji, president, Association of Pension Fund Operators of Nigeria; Samuel Ogbodu, managing director/CEO, SUNU Assurance Nigeria Plc; Mohammad Ahmad, former director general, National Pension Commission (PenCom); Pius Apere, managing director/CEO, Achor Actuarial Services Ltd/guest speaker; Fatai Adegbenro, executive secretary, Nigerian Corporation of Registered Insurance Brokers; Adeleke Hassan, executive director, SUNU Assurance, and Wilson Ideva, managing director/ CEO, High-Gate Consulting Ltd, during the 4th edition of the National Association of Insurance and Pension Correspondents (NAIPCO) National Conference in Lagos

Stakeholders seek relaxed regulations to deepen penetration in insurance, pension sectors …see trust as critical for attraction Modestus Anaesoronye

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takeholders in insurance and pensions have agreed on the need to relax some of the regulations in both industries to bolster uptake and market penetration.

They also agreed that trust is number one element that is needed to boost consumer confidence, while technology and distribution channels will complete the servicing process.

These were part of the communiqué reached at the end of 4th NAIPCO Annual National Conference held in Lagos weekend attend by operators, regulators, and in-

formal sector workers as well as journalists.

Theme of the Conference and lead paper which centered on Financial Inclusion :The Micro Agenda for Insurance and Pension Sectors, was presented by Pius Apere, managing director/ CEO, Achor Actuarial Services Limited.

On regulation, the participants agreed that regulators of the two sectors should adopt light regulation model to drive micro pension and insurance to achieve financial inclusiveness.

There was also agreement that the two sector regulators, as a matter of policy should engage informal sector operators to understand their peculiarities and needs,

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in other to formulate policies that will encourage participation and enrolment.

They also noted that despite the challenging economic and business environment, building the much desired trust and confidence will drive the relationship with the target micro market segment, and make them see the value in the services they render.

On technology, participant agreed that operators and regulators of the two sectors should leverage on technology especially telcos to reach the masses with financial inclusion messages to improve the level of financial literacy in Nigeria.

“Operators should give due consideration to attach-

ment of incentives to woo and retain contributors and policy holders.”

According to participants, the potentials in the market are so huge that operators should take cognisance of all the segments of the informal sector and device peculiar ways to engage them and make them sign on to financial inclusion.

Also the observed that rather than assume that the micro market segment have adequate knowledge of their products and services, they should create improved and sustained education, awareness programme that will broaden the understanding of their services and improve on their level of financial literacy.

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frican Reinsurance Corporation (Africa Re), a leading pan-African reinsurance company and the largest reinsurer in Africa in terms of net reinsurance written premiums has received the ‘2018 Outstanding Insurance Development Promoter Of The Year’ award of the National Association of Insurance and Pension Correspondents (NAIPCO).

NAIPCO, a body of Insurance and Pension Journalist in Nigeria after a critical analysis of Africa Re’s immense contribution to the growth of insurance industry in Nigeria nominated the reinsurer for the award.

The award was received on behalf of Africa Re by Ken Aghoghovbia, deputy managing director/COO of the company.

“This award is in further recognition of your strong commitment to the development of insurance in the African Continent and Nigeria specifically exemplified by your recent partnership with the IFC, a member of the World Bank Group to help insurers in Nigeria develop innovative agricultural insurance products for small holder farmers, the organizers said.

“Again next month between September 3rd and 5th you are partnering with the College of Insurance and Financial Management to train and build capacity for Nigerian insurers on product pricing and development, among other capacity building efforts you are do-

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ing in the Nigerian market.”

“These are efforts that we believe will unlock opportunities in the agricultural sector for growth of the insurance business in Nigeria, and other business lines in the market”, the organizers said.

Africa Re was set up by 36 African states in 1976, following a recommendation by the African Development Bank (AfDB), with the mission of developing the insurance and reinsurance industry in Africa through increased underwriting and retention capacities, and support to African economic development.

Ranked 38th in the 2018 Standard & Poor’s Global Reinsurance Groups and 41st of the Top 50 Global Reinsurance Groups by AM Best in 2018,.

With headquarters in Lagos (Nigeria), Africa Re operates through six (6) Regional Offices across Africa: Casablanca (Morocco), Abidjan (Côte d’Ivoire), Nairobi (Kenya), Lagos (Nigeria), Cairo (Egypt) and Ebene (Mauritius), one (1) Local Office in Addis Ababa (Ethiopia) and one (1) Underwriting Representative in Kampala (Uganda). It also has two (2) Subsidiary Companies (Africa Re South Africa Limited and Africa Retakaful) in Johannesburg (South Africa) and Cairo (Egypt) respectively.

In 2017, Africa Re wrote $746.8 million of premium income and realized a net profit of $87.9 million. Its shareholders’ funds reached $902 million while its total assets were US$1,628.5 million.

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Revolution to address knowledge gap begins in insurance industry Modestus Anaesoronye

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reating the necessary structure to build a conscious insurance society will go a long way in addressing some of the national wastes that has characeterised our country and this can be largely eliminated if insurance can be given its rightful place in national planning and policy implementation.

Paschal Emeka Egerue, a leading insurance practitioner and intellectual with multi disciplinary background in discussing this subject applauded the decision of the Federal Ministry of Education to introduce insurance studies at senior secondary school level. His words continue below: The Federal Ministry of Education has in identifying this critical knowledge gap in the vital area of Insurance taken a profound step to incorporate insurance into the syllabi of West African Examination Council (WAEC) and the National Examination Council (NECO) as O’ Level examination subject.

The Federal Ministry of Education in conjunction with The Nigerian Educational Research and Development Council (NERDC) released in 2009, a Senior Secondary School Education Curriculum in Insurance for SS1 - 3.

This curriculum unarguably has laid a very solid foundation for insurance Education in Nigeria.

The teaching of Insurance at Secondary school level is no doubt very central

Paschal Emeka Egerue

to bridging the knowledge and awareness gap in Insurance in Nigeria. It will give students at this level, a strong foundation on which to base future career and business decisions.

The need for insurance is so pervasive that its knowledge is very important to every person. The truth is that the nation will be far more financially stable and prosperous if every citizen is able to manage his or her risks very well and without a constraint to understanding when to transfer some of the risks to approved insurance companies through registered

intermediaries.

Insurance is an inalienable attribute of developing nations. Any country that therefore desires to develop must embrace insurance practice. The Federal Ministry of Education therefore deserves accolade for this groundswell adoption of Insurance as Examination subject in the SS 1 - 3 certificate examinations.

As with all things new, there is noticeable apathy on the part of the students to venture into the new subject of Insurance, so all hands must therefore be on deck to encourage students to accept the insurance subject.

One of the early noticed problems is that of lack of trained teachers. Most of the teachers available to teach insurance in the secondary school are those from the liberal social science and business education background. Very few are grounded in Insurance. It is difficult to get insurance graduates to abandon career in the corporate world to go and teach in the secondary school. Rapid training and retraining of the existing teachers is therefore an imperative. Effort must also be made to incorporate insurance as an area of study in the education faculties in the Nigerian Universities and Colleges of Education.

Another observed problem is lack of books to guide the tutors and students.

The Chartered Insurance Institute of Nigeria attempted to fill this gap when the institute organized some professionals to co - author an introductory textbook on Insurance. The gaps noticed in this pioneering effort of the institute prompted more research and

efforts by professionals to write more books.

It is within this context that the book basic insurance for schools and colleges was written. This book is the author’s own contribution towards effective introduction of Insurance studies at Secondary School level in Nigeria.

The book was also intended to be a useful guide to first year university, polytechnic and college of education students who may be required to take Insurance as elective. While it is appreciated that technical subjects like insurance do have peculiar vocabularies that are often difficult to understand by beginners, effort was made in this book to present the topics in the book in very simple and plain English laced with attractive pictorial illustrations.

The writing of this book benefited from the author’s many years of painstaking research and practical experience in the insurance industry.

The multidisciplinary background of the author, as a graduate of Sociology, Business Administration, Public relations, Law and as a Chartered Insurance Practitioner and broker is very evident in the quality of the content.

In his foreword to the book, Aloy Ejiogu, renowned educationist and professor of Management Education at the University of Lagos had this to say “The book offers itself as a friendly companion to the generality of Nigerians in these days of socio – economic volatility, uncertainty and unpredictability”.

It is therefore important that the nation embraces this book.

NSIA Insurance partners Multichoice to reward DSTV customers Modestus Anaesoronye

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SIA Insurance has partnered with Multichoice on the DSTV Thanks Program, to reward loyal DSTV subscribers with 10 percent discount on four identified products which includes; NSIA Comprehensive Motor Insurance, NSIA Motor Insurance- Third Party Fire & Theft, NSIA Householder Insurance and NSIA Personal Accident Cover.

To partake in this reward program and to qualify for NSIA Insurance discounted products, customers must be on any of the DSTV packages; Family, Access, Compact, Compact+ and Premium; stay connected and pay your subscription on time.

“We are excited to partner with DSTV on this initiative as we are always eager to reward our loyal customers for their patronage which aligns with the DSTV THANKS Program. We constantly explore partnerships to enhance the benefits that we offer our valued customers to cater for their needs,” says NSIA Insurance MD/CEO, Ebelechukwu Nwachukwu.

In speaking on the four NSIA Insurance

products featured for the DSTV THANKS Program, Titi Shodeinde, head of Retail, Products and Research explained in details the product offering.

“NSIA Comprehensive Motor Insurance Plan is a product that has taken into consideration the Motor Insurance needs of the average/high net-worth subscriber and gives great value to them, depending

Ebelechukwu Nwachukwu

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on the band they fall in. This covers cost of repairs paid in the event of accidental damage, fire and theft to the vehicle. It also has a cover of up to N1, 000,000.00 paid in the event of damage to Third Party Property and Unlimited liability in the event of Injury/ Death of Third Party. Excess Buy back and tracking device on vehicles are covered free of charge on this plan.”

“NSIA Motor Insurance- Third Party Fire & Theft Plan is a product that covers against fire and theft as well as damage to third party vehicle or property. Up to N1, 000,000.00 is paid in the event of damage to Third Party Property and unlimited liability in the event of Injury/Death of Third Party.”

“NSIA Householder Insurance Plan provides cover for your home (building) and its contents in the event of loss or damage as a result of fire, explosion, lightning, earthquake, the impact of aircraft, vehicles or animals, theft or attempted theft, damage caused by riot and malicious persons, storm, personal liability for bodily injury to third Parties, buildings and household contents.”

“NSIA Personal Accident Insurance Plan

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provides compensation in the event of injuries, death and disablement resulting from physical accidents. It also provides medical expenses for treatment of injuries. The cover provides a 24-hour worldwide protection.”

“We are also offering qualified and loyal DSTV subscribers additional benefits like unique NSIA Car fragrance, driving and safety tips, and birthday greetings, Titi added” NSIA Insurance Limited is a first class composite insurance company driven by Integrity, Care, Innovation and Professionalism, with its Head Office in Lagos, strong regional presence in Abuja and a large network in strategic states across the country. NSIA Insurance offers a wide range of insurance services at competitive rates to meet the changing financial, investment and lifestyle needs of its corporate, commercial and individual customers.

NSIA Insurance Limited (Nigeria) is part of NSIA Participations which is currently present in 12 African countries; Benin, Cameroon, Congo, Côte d’Ivoire, Gabon, Ghana, Guinea, Guinea Bissau, Mali, Nigeria, Senegal and Togo.

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Adetola Nola: Finding success in Nigeria’s real estate industry JOSEPHINE OKOJIE

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n the highly competitive real estate business in Nigeria, it is difficult to stand out from the crowd.

But this is certainly not the case for Adetola Rilwan Nola, founder of Veritasi Homes and Properties Limited.

Nola, 29, is a passionate entrepreneur on a mission to improve people’s wellbeing through the provision of affordable housing for low-income Nigerians.

He was inspired to establish Veritas Homes and Properties Limited in 2017 owing to his desire to help Nigerians own a home.

“I was inspired to start Veritasi Homes and Properties because I felt that we could give people, who never believe they could own properties in Nigeria, an opportunity to do so,” he says.

“We have given market women and other people on the lower rungs of the ladder flexible payment plans that aid them to own properties in choice areas in Lagos,” the young entrepreneur says.

Nola, a graduate of Chemical Engineering from Obafemi Awolowo University, had a shoe factory before setting up the real estate business—a testament to his entrepreneurial prowess at very young age.

With the support of a friend and family members, including the money

he made from sales, he was able raise $5,000 needed to kick-start his real estate business.

“Prior to starting the company, I had two cars and a shoe factory at Bajulaiye market. I sold the cars, all the machines, generators, and all the raw materials for shoes I had imported. I also borrowed

mone y from a fr iend of mine,” the engineerturned-entrepreneur says.

He had worked for a real estate firm for four years to broaden his sales skills and gain deeper understanding of the country’s real estate industry.

“After I had gained a lot of knowledge about real estate, I started Veritasi in April, 2017,” he reveals.

“My and I friend came to Lagos in 2013 to market the shoes we had produced then. While marketing, I met Hakeem Bakare of Grenadine Homes who was very impressed with my marketing skills and he offered me a job,” he says.

He tells Start-Up-Digest that he later accepted the job offer owing to his interest in the industry, which later translated into passion.

He started the business with a single employee, but Veritasi Homes and Properties now has 18 fulltime employees, 12,000 real estate consultants and 1,300 realtors.

With his excellent marketing skills and quality services, Nola was able to

scale the business within a short period of time.

“The quality services we provide earned us a lot of referrals from existing clients,” he says.

“We have sold over 1500 plots of land, and there’s no single litigation, court case or controversy.

Ninety-five percent of our clients are satisfied and we have a good structure, wonderful products, and our brand is great,” he explains.

He says the business plans to dominate the industry within the next 10 years through the provision of innovative housing packages for clients to enable them easily own their homes.

“In the next ten years, we will have dominated the industry. I believe that if we implement our deluxe strategies and packages, we would achieve this,” he says.

In evaluating the country’s real estate industry, the engineer-turned-entrepreneur says the industry is fast growing and there are still numerous opportunities to be harnessed.

In answering questions

on challenges confronting the business, Nola says finance and land ownership system remain the major hurdles.

“It is difficult to raise money due to the risks involved in real estate projects, especially in Africa.

People find it easier to invest in trade finance instead of project finance,” he says.

He urges the government to provide adequate financing model for small businesses. He calls for more public-private partnerships in the execution of housing projects across the country.

The young entrepreneur has won several awards since kick-starting his entrepreneurship journey. He has won the most enterprising student of the year award – as an undergraduate at OAU, and several property and investment awards.

On his advice to other entrepreneurs, he says, “Persistence, doggedness and boldness are important. As an entrepreneur, you need self-development to succeed in your entrepreneurship journey.”

Nigeria’s green economy can create $250bn investment opportunity for entrepreneurs - Experts …as Home Fort Energy emerges winner of Climate Launch Pad Finals JOSEPHINE OKOJIE

A

s Nigeria explores ways of tackling high unemployment rate, experts say that the country’s $250 billion potential in green economy could play a vital role in this regard.

They say that entrepreneurs can tap into the enormous opportunities in the green space to create millions of jobs.

A green economy is low carbon, resource efficient and socially inclusive, according to the United Nations Environmental Programme (UNEP). In a green economy, growth in employment and income are driven by public and private investment into such economic activities, infrastructure and assets that allow reduced carbon emissions and pollution, enhanced energy and resource efficiency, and prevention of the loss of biodiversity and ecosystem services, UNEP adds.

The experts, who spoke at a forum organised by the Nigeria Climate Innovation Center (NCIC) in Lagos recently, said that with the direct consequences of climate

Weeber Boer, CEIO, All On; Bankole Oloruntoba, CEO, Nigeria Climate Innovate Center (NCIC); Chidinma Lawanson, MD, Springtyde and Renee Limited, Bob Patterson, charge d’ affaires of the Embassy of Ireland; Thessa Bagu, representative of Enterprise Ireland and Jubril Adeojo, CEO, SME Funds Capital during the NCIC 2019 Climate Launch Pad National Finals held in Lagos recently.

change on the ecosystem, it is imperative that entrepreneurs leverage the opportunities in the green space to create solutions and wealth.

“Nigeria has power gaps of about $200billion, agricultural waste of 40 percent and 200 million people creating waste that is not recycled,” said Weeber Boer, CEO, All On. “This shows that there is a huge investment opportunity in the country’s green economy that entrepreneurs www.businessday.ng

can tap into by creating solutions that are viable and sustainable to these challenges,” Weeber said.

He stated that with more solutions being provided to address issues of climate change, the country will be able to create new jobs and scale the opportunities in the green economy.

He noted that it will be hard for the country to build a green economy if the government continues to subsidise petrol.

Also speaking, Bankole Oloruntoba, CEO of NCIC, said that the global green economy is a multitrillion dollar economy which the country’s entrepreneurs can harness through innovative solutions to climate change challenges.

“If Nigeria is able to develop conducive environment for the growth of the green economy, the country could have a massive share from the over $14 trillion global green economy,” Oloruntoba

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said.

“In Nigeria the challenges are enormous and if we can create some form of opportunities to support businesses in that space in terms of capacity, it will create a rival opportunity for the country to build an economy that does not depend on crude oil,” he said.

“The green economy gives the country the opportunity to create more jobs and there are lots of opportunities in the green space with covers from media, to transportation, to waste management and even to educate among others,” he further said.

He noted that the NCIC is already providing support to start-ups that are creating solutions to issues of climate change in the form of technical training to help them scale.

He stated that his organisation is planning to create a fund for businesses in the green space with the help of the Central Bank of Nigeria.

Bob Patterson, Charge d’ Affaires of Ireland, while reeling out some of his country’s programmes for growing its green economy, said that Ireland will continue to @Businessdayng

support Nigeria in growing its own green space.

“Agricultural practices are significant and major contributors of climate change and we must find ways to address this,” Patterson said.

“We are committed to supporting diversification within agriculture and land use to develop sustainable and circular value chains and business models for lower carbon intensifying farming,” he noted.

Also at the event, there was a pitch competition for entrepreneurs in the green space.

Home Fort Energy emerged at the winner of the 2019 Climate Launch Pad Nation Finals pitch competition.

Home Fort Energy beat other 15 entrepreneurs to win the award with its clean gas business model that is helping low income household switch from dirty fuels to cook gas for as low as N500.

Home Fort Energy, Agrimax – first runner up, and Green Axis - second runner up— will represent Nigeria later this year at the Global Launch Pad Finals pitch competition in Amsterdam, Netherlands.

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Monday 02 September 2019

BUSINESS DAY

START-UP DIGEST Meet Awalade-Ologbenla, inventive fashion designer GBEMI FAMINU

A

degoke AwaladeOlogbenla, young and innovative fashion designer, is a graduate of Sociology from Crawford University. He is also the chief executive officer of St. Calypso Couture International, which deals in premium fashion, ready-to-wear collections, footwear production and general fashion merchandise.

He started his business in 2008 during his 3rd year in the university and was inspired to go into the fashion world because of his love for designs.

“Growing up with an industrious parent birthed my passion for fashion in 2008,” he says. “I grew up being conscious of my appearance and looks. This led me to start sketching my own designs, creating new looks and making money with my creativity,” he says.

Unlike most entrepreneurs, Awalade-Ologbenla started his business with zero capital, which goes to show that there are many businesses in the country that can be started with little or no money.

Awalade-Ologbenla’s secret was that he so advertised him-

self that he got a major contract worth almost N300, 000. This gave him a big break and opened doors for larger contracts and more opportunities.

He says that although running a business can be difficult, he has been able to record ample growth and even operates on a larger scale while fostering

partnership deals with other enterprises. Because he runs his business on a large scale, he gets raw materials in large quantities from major markets in Lagos and sometimes outside the country such as from Turkey and China.

Ologbenla further says his company creates affordable outfits to suit clients’ tastes while

being prompt both in delivery and time. These have allowed continuous patronage and generous referrals, he admits.

The young entrepreneur reveals that since its establishment, the company has attained high-profit margins and an extended customer database. It has over 10 permanent workers

and 15 ad hoc staff members. He plans to expand his business by having the biggest bespoke and ready-to-wear garment factory in Nigeria. He has an eye on 30 percent of the Nigerian population, he tells Start-Up Digest.

Despite the love for fashion, the entrepreneur says he faces challenges relating to epileptic power supply, inadequate funding for business expansion, unfavourable exchange rate and the high tariffs.

He urges the government to address issues around high duty and tariff charges and unfavorableforex. He points out that providing business grants and encouraging skills acquisitions will go a long way in supporting the growth of businesses.

The entrepreneur attends trainings and workshops both digitally and physically as he believes there is a room for improvement. He believes that such trainings and certifications improve his business as he tries to deliver global values while running a local brand.

Advising other entrepreneurs, he says, “There is no shortcut to success. You have to learn by the ropes, be accountable, smart, different and know when to quit and, above all, nothing is impossible.”

We hope to mentor entrepreneurs, build techniques for small businesses – Otabor The International Small Business Congress (ISBC) will, in partnership with the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), host the first ISBC conference in Abuja, Nigeria next week.

ITIA OTABOR, director of ISBC, who spoke with AMAKA ANAGOR-EWUZIE on the upcoming event, explains how the gathering hopes to address issues of mentorship and training limiting the growth of small businesses.

Tell us what ISBC is about?

SBC is the gathering of entrepreneurs, small business developers, associated professionals who come together to deliberate on issues that concern small business development across the world.

This conference started in 1974 as Pan-Pacific Small Business Conference that was held in Honolulu City of Hawaii with over 125 represented from 126 countries.

At 10th conference held in Singapore in 1983, the name was changed to the International Small Business Congress, and over the last 44 years, it has been held 28 times across 25 countries. The first time Africa hosted it was in 2012 in Johannesburg, South Africa.

So, this is the second time it is coming to Africa, and first time in Nigeria.

It will hold in the Nigerian Airforce Conference Center in Abuja from 9th12th of September, 2019. We are hoping to get the Vice President Yemi Osinbajo to declare the conference open. Arrays of speakers from Nigeria and outside Nigeria are billed to speak including the President

I

Itia Otabor

of African Association of Small and Medium Enterprises (AASME).The 3-day conference comes with exhibitions.

At the end of the conference, what do you hope to achieve?

Primarily, the conference www.businessday.ng

hopes to draw attention to issues of small business development, including how Nigeria can accelerate small business development and improve every area of small business development.

Specifically, for this conference, one of the key takeaways we are hoping to get

is that Nigeria will officially become part of the ISBC African region and we are hoping to start an Institute of Small Business Development that will focus on training professionals on the issues that have to do with small business development.

mentors, it will help them grow their business. We are hoping that this conference will go a long way to building capacity of entrepreneurs in these areas.

So, these are the major issues we are hoping that this year’s conference will be able to deliver.

As an expert, what are the challenges in the industry?

One of the major challenges that we have come to see when it comes to small business development is lack of preparedness on the part of people that venture into small business. They lack some basic techniques required to run small business.

There is a session at the conference titled, ‘Building Your Business from Scratch to Sustainable Success, Contemporary Wisdom’, and we have about four speakers in that session.

The speakers will use their success stories to encourage delegates and participants that they can start from small.

The second major issue is mentorship. We discovered that if small business owners are connected to

What will you be expecting from the government?

The conference is being held in partnership with SMEDAN, the umbrella body that warehouses all issues entrepreneurs and small businesses face in Nigeria. They are going to be there to listen to the ideas and contemporary wisdom that are driving small business growth globally. We are hoping that some of the issues that are within their means should immediately be implemented.

For instance, the general issues around infrastructure, ease of doing business in Nigeria are not within one agency’s control. The truth be told, the government has to really put a lot of things in place to drive entrepreneurship. Infrastructure will be a key thing.

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@Businessdayng

How can SMEs leverage the African Continental Free Trade Agreement (AfCFTA)?

Well, the full ramification of that agreement is still unfolding. One of the main things the agreement promises would be access to market. But the truth is that if you have access to market, it also means that other people have access to your own market. What this creates for us in Nigeria is that we have to be able to be competitive and for that to happen, it boils down to infrastructure, access to power and so on.

We know that AfCFTA will bring millions of business into the market space.

Therefore, for Nigeria to maximise that opportunity, the country has to be competitive and nobody is going to wait for you or defend your right in the market space. Countries like Rwanda, Kenya, and Ghana do not have issues with electricity supply. Most of the countries in Africa have conquered that major issue of electricity supply but Nigeria has not.

Monday 02 September 2019

BUSINESS DAY

35

INSIGHT The Auto Policy – of politics and vested interests Bambo Adebowale

T

hree years as chairman of the Auto group at the Lagos Chamber of Commerce and five years of raising issues on the Nigeria Auto policy, I have seen the Nigerian auto industry from a different perspective. For instance, I have come to the realization that many of us in industry have the assumption that the National Automotive Design and Development Council (NADDC) is responsible for the development of the Nigeria auto industry from an economic perspective. The NADDC mandate is “...to initiate, recommend. programmes for locally manufactured vehicles and components” - the promotion of the made-in-Nigeria vehicle (interpretation is mine). It just happens that its main interests, as ours in the industry, are contained in a single document, the auto policy.

It probably explains why those of us in industry accuse the NADDC of the imposition of industry stifling duties, leaving auto dealers (and the influx of large numbers of defective used vehicles) unregulated and giving insufficient attention to the development of a robust financial structure , when it wasn’t their core mandate or competence. The NADDC’s mandate is more of the development of the industry from a technological perspective and the economic implications are an aside. Technological development, ICT and innovation are its core competencies (I had to revisit its website and Facebook page). The penny then dropped. The NADDC board is comprised of “manufacturers” and “assemblers” – a part of a much longer value chain. I wholeheartedly apologize to my friend and Director General of the NADDC Eng. Jelani Aliyu.

Which therefore raises the question - who has been (or should be) developing the Nigerian Auto Industry from an economic perspective?

The auto policy’s main objective is the development of the auto industry in alignment with the Nigeria Industrial Development Plan - encourage local assembly of vehicles, increase employment, promote skills transfer etc. There are however just too many stakeholders and interests, creating a confused web of self-serving decisions and actions. It’s understandable, because the Nigeria auto industry is huge. My estimate is that we have a $30bn industry. Think of it. 193m people dependent on road transport; 11m registered vehicles, a million-unit new car market; 500,000 technicians; 450,000 vehicle assembly capacity; 400,000 spare part dealers; 350,000 new and used vehicles in inventory; 250,000 used vehicle imports/yr.; 100,000+ unregulated car dealers. - and at least 10% of this is revenue to the government in form of taxes, levies and licensing fees, if the government can see the big picture.

Various and varied interests The presidency is trying its best in the face of unrealistic expectations from sentimental decisions, but this government has been a mixed bag in its involvement in the auto industry.

a) President Buhari rejected the auto bill nearly five years after the policy was introduced by President Goodluck’s regime. Not a good impression for a nation wanting to attract foreign investors, but I believe it was the right decision given the circumstances. a) the Presidential Enabling Business Environment Council (PEBEC) - Vice President Osinbajo’s brainchild, is still trying to reduce the number of agencies at the ports and save importers from a multiplicity of charges - documentation charges, administrative charges, MOWCA Levy, Indirect Import Delivery Charges, NIMASA Sea Protection Levy, Terminal Handling Charges. According to PEBEC, the Ministry of Finance and the Nigeria Customs Service were on the “least transparent” list of 46 Federal Government’s Ministries, Departments and Agencies assessed in 2018. Ironically, both the Ministry of Finance and the Customs Department called for a review of the auto policy on the back of alleged falling revenues caused by smuggling. b) Secretary to the Government of the Federation, Mr Boss Mustapha, a year ago publicly commended used car dealers and their trade association - Association of Motor Dealers of Nigeria (AMDON) for contributing immensely to the country’s GDP and thanking the trade body for reducing the rate of unemployment whilst encouraging economic diversification. Unusual support from the Presidency, but unsurprising since Nigeria allows vehicles 15yrs old to be imported and encourages its continued operation on a large scale - the assembled vehicles are unaffordable and we do not have the public transport infrastructure that could have eased the need for vehicles. In a bold move, the AMDON president, Prince Ajibola sought additional waivers on customs duties on imported used vehicles by members.

The Ministries and Parastatals – a maze of authorities and responsibilities.

The development of our economy in general and Nigerian automobile industry in particular (at least on paper) is the responsibility of MITI. Monetary and fiscal policies on the other hand are administered by MoF through the CBN, Customs Service and the FIRS, key parastatals for the auto industry. ….and it gets more complex: a) Industrial development policies (mainly Pioneer Status and tax relief for investors) is managed by the Nigeria Investment Promotion Board. b) Auto related imports are financed by forex and letters of credit from banks under authority of the CBN. c) funds for further auto development will likely come from the Nigeria Automotive Council Fund domiciled at the Bank of Industry (under MITI). d) Once CKD and/or SKD parts are imported and customs cleared, they will be assembled by any one of the 58 licensees issued by NADDC www.businessday.ng

and quality controlled by the Standards Organization of Nigeria (SON), NADDC’s sister agency. e) At the end of each year, the vehicle assembly licenses granted by NADDC, are renewed by the MoF. f) Technical manpower training and development of the mechanics sits with the Business and Technical Education Examination Board accredited by the National Board for Technical Education (both under the Ministry of Education). In fact, NADDC has drawn up a new training syllabus to be run for the mechanics

by Universities.

Nb - The auto policy bill actually includes instructions for the registration of auto technicians with the NADDC who is developing a new syllabus for mechanics and technicians – to be run by Universities, though current certification of the mostly apprenticeship scheme trained technicians is carried out by the National Business and Technical Examinations Board (NABTEB) under accreditation by the National Board for Technical Education (NBTE). All these agencies are under the Ministry of Education.

No surprises that we are pulling in

“

The presidency is trying its best in the face of unrealistic expectations from sentimental decisions, but this government has been a mixed bag in its involvement in the auto industry

different directions. g) the ports, vehicle registration and vehicle safety responsibilities are that of the Ministry of Transport.

The Private sector and interest groups An investor wanting to set up business in Nigeria will usually have the Nigeria Investment Promotions Council One-stop shop as its first point of call. He would have likely been in touch with his country’s Chamber of Commerce – who would introduce him to a Chamber member of the Nigerian Association of Chambers of Commerce Industry Mines Agriculture (NACCIMA) - like the Lagos Chamber of Commerce and Industry (LCCI). a) An auto assembler will likely join the Manufacturers Association of Nigeria (MAN) and/or Nigeria Automotive Manufacturers Association (NAMA). If he is comfortable with just vehicle trading rather than vehicle assembly, he will likely join an organization like the Lagos Chamber (for used vehicles, he will likely join the Association of Motor Dealers of Nigeria (AMDON). b) His Letters of credit will be

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opened by a bank, likely supported by a “facility” provided by a member of the Bankers Committee. His relationship officer will be a member of the Nigeria Institute of Bankers (NIB)). c) Once he starts to import, he moves into clearing agent territory – members of the Association of Nigeria Customs Licensed Agents and/ or National Council of Managing Directors of Licensed Customs Agents. d) The vehicle will be sold and the new owner will insure the vehicle with a member of the Nigeria Insurers Association (eventually, we will see insurance as a good way to regulate the use of defective vehicles, but currently unexplored). e) Spare parts for repairs and service are sold by members of Trade Associations like Auto Spare Parts and Machinery Dealers Association (ASPAMDA) in Badagry if new, or Ladipo Auto Spare Part Dealers market if used. f) Eventually, spare parts will be manufactured in Nigeria by members of MAN and/or any one or combination of the following bodies under the auspices of Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) a parastatal of MITI.: i) Automotive Local Content Manufacturers Association of Nigeria (ALCMAN), ii) Nigerian Association of Small and Medium Enterprises (NASME) or iii) Nigeria Association of Small Scale Industrialists (NASSI) g) Whenever the vehicles hit the roads, repairs will be carried out by one of the rival mechanic groups – the Motor Mechanics and Technicians Association of Nigerian (MOMTAN) or the Nigeria Automobile Technicians Association (NATA).

Four ministries, 10 Parastatals, 12 Trade Bodies and a partridge in a pear tree and you have a multitude of vested interests - all of them leveraging on their various and varied connections at different levels for differing reasons and with different results.

Implications for auto entrepreneurs for those already in the auto marketplace, the auto policy and other auto regulations are still in operation - the 70% duty/levy on new FBUs, the Regulation allowing vehicles of 15yrs to be imported, the absence of any realistic financing structure or provider and timelines that have not taken the end of the combustion engine into consideration.

Investors, foreign and local will feel like they are being punished, caught in the cross-fire of vested interests. As at the end of July 2019, applications submitted since October 2018 for the renewal of vehicle assembly licenses and receipt of duty discounts on importation of new Fully built vehicles (FBUs), had not been renewed. The NIPC, monitor of trade promotion most likely raised concerns on the fiscal incentives in the draft auto bill and did a push back. It is likely that the Ministry of Finance, seeing an opportunity to trigger a policy review, (already requested by NPA and Customs), seized it, and went heavy @Businessdayng

handed on assembly plant license renewals, overlooking its likely effect – imports without the promised duty waivers, reduced imports and plant stoppages (and father reducing revenue to the government).

Ironically, it was the MoF under Hon Minister Ngozi Okonjo-Iweala that started the auto policy initiatives that are now being challenged.

Whilst we were sleeping - Ghana announced its auto policy in December 2018 and had passed its auto bill into law by August 2019 (35% duty, 4-year maximum for used cars, a finance structure and a coordination team in place) all in 9 months. We need to sit together round a table and hammer this policy out. It is too vague, the duty rates are too high, fundamentals like finance are incontrovertible, old vehicles need tighter regulation, that we can’t continue to allow just about anybody to sell vehicles - it is economic suicide.

Silver lining? We finally have a Minister, yay!

The president took his time, but got there eventually. This would be a good time to have access to the kitchen of the new Minister. I’d stick a “post-it” note on his fridge that reads as follows…

Hon Minister Sir, You need to help the auto industry get support - from the Central Bank on forex, from the Bank of Industry on vehicle financing, from Customs and the Ports Authority on easing the import process, from the Board of Tech Education on robust and flexible ways to prepare mechanics post-combustion era. You will need to get many people round the table.

You also need to make bold and challenge current assumptions – assumptions that high duty gives protection in a country with porous borders, assumptions that allowing 15yr old vehicles to be imported is a good idea, assumptions that a lack of vehicle financing options is no big deal, assumptions that our inefficiencies will not jump up and bite us in the arse.

Welcome!

I really hope we can get a robust and workable auto bill in place. The effort to get all the interest groups on the same page will be a challenge, but is needed. I cannot come and go and kill myself…

Bambo Adebowale is Chairman, Auto Group, Lagos Chamber of Commerce and Industry

36

Monday 02 September 2019

BUSINESS DAY Harvard Business Review

MONDAYMORNING

In association with

Every computer science degree should require a course in cybersecurity JACK CABLE

C

ompanies frequently sacrifice security for other business developments, since investing in it often yields no immediate financial benefits. But companies — and governments — cannot improve without a pipeline of talented individuals who understand how security works.

As a security researcher who has discovered hundreds of flaws in the systems of companies and governments, I can say that the severest issues are often the simplest — an indicator that companies need to

go back and review the basics. Looking through data breaches reveals a remarkable trend: In almost all cases, they stem not from sophisticated hackers’ exploiting novel vulnerabilities, but from

simple errors that any well-trained eye could spot.

Developers are woefully unprepared and many lack even the most basic security knowledge. As a consequence,

most view security as an afterthought, an extra step that stunts otherwise speedy development. But as data breaches become the norm, this paradigm must change.

Systematically ad-

dressing the problem of security begins with educating software developers at scale. As an undergraduate at Stanford, I have the opportunity to see how the next generation of computer scientists and software developers are incubated. While the curriculum does well at covering computer science fundamentals and hot trends such as machine learning, security is markedly absent from the list of degree requirements.

Universities should overhaul their degree requirements to make a security course standard for all students studying computer science. Such a course should teach fundamentals of building se-

cure software, including common security pitfalls, secure coding practices and application security.

Until a developer’s ability to code securely is valued as much as the ability to write a sorting algorithm, we will continue to face large-scale problems. Give software engineers the basic knowledge needed to build secure code, and the results will pay for themselves.

(In 2018, Jack Cable became the youngest person to receive security clearance from the Department of Defense, through his work on government cybersecurity programs.)

Why “tell them something they don’t know” is bad advice in B2B sales FRANK V. CESPEDES AND TRACY DECICCO

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ver the years, we’ve observed many salespeople who successfully make developing and delivering meaningful insights a core part of their approach. Their experience and our research indicate that, at a minimum, you need to do more than “tell people something they don’t know.” Instead, we suggest crafting a strategy based on whom you’re talking to and where you are in the sales cycle.

In general, as one salesperson told us, “the higher you go up the chain, the more industry insights matter.” If you’re talking to a C-suite or line-of-business executive, insights are crucial; if you’re meeting with a midlevel informa-

tion technology director, you’ll probably want to spend more time on product functionality and ask more questions.

When developing your

strategy, keep in mind that lower-level managers are gatekeepers; their job is to vet vendors and their products. Senior-level managers, on the other hand,

focus on business issues, which makes them more receptive to insights.

In an early meeting with a senior buyer or influencer, it’s typically important to

demonstrate that you can articulate how your product relates to key trends, opportunities, challenges or evolving best practices in that market. You can do this by indicating who you know (people and companies using your product to drive business value and financial benefits) or what you know (your firm’s viewpoint about industry trends and the sowhat implications), or both.

Industry examples can be useful, too. Since adopting products and services usually requires customers to make changes to a wider usage system, they’re routinely hesitant to buy. Here, examples can provide what researchers call “social proof”: the fact that people are more likely to act when they know that others have.

At later stages, senior leaders have different needs. Senior buyers often

(C) (2017) Harvard Business Review. Distributed by New York Times Syndicate

Make this summer your best one ever With any of our FirstBank cards, you can enjoy a flexible summer in over 200 countries worldwide Visit any FirstBank branch for the issuance of your Summer Cards

need to justify a significant purchase to others in their organization, and they typically do so by addressing a market challenge or opportunity. Moreover, in many service, software and professional-services categories, return on investment is inherently “experiential value” — that is, the buyer doesn’t really know the nature or magnitude of the value until he experiences it in post-sale usage.

Providing insights is indeed a difference maker in many buyer-seller interactions. But, as always in sales, influence is bestowed by the buyer as well as earned by the seller.

(Frank Cespedes is a senior lecturer at Harvard Business School. Tracy DeCicco is a director at HCL and founding principal of Konposit.)

Monday 02 September 2019

Harvard Business Review

BUSINESS DAY

MONDAYMORNING

37

In association with

CEOs say their aim is inclusive prosperity. Do they mean it?

KATE ISAACS AND DEBORAH ANCONA

T

he Business Roundtable’s statement on corporate purpose is noteworthy both for its endorsement of inclusive prosperity as an ideal and for its rejection of maximizing shareholder returns as the sole corporate objective.

However, the real significance of the statement will depend on whether — and how — it is translated into practice. As of now, there are at least four reasons to view the statement as more of a symbolic gesture than a harbinger of change in how corporate America functions.

For one thing, the statement itself suggests that it is meant as an updated description of how CEOs see their job rather than a call to action. If that is the dominant interpretation among those who signed, its practical impact will certainly be limited.

For another, there is no mention of changes in corporate governance or management

practice to implement the new stance.

Another reason to withhold judgment about the statement’s significance is the difficult issue of how the interests of various stakeholders are to be weighed

and reconciled. Surely, it can’t be the case that managers should (or can) satisfy the interests of all stakeholders all of the time. But how are those interests to be prioritized and mediated?

Ethical standards defining human rights and wrongs and prohibited harms can be helpful. Understanding how the CEO signers prioritize these interests and resolve conflicts among them is crucial for as-

sessing the statement’s significance and likely impact. If conflicts are to be resolved through the lens of shareholder returns, any change will be modest at best.

The small number of signatories from the investor community is yet another reason to take a “wait and see” attitude.

So long as directors who deviate from short-term value maximization are vulnerable to removal by impatient shareholders, they will be understandably reluctant to take the kinds of actions implied by the BRT statement and needed to achieve the inclusive prosperity it espouses.

If the BRT (or any other group) is serious about inclusive prosperity, sustainable capitalism or any other significant change in how America does business, these are a few of the many issues that will have to be tackled.

(Lynn S. Paine is a professor of business administration at Harvard Business School.)

3 ways to help people understand what your data means in a stadium. For example, the San Francisco Giants baseball field has 41,915 seats. So, if communicating this number to a Bay Area audience, you might say: “Our users would fill the San Francisco Giants stadium almost 24 times.”

Data signals a problem or an opportunity. The insights are meant to move us to decisionmaking. For any audience to feel inspired to act, they need to understand the gravity of what is at stake if they don’t. We can help audiences move from making sense to making meaning by imparting a sense of scale.

NANCY DUARTE

I

f you’re serving your organization in any kind of analytics-enabled role, you likely spend most of your days digging through data. When you uncover a statistic that feels shocking, you know you must communicate that insight to decision-makers immediately.

But often, the narrative gets lost in numbers they can’t really comprehend. Though an audience may intellectually understand the measurement, they might fail to relate or connect with it emotionally.

Your audience can sense scale through relatable size, known distance, a familiar segment of time or rate of speed. Here are some strategies you can use to make the magnitude of your statistics both manageable and meaningful for your audience.

— CONNECT DATA TO RELATABLE SIZE: Connect data to a relatable size by comparing length, width, height, thickness or distance. But remember that for size or dis-

(Nancy Duarte is a bestselling author with 30 years of CEO-ing under her belt.)

tance to be truly effective in making data meaningful, it has to be grounded in what’s relatable or known by your audience.

— CONNECT DATA TO RELATABLE TIME: We measure time in seconds, hours, minutes, days, months and

decades, but we can create more relatable time frames by communicating work hours, flight time between cities, an episode of a sitcom or the time it takes to microwave a bag of popcorn. Time is money — and that makes it an effective way to develop scale when it

comes to making meaning out of a billion-dollar sum.

— CONNECT DATA TO RELATABLE THINGS: Let’s say you have 1 million users. It’s easier for an audience to get a sense of that quantity if you compare it to the number of people who could be seated

Brought to you courtesy of First Bank Nigeria

38

Monday 02 September 2019

BUSINESS DAY

CEOINTERVIEW Interview with Private Sector Leaders

‘Indigenous upstream operators need to

After rising to the role of an Attending Physician/ Professor and Diplomate of the American Board of Oral and Maxillofacial Surgeons, BOLAJI OGUNDARE, CEO of NewCross Petroleum Limited, crossed over to the energy sector. He is a staunch believer in the ability of indigenous professionals to control the narrative of the Nigerian oil and gas industry. In this interview with OSA VICTOR OBAYAGBONA, assistant news editor, and DIPO OLADEHINDE, energy correspondent, he explains the challenges facing indigenous oil producers, how to increase investments in Nigeria’s oil and gas sector, expectations from the next petroleum ministers and NewCross’ next strategic plans. Excerpts:

W

hat is your assessment of the global oil and gas industry in the last 5 years?

Is Nigeria making progress?

Nigeria’s situation is very unique. When you produce a commodity that is a global product, you are competing against other countries producing the same product.

You have to operate efficiently, keeping other countries as a yardstick in many areas including reducing your cost of operations. Nigeria, has a country has significantly benefited over the years from the OPEC strategy and the indirect, and mostly beneficial actions of the President of the United States of America, who have both helped us keep oil prices artificially high.

If global aspirations allowed every oil producing country develop at its own pace and produce at maximum capacity, we will most likely see oil prices fall below the point of 2014- 2016. What that means, as a country is that we need to reflect on what we need to do to become an efficient oil producing nation in other words, an efficient producer. The cost of Nigeria producing oil per barrel remains amongst the highest in the world. On average you won’t find any company producing oil today at less than $20 to $30 in Nigeria, which means that by the time royalty is paid to the government, the payable petroleum profit tax is negligible.

Ultimately, government has to help the oil producing companies become more cost- efficient at production by providing an ideal operating environment. If you ask most oil producing companies, they will tell you that the highest cost associated with their operation is security cost. Sadly, when we reduce our cost allocation to this budgetary area, it had an adverse effect on oil production. In order for us to compete, we need to create an enabling environment to ensure our operation is safe, as security is the major factor pushing production cost higher.

This is sadly a regular unchecked event, which has probably affected every oil producing company in the region. The unfortunate part to this is that, with the oil theft or bunkering comes spillage. This ultimately leads to environmental degradation and ultimately, significant environmental cleanup cost. The indirect cost of this on oil production cost is very significant with no tax breaks for the operating companies who literally are victims of a double jeopardy.

In all this, we need to reflect inward and ask ourselves: do we want to produce oil for ourselves i.e. process the crude internally or do we want to focus on the export market? To solve our problems, Nigeria needs to bear in mind

that we are competing in a global economy, so we need to fix our refineries to solve our domestic challenges and build our economy inwards rather than outward.

What is your outlook for oil price?

The current United States and China economic sanctions might lead us faster into a global recession. When recession happens, it means the entire economy slows down, which means demand for goods and services will reduce.

We have a product whose price is governed by multiple factors such as embargo that are in place, either by the United States or China or self-impose production cuts from Organization www.businessday.ng

of Petroleum Exporting Countries (OPEC). If we imagined Venezuela (with the largest world reserves) or Iran being able to produce into the global markets, we would be in dire straits.

Global economics with the economic contraction and inverted yield curves shows that we are heading towards a recession. Currently, neither the government nor most companies are preparing for this. In an ideal scenario, we should be building an economic war chest, reducing interest rates to encourage borrowing and spending and providing tax breaks or waivers to companies who are genuinely driving growth in the economy. Ultimately, a critical decision has to be made by the government, as

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to whether its role is to stimulate the economy or strangulate the economy.

In order to stimulate the economy government needs to diversify the economy.

What are those other things you think government can do?

Nigeria is naturally blessed with what other countries don’t have. Being a big believer in agriculture as a platform for food sustenance.

I think the right incentive needs to be there to encourage people go towards agriculture.

Making loans available on paper for farmers is a start but it has to be deployed via the right financial inclusion pathway to the farmers, small and medium size agricultural traders and

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Monday 02 September 2019

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BOLAJI OGUNDARE CEO, NewCross Petroleum Limited

also focus on finding new reserves’ distributors. These are some of the people that would drive growth in our economy.

Nigeria also needs to invest in Information Technology infrastructure. I believe this hasn’t taken off as anticipated because we are trying to adapt products that work in different countries to Nigeria rather than develop products that the Nigerian growing population require.

The amazon model for the United States wont necessarily work in Nigeria and if it does it isn’t scalable yet. FinTech is a big future for Nigeria and I think it is something we need to encourage our youths about. Lastly, tourism is undervalued in this country. Just like the Caribbean countries, we need to encourage Nigerians by creating a secure environment that will allow foreigners to patronise Nigeria’s beautiful God-given nature. It’s amazing to see Nigerian financial institutions provide loans for its citizens to visit another country on holidays but wont provide a loan for the same person to start a business.

For almost three decades, the Petroleum Industry Bill (PIB), which later became known as Petroleum Industry Governance Bill (PIGB), has been in the works. What reforms are still critical to the oil and gas industry at this point? Are we moving in the right direction in terms of legislation?

In the beginning, when the PIB draft came out it was bigger than the Bible, literally. I once said it can never be passed because when you want to make big changes you do them in little steps, which is why I like the steps taken by former Minister of State, Ibe Kachukwu, by attempting to breaking the PIB into many bills.

I believe there may be parties who do not want the current document to be passed as it is. I have always believed in passing the PIGB, whether everybody likes it or not, because it will bring clarity to investors on how to invest and implications of investment in Nigeria.

Passing the bill does not mean investors will start trooping into Nigeria, but it means investors will have clarity. There will be clarity on investment mechanisms fiscal regimes, taxation and repatriation of profits to their countries where applicable. Regardless of the terms in it, I believe the bill should be passed because investors are beginning to look elsewhere.

For example, you can see that one of the biggest IOCs in Nigeria has gone to Guyana to build one of the biggest LNG projects in that region. Mozambique is another environment developing a significantly sized LNG project while Ghana is making new discoveries. All while we have been debating and repackaging a bill. Most of us investing in Nigeria today are doing it mostly based on nationalism and faith rather than economics alone.

Over the past few years, indigenous oil firms like NewCross started developing capacity to match the IOCs, especially in exploration and production. What gaps still exist?

The participation of indigenous players in Nigeria oil and gas industry has continued to increase. I am not looking at the oil and gas producers alone but also services companies.

One of the things the Niger Delta Development Commission (NDDC) has done is empowering a lot of Nigerian companies to provide services for the oil and gas producers.

Prior to 2003 bid round, I believe indigenous production was around 3 to 4 percent of Nigeria’s total production. By the first round of divestment by the SPDC JV in 2009/2010, indigenous contribution to production rose to about 10 percent and by the 2014 divestment by the same JV, it rose to between 18-20 percent.

This mean that indigenous producers are

contributing more to the economy, although my bigger worry is on indigenous companies’ reserve replacement. Ultimately, this is the indicator of long-term growth.

If you can remember, most of the indigenous companies including NewCross are producing now because we bought the assets and started producing on them. But the bigger part to the sustainability and life of an oil company is finding new oil or new reserves, which is what determines your strength.

For example, if you look at the books of the IOCs, it is more important for them to have reserves or new oil because that is what majority of their share value is based on. Most local producers are still unable to actively commit to finding new reserves , which is understandable, because majority of us accessed significant loans and debt to secure those assets. Local producers also need to be working on evacuation, which means moving oil via secure pipelines.

At NewCross one of the things we did in 2009 was take advantage of an opportunity to pursue exploration assets in Nigeria. We decided we want to start finding new oil from Greenfield, which indigenous producers are never keen on. We acquired two assets in similar states at significant costs, and high risk. Sometimes, just sometimes, luck favors the brave. We hope to commercialize one of these assets in the next 6-9 months. For a small company of our size, this is a significant feat.

I always tell people that I am more proud of the assets we build from the exploration phase than the producing assets we acquired. We value each asset in our portfolio but we have stronger attachments to the full cycle assets How is the regulatory environment impacting indigenous oil companies?

In understanding the industry, we need to know that NNPC is technically your partner, which is their role. However, they also have to benchmark you by making sure you are an efficient operating partner. Department of Petroleum Resources, DPR is the sole regulator for the oil and gas industry in Nigeria. DPR is doing its best because, honestly, it is a tough sector to regulate because their job is very expansive, ranging from upstream, midstream and downstream activities. A role they have assumed successfully is also as a mediator in sensitive operations situations.

So far, I feel the regulator is doing a decent job. Where we worry is the leadership structure of Nigeria’s regulatory agencies, where some appointees don’t understand the challenges the industry is facing. It has to be contextual in application and interpretation of the laws.

Is the Nigerian oil and gas industry as attractive as it used to be in the 1990s?

Nigeria is always attractive to international players. However, people are beginning to look at other oil-producing countries.

The bigger challenge some of us worry about is the issues surrounding ancillary regulatory authorities. In Nigeria, you are subject to many organisations’ or committees’ meetings that have a right to your books or summon you, which are disruptive to your business. DPR should regulate and Federal Inland Revenue Service, FIRS should collect taxes on behalf of the government. It’s not unusual to receive invitation letters from different arms of the government relating to the same issue. These are things that scare investors because there is no clarity of purpose, unlike other countries that are creating a more enabling environment. Fortunately, Nigeria is a proven province for hydrocarbon, thus making it always attractive, however other countries are catching up. www.businessday.ng

One of the changes we noticed when many of the onshore assets were handed over to indigenous oil companies was a drastic reduction in the confrontation between host communities and oil companies. How has NewCross managed the relationship with its host communities?

There are three groups to this issue. There are elements outside the host communities who incite the host communities against oil and gas producers, which is one group. There are other elements of people who are empowered with arms to attack your facilities. Lastly, there are members of the host communities who for one reason or the other feel they have been maligned or taken advantage of for many years, who are agitators. Our goal as a company is to have a good relationship with members of our host communities who truly seek peace but want to partner in development. For the first 2 groups, we are unable to identify or discuss with this group. Only the government can manage this group decisively.

At NewCross, one of the things we strongly believe in is that growth should be symbiotic, which means if I am growing you are growing, if I am going down you are also going down. This gives you an incentive to protect my interest or investment. At NewCross, we focus on three primary things - Healthcare, Education and Economic sustenance. We do social impact assessment study to find out the most prevalent issues in these communities and help in providing the right infrastructure to solve those peculiar challenges.

We don’t give free money to our host communities rather we look for ways to stimulate economic growth. We look at areas where fishing and farming are the most predominate occupations and find ways we can do more to stimulate economic growth.

According to DPR, a total of 42 oil bloc licences held by some indigenous and international operators will expire this year.

Does that worry you?

This is a very sensitive issue for the indigenous companies who have invested in Nigeria. For those of us working in Nigeria we really believe it is important for government to find a way to reconcile the issues, irrespective of the challenges, unless it’s a criminal case.

Revocation of a license has significant impact on investors, hot communities, relationships and families. The repercussion is significant.

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Personally, I think there are ways to solve issues rather than a hammer. It can be likened to a child who has an infraction. There are many micro and macro factors that affect firms, which expose us to economic infarctions.

What are the things NewCross is doing with gas infrastructure?

If you take a holistic view of Nigeria’s economy and what it needs for industrialisation, gas is a bigger enabler of what Nigeria needs than oil. As an organisation, we are working on some initiatives; we are a big believer in distillation of gas molecules into Liquefied Petroleum Gas (LPG) utilisation and enabling LPG usage. So, one of our assets that is coming on-stream in the next 12 months is targeted at the LPG chain, where we will be producing LPG Nigeria. We are already a minority partner in a LPG producing plant in Nigeria and we feel the impact on empowerment and environmental protection.

In other areas, we are working towards providing gas for power. So, in NewCross Exploration, which is one of the subsidiaries of NewCross within the group, our company is committed towards producing gas for power in the Eastern corridor of Nigeria.

Recently, we formed a new team completely different from our main team to look at our infrastructure from a gas perspective, which means we are paying more attention to gas, irrespective of how much oil we are producing.

Gas investment takes time, but we are happy at the direction we are going. We are not too far behind the leaders in commercializing our gas.

What is the future for NewCross?

Our long-term goal is to be seen as an energy company and not just a petroleum company.

We are looking at the global market and what will change Nigeria. We see gas in the competitive landscape for companies, knowing that in the future a one-product country or company, majorly focused on oil will struggle to survive.

Already, the likes of Shell and Chevron are doing it by going into renewable energy. Our emphasis on oil operations will continue but we are clearly looking at how to contribute to the renewable energy industry.

What should be the priority of the new minister of petroleum and the NNPC? He should focus on passing the PIGB that governs the industry. The governance of the industry is a big one that needs clarity for everyone.

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40

Monday 02 September 2019

BUSINESS DAY

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

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Value of Ignite Investment Forte Oil stake rises to N15.83bn

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an agreement with the Prudent Energy team, investing through Ignite Investments and Commodities Limited, to divest of his full 74.02 per cent direct and indirect shareholding in the company’s downstream business.

While other players in the industry are reeling from lack of cost reflective cost on premium motor spirits that has undermined earnings, Forte Oil is thriving as a double digit growth in revenue from fuel added impetus to profit.

The company converts sales into cash in an efficient and expeditious manner, as its operating cash margins surged to 15.42 percent in June 2019 from 1 percent the previous year. It has an operating cash flow of N12.79 billion in the period under review, as against N488 million the previous year. A robust cash position shows the company has the financial strength to settle its debt, pay dividend to shareholders and fund future expansion plans.

A robust cash level means the

company can settle its debt, pay dividend to owners of the business, and fund future expansion such as the acquisition of more trunks or building new gas stations.

Forte Oil has an attractive valuation compared to peers, which means its shares should be cheap for investors.

It has a price to earnings ratio of 2.58, this compares to Total Oil, 12.95 times price to earnings; Mobil Oil, 7.07 times; ConOil, 5.12 times; Eterna Oil, 24.66 times earnings.

Total Nigeria may forgo generous dividend as operating environment crimps profit BALA AUGIE

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otal Oil Nigeria Plc could give up on generous dividend payments as analysts expect the downstream oil and gas giant to record a loss this year.

The company is having multiple issues stemming from the lack of cost reflectiveness of Premium Motor Spirits (PMS) prices as the Nigerian National Petroleum Corporation (NNPC) assumed the position of 100 percent importation of domestic petrol consumed.

“Industry experts don’t believe the firm would declare dividends in 2019 because of the possibility of a loss making year, but we are not so sure,” said analysts at BUA Intelligence, in a note to clients.

Total Nigeria has been offering jaw dropping payouts and it has consistently been rewarding shareholders from distributable profit since 2010.

It has also been handing out N5.77 billion cash dividend or N17 dividend per share (DPS) since 2016 even as

SHORT TAKES N311.94bn Sectoral distribution of Value Added Tax (VAT) data for Q2 2019 reflected that the sum of N311.94billion was generated as VAT in Q2 2019 as against N289.04billion generated in Q1 2019 and N269.79billion generated in Q2 2018 representing 7.92% increase quarter-on-quarter and 16.95% increase yearon-year.

BALA AUGIE he value of Ignite Investments and Commodities Limited investment in Forte Oil has increased to N15.83 billion, after acquiring an additional 500,000 more ordinary shares in the downstream oil and gas firm for a price of N66.25.

That jerks up Ignite and Commodities’ stake by 0.04 percent, as total holdings now stands at 74.06 percent, leaving the minority shareholders of Forte Oil with stakes valued at N5.59 billion out of a total market capitalization of N20.42 billion (as at last Friday August 30).

We arrived at the total holdings by multiplying 74.06 percent by total number of ordinary shares of Forte Oil of (1.30 billion as the balance sheet date), then multiplying the final figure with market price of the downstream oil and gas firm.

This means Ignite Commodities has 962.78 million ordinary shares in the company.

Forte Oil disclosed on December 24, 2018 the divestment by its majority shareholder, Femi Otedola, who said he had reached

P.E

earnings per share (EPS) have been falling, according to data compiled

by BusinessDay. Its dividend yield (the dividend divided by share price) of 17.51 percent is the highest in the industry, according to data compiled by BusinessDay. The charts shows Total Nigeria’s payout ratio was 117.45 percent in 2015, the highest in a since 2010, but the ratio has been rising steadily since 2016.

The dividend payout ratio is the

ratio of the total amount of dividends paid out to shareholders relative to the net income of the company. It is the percentage of earnings paid to shareholders in dividends. The amount that is not paid to shareholders is retained by the company to pay off debt or to reinvest in core operations.

The downstream oil and gas firm has a negative cash flow from operating activities of N9.85 billion as at June 2019.

It has total debt of N52.51 billion in June 2019, while debt to equity is at an all-time high of 200.19 percent.

A high debt to equity ratio means the company runs its operations with more debt than equity.

Analysis of the half year results of Total Nigeria shows it is at the cusp of loss making as it capitulates to rising finance costs, ballooning operating expenses, and slow sales.

Profit was N129.97 million in June 2019, a 97.82 percent drop from N5.67 billion recorded last year, while the fastest expansion at the bottom line was in 2015 financial period when profit surged by 355.61 percent.

Total Nigeria operates in a tough and unpredictable macroeconomic environment, as a rally in oil price since the fourth quarter of 2016 resulted in higher landing costs of the product.

Also, a protracted delay in the payment of subsidy money by the Federal Government is undermining operations since interest on loans are accruing, hence, bloating interest expense in the profit and loss account.

57.9 index points Manufacturing Purchasing Manager Index for August 2019 stood at 57.9 index points indicating expansion in the sector for the 29th consecutive month.

The index grew at a faster rate when compared to the index in July. Of the 14 subsectors surveyed, only 13 reported growth, only paper product subsector recorded decline in the review month.

11.08% Annual inflation slowed to 11.08% in July 2019, the lowest in almost four years buoyed by lower food prices on account of favourable harvest.

This is second straight moderation in headline inflation after it peaked 11.4% in May. Core inflation eased to 8.8% in July to reach its lowest level in over three years, while food inflation bottomed to 13.39%.

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

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

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MARKETS INTELLIGENCE NSE reverses gains made last week …. ASI down by 99-basis points WoW Ifeanyi John

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he Nigerian Stock Exchange (NSE) cannot seem to get a break from the bears as it reversed the gains earned in the previous week. Last week, the All Share Index, the indicator of aggregate performance of the NSE rose by 325 basis points to close at 27,800.17 index points. Investors in the capital market were all smiles as about N83.0 billion was gained.

However, just a week later, their joy was short-lived as the NSE returned to what we have been accustomed to in the last 12 months, a bearish market performance. The ASI dropped from 27,800.17 points to 27,525.81 points, a 99-basis points reduction from the previous week. Consequently, investors in the market lost a whopping N133.5 billion to the downturn in the market.

In a note to clients last week, Lagos based asset Management Company, Growth & Development

Asset Management asserted that the gains made by investors in the previous week were likely going to be reversed. Their assertion was based on the lack of any major policy driver to jump start the market. This prediction was spot on, as

the market proceeded to descend lower 5 trading days later.

Our analysis of the market performance this week revealed that 4 of the major indices of the market declined with the oil & gas index leading the pack by about a 10.8

percent led by Seplat’s share price declining by about 18.84 percent.

Jeremiah Ejemeyovwi, an economist and lecturer at Covenant University acknowledged that with downturn in crude oil prices, falling global demand and strong dollar

within the last few weeks, it is not surprising that Seplat declined the most given its position in the upstream sector.

In a previous comment by Obinna Uzoma, a chief economist at investment research firm, EUA Intelligence explained that “as the Dollar strengthens, the pegged Naira is at a higher risk of overvaluation and monies invested in the stock market falls in dollar terms if a currency devaluation occurs. As this risk heightens, foreign portfolio investors would prefer to liquidate their positions in the Nigerian stock market as a hedge to that risk of devaluation.”

An investor in the stock market who pleaded anonymity mentioned that right now, he is tired of waiting for improvements in the NSE as his risk has not been rewarded with returns and would be liquidating his investments in favour of fixed income investments.

Year-to-Date (YTD) analysis of the stock market shows that the NSE’s ASI is down by 12.42 percent, worsening from the previous market dip of 11.55 percent.

Nigerian insurers woo foreign investors with attractive valuation BALA AUGIE AND SEGUN ADAMS

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he new capital requirement by the regulator is an opportunity for foreign investors to invest in Nigerian insurance market as shares of companies are cheap.

Among the country’ financial institutions, insurers have the lowest price-to-book ratio, which measures the stock price against the value of assets minus liabilities.

Nearly all the companies are trading at a price below their book value.

Only AXA Mansard, NEM, and Continental Reinsurance with price to book of 0.84, 0.71, and 0.64, are above the industry average of 0.3639.

Experts say insurers are unable to deliver a higher return to shareholders in form of share appreciation and bumper dividend because they do not have the capacity to take on more risk.

Insurers in Africa’s largest economy are grappling with deteriorating margins, weak premium income growth, and rising combined ratios as huge claims are undermining underwriting capacity.

The cumulative profit after tax of the largest insurance companies that have released half year results fell by 5.70 percent to N17.05 billion from N18.02 billion as at June 2018.

Experts are upbeat that the new minimum capital requirements by National Insurance Commission (NAICOM) will help underpin the capital base of operators in the industry, and they added that companies are losing big jobs to their foreign counterparts due to weak capital.

The regulator has announced a

new Minimum Paid-up Share Capital Policy for insurance and reinsurance companies in Nigeria.

The revised paid-up capital requires life Insurance business operators to raise its capital from N2 billion to N8 billion; General business from N3 billion to N10 billion, while that of Composite business has been jerked up from N5 billion to N18 billion.

NAICOM stated that the last recapitalization was down in 2005/2007, but the industry has witnessed astronomical growth in the value insured assets with exposure to higher level of insured liabilities and increased cost of insurers. Some insurance companies have started the race to recapitalize as the clock continues to tick faster towards the deadline for the exercise.

We have since seen Mutual Benefit and Sovereign Trust Insurance (STI) opt for capital raising.

Mutual Benefits raised N1.59 billion via rights issue in 2018 (79.50 of the N2 billion offered) while STI also recently conducted a rights issue of 4.20 billion shares of N0.50/share 91 (1 for 2) to raise N2.10 billion.

Similarly, Consolidated Hall Mark Insurance is in talks with its shareholders to raise N3.90 billion so that it meets a short fall of N3.65 billion in shareholders’ fund and N5.63 billion in qualifying capital.

STI and Prestige insurance have disclosed their intentions to raise share capital to N10 billion, from N7.50 billion and N3 billion.

However, analysts have raised concerns that the volatility in the stock market could make it practically difficult for insurers to raise capital.

Morever, there has been few activities on the floor of bourse except the listings of MTN Nigeria and Airtel. www.businessday.ng

Weak Yuan raises risk for global oil demand, pressures EM currencies ISRAEL ODUBOLA

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he decision of United States’ Donald Trump to levy additional 5 percent tariff on $300 billion worth of Chinese goods effective September 1, coupled with Beijing’s weaker Yuan, will negatively affect emerging market (EM) currencies.

An index that tracks the total return of 25 EM currencies relative to the US dollar, sustained its bearish streak last week, down 1.5 percent

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year-to-date.

The 17-month old trade war could further slow global oil demand, experts say, further weighing on oil prices, and major central banks might just have to slash policy rates to stimulate global growth.

“Mounting trade tensions are putting depreciation pressure on the Yuan”, said a team of analysts at Washington-based Institute of International Finance (IIF) in a note to investors.

“For the rest of the EM, Yuan weakening carries a contagion risk and adds to an already unsettled @Businessdayng

environment,” they said.

As the world’s largest energy consumer that plays a significant role in how crude oil is priced, Beijing’s weaker Yuan at its lowest level against US dollar since 2018 portends serious implications for Nigeria, Africa’s top crude producer, in terms of softening global oil demand and lower oil prices.

This justifies why Brent, Nigeria’s benchmark grade, sold for less than $60 per barrel budget peg since the trade war intensified early August.

It hovered around the benchmark price on Friday.

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Monday 02 September 2019

BUSINESS DAY

Live @ The Exchanges Fidelity Bank grows half year pretax profit to N15.1bn

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Stock investors lost N116bn in August Stories by Iheanyi Nwachukwu

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nvestors at the Nigerian Bourse who held their stocks till August 30, 2019 booked approximately N116billion loss, BusinessDay trend watch shows.

In the absence of any positive catalyst, the equities market will still remain pressured into the new month of September.

The value of listed stocks on the Nigerian

Stock Exchange (NSE) which opened the month of August at N13.507trillion decreased remarkably to N13.391trillion as at Friday August 30, the last trading day.

Likewise, the Nigerian Stock Exchange (NSE) All Share Index (ASI) closed lower from August open level of 27,718.26 points to 27,525.81 points, down by 0.69percent.

Despite improvement in market breadth and more advances than declines especially in the third trading week in August, market

heavyweights still dictated the movement of the overall index as witnessed in the later part of the review month.

The last trading week in August close in the red as sell pressure dominated most trading sessions on the back of capital appreciation that was recorded in the preceding week to August 23.

The stock market’s year-to-date (YtD) returns still stood in the negative region of -12.42percent as at close of trading on August 30.

idelity Bank Plc has released its half year (H1) audited financial statements for the period ended June 30, 2019 showing growth across its topto-bottom line figures.

The bank’s Gross Earnings increased by 12.3percent to N103.7billion, from N92.3billion in H1 of 2018.

Net Interest Income (NII) decreased by 3percent to N36.9billion from N38.1billion in H1 2018.

Operating Income increased by 16.5percent to N53.2billion from N45.7billion recorded in H1

2018. Profit Before Tax (PBT) increased by 15.7percent to N15.1billion from N13billion in H1 2018.

As at close of trading on Friday August 30, the shares of the bank were on demand at the Nigerian Stock Exchange (NSE). The share price increased from N1.66 to N1.68, after adding 2kobo or 1.20percent.

In the review half-year period, its earnings per share (EPS) printed higher at 47kobo from a low of 41kobo in H1’2018. Net Loans increased by 17.6percent to N999.3billion from N849.9billion in 2018 financial

UBA grows half year pretax profit to N70.27bn …proposes 20kobo interim dividend

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he Board of Directors of United Bank for Africa Plc declared interim dividend of 20kobo per share from the retained earnings account of the banking group as at June 30, 2019.

United Bank for Africa Plc on Friday August 30 released for the

investing public its interim consolidated and separate financial statements for the half year (H1) period ended June 30, 2019.

The audited results show UBA Plc recorded 13.95percent increase in gross earnings to N294.032billion in H1’2019 from

PZ Cussons proposes N595.5m dividend payout despite disappointing full year scorecards

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he Board of Directors of PZ Cussons Nigeria Plc on Friday August 30, 2019 presented to the Nigerian Stock Exchange (NSE), the company’s annual report and consolidated financial statements for the year ended May 31, 2019.

The company proposes to pay its shareholders 15kobo dividend per share (same as in 2018) which amounted to N595.5million despite that its top-to-bottom line figures disappointed when compared to the preceding year levels. The company’s share price remained at N 5.9kobo per share on Friday August 30, 2019.

PZ Cussons Nigeria Plc reported revenue decline of 7.7percent to N74.33billion in the review financial year as against

N80.55billion in 2018.

The principal activities of the group continued to be the manufacturing, marketing, sale and distribution of a wide range of consumer products and home appliances which are leading brand names throughout the country in the detergent, soap, cosmetics, refrigerators, and air-conditioners.

The group also distributes the products of Nutricima Limited, Harefield Industrial Nigeria Limited and PZ Wilmar Food Limited.

The results show that PZ Cussons Nigeria Plc’s operating profit decreased by 72.4percent to N2.27billion from a high of N8.22billion in 2018.

The company’s reported Profit Before Tax (PBT) declined by 16percent to N1.94billion from N2.31billion in www.businessday.ng

year. Loan to Deposits ratio increased to 91.1percent from 86.8percent in H1’18. Cost to Income Ratio of 84.2percent in H1’19 rose from 72.9percent in H1’18.

The bank’s total deposits hit an all-time high of N1.097trillion, up by 12percent to from N979.4billion recorded in 2018 financial year. Total Equity increased by 10.9percent to N215.6billion from N194.4billion in 2018 financial year, while Total Assets increased by 12.8percent to N1.940trillion from N1.719trillion in 2018 financial year.

2018; while Profit After Tax (PAT) which stood at N1.15billion against N1.92billion in 2018, represents a decline of 40percent.

The company will close its register for dividend payment from October 14-18, 2019 while payment date is October 30, 2019. Its dividend yield Dividend Yield is 2.5percent.

According to the Register of members as at May 31, 2019, PZ Cussons (Holdings) Limited UK held 2.909billion shares in PZ Cussons Nigeria Plc which represents 73.27percent of the group’s paid-up share capital. Apart from PZ Cussons (Holdings) Limited UK, no other shareholder held more than 5percent of the group’s paid-up capital as at May 31, 2019. https://www.facebook.com/businessdayng

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N258.04billion in H1’2018.

Its profit before tax (PBT) grew by 20.9percent to N70.27billion from N58.14billion in corresponding H1 of 2018. Profit after tax (PAT) stood higher at N56.74billion in H1’19 against N43.79billion in H1’18, representing an increase of 29.6percent.

Monday 02 September 2019

BUSINESS DAY

This is MONEY

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The uninvolved spouse: How not to set up your widow to fail The Solid Wealth Messenger

Grace Agada

E

arly modern society had very few roles carved out for women. A girl typically moved from being a daughter to a wife and then a mother. While these three roles were different from one another and came with different responsibilities, they were all subject to men’s authorities in some way.

This trajectory affected the involvement and participation of women in wealthy families as a woman’s role became passive and silent and when it comes to financial matters in wealthy families, not much has changed.

This may be a safe structure as long as the wealth creator can guarantee an unlimited life. However, because life is limited for everyone, couples must talk about death and how to prepare their dependent spouse for the leadership and management role they will take on when the wealth creator dies. Although it is not in all cases that the male wealth creator dies before the wife, research has shown that most women will live longer than their husbands and it is this situation that creates a need for the preparation of the spouse so that wealth can be preserved beyond the wealth creator.

The women in and of themselves are not risks to wealth; it is the fact that they are unprepared, passive, left behind, and uninvolved, that creates this risk. The days after a woman loses her spouse are often a blur. After the immediate shock, she has funeral plans and wellwishers to deal with. But when the haze of activity subsides, many of these widows then become overwhelmed and faced with the harsh reality of independence, leadership, management, control, and power that is bestowed on them.

While the independence, control, and power that women gain in widowhood have its benefits, it can also come with many obstacles to wealth preservation. If the window is already aligned and prepared for

her new role and if the husband has confidence in his wife’s ability to manage his estate, then the results are supportive of wealth preservation. If the widow, on the other hand, is unprepared for her role, have values and agenda that are misaligned with that of the wealth creator, the wealth can be put at risk.

The widow holds great influence and power and whether she is allowed to be actively involved and participate in the family business or not, her influence is felt and can disrupt the preservation of wealth. There are two major risks to wealth from a passive and uninvolved spouse.

The Diversion Risk and The Influence Risk The diversion risk which is the risk that most legal expert focuses on is the least risk posed by an uninvolved, unprepared and passive spouse because this risk can be easily taken care of by appropriate provisions in the trust or estate plan. Additionally, women are less likely to remarry after the death of their husband and so the diversion of wealth risk is lesser with women than with most men.

In fact, the diversion risk is higher with a surviving male spouse than it is with a widow.

The factor that bears the highest risk to wealth preservation is the influence factor. Most women carry a large amount of influence especially over their children who are also most likely going to be the successors. Women are one of the greatest pillars of emotional and spiritual support for their children. This, therefore, means that there is never going to be a time when the children, who are also the future successors, are away from the influence of their mothers. If this influence is coming from a woman that is naive and lack competence in financial and business affairs, these influences can become detrimental to wealth. Secondly, the majority of the trust provisions and estate plans put a surviving spouse at the helm of decision making, leadership, and management affairs. If the windows are not prepared for their role, they can make certain uninformed decisions that can hurt the family’s wealth.

The solution, therefore, is not to put women at the background or make them business or financial gurus but to get them in-

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

volved and knowledgeable about the fundamentals that govern the family’s wealth and what should guide them in their decisionmaking process?

To think that you can put your spouse at the background and still preserve wealth is to be naïve concerning the influence that women wild especially when they enter autonomous leadership positions.

The key is to know where your wife stands regarding the future of the family’s wealth, make her feel heard and understood and integrate some of her own concerns regarding the family in the wealth preservation plans. There are many cases where surviving spouses have fired the wealth creator’s advisors and hired her own team when the wealth creator dies. There are also some few other cases where a wealth creator and an only child died at the same time leaving the bulk of wealth to the surviving spouse. Regardless of the the manner by which a widow comes into leadership and power, it is important that her goals and values are aligned with that of the wealth creator so that when the widow takes over, she simply continues from where the wealth creator stops as opposed to creating an entirely new agenda and disrupting the wealth preservation process. Preparing your spouse for the task ahead will also ensure that she gives sound advice to the successors when they depend on her for guidance.

If you want to begin this important preparation process for your spouse and if you want to unify and align the values and goals of

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the members of your family in such a way that will ensure the continued preservation of wealth beyond your lifetime, there is a solution for you.

This solution is what we call “The Diagnostic Family Meeting”.

The goal of this meeting is to first diagnose and understand the level of preparedness of the individual members of your family as regards the long-term preservation of wealth and to create alignment in the goals, vision, and values of the individual family members so that your family can jointly propel wealth into the future. To find out more about our “The Diagnostic Family Meeting” send a text with the Title “Diagnostic Meeting”. to 08101860042.

Behind the scenes of thousands of family wealth that have been destroyed in history, are women. Although there is a limited amount of research carried out on their role in the loss or preservation of wealth, we know that the competence, capabilities, and preparation (or lack of it) of those women played a great role in whether wealth was lost or preserved. The more informed, involved aligned and prepared your spouse is, the greater your chances of preserving wealth long-term.

The future of wealth depends on the preparedness of your spouse and children.

‘

The days after a woman loses her spouse are often a blur. After the immediate shock, she has funeral plans and well-wishers to deal with.

But when the haze of activity subsides, many of these widows then become overwhelmed and faced with the harsh reality of independence, leadership, management, control, and power that is bestowed on them

Grace Agada is a Senior Wealth Advisor and Author with extensive experience in wealth creation, wealth preservation and wealth transfer.

Email: info@createsolidwealth.com Tel: 08101860042

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44

Monday 02 September 2019

BUSINESS DAY

Access Bank Rateswatch Market Analysis and Outlook: August 30 - September 6, 2019

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.01

Q1 2019 — lower by 0.38% compared to 2.39% in Q4 2018

Broad Money Supply (N’ trillion)

34.89

Decreased by 0.77% in May’ 2019 from N35.17 trillion in Apr’ 2019

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

24.86 2.11

Decreased by 0.13% in May’ 2019 from N24.89 trillion in Apr’ 2019 Decreased by 2.22% in May’ 2019 from N2.16 trillion in Apr’ 2019

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

11.08

Decreased to 11.08% in July 2019 from 11.22% in June 2019

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

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

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

43.73 60.33 1.786

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

Friday

30/08/19

23/08/19

NSE ASI Market Cap(N’tr)

27,525.81 13.39

27,818.50 13.53

Volume (bn)

0.12

1.14

Value (N’bn)

1.82

2.26

MONEY MARKET NIBOR Tenor

August 28, 2019 figure — a decrease of 2.55% from August start August 30, 2019 figure— an increase of 1.46% from the previous wk July 2019 figure — a decrease of 1.21% from June 2019 figure

Friday Rate (%)

Friday Rate (%)

Change(%)

Indicators

30/08/19

1-week Change

YTD Change

(%) Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) (89.07) Agriculture Cocoa ($/MT) (19.66) Coffee ($/lb.)

Cotton ($/lb.)

Sugar ($/lb.)

Wheat ($/bu.)

Metals Change Gold ($/t oz.)

Silver ($/t oz.)

(Basis Point) Copper ($/lb.)

(1.05) (1.05)

(%)

61.21 2.27

1.46 5.58

(5.01) (25.72)

2199.00 95.60 58.95 11.19 466.50

(1.39) (1.44) (0.56) (3.28) (1.06)

13.58 (26.57) (23.94) (27.01) 7.61

1525.32 18.37 257.45

2.02 7.62 0.27

15.77 6.86 (21.46)

30/08/19

23/08/19

OBB

9.2900

17.7100

(842)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N CALL 30 Days

10.5000 9.2500 13.9985

18.7900 19.1667 15.3656

(829) (992) (137)

Tenor

30/08/19

23/08/19

90 Days

12.9832

14.8772

(189)

1 Mnth 3 Mnths

13.03 11.42

14.89 15.06

(185) (363)

6 Mnths 9 Mnths 12 Mnths

13.95 14.74 14.98

15.72 15.38 15.35

(176) (64) (38)

FOREIGN EXCHANGE MARKET Market

Friday (N/$)

30/08/19

Friday

1 Month

(N/$)

Rate (N/$)

23/08/19

30/07/19

Official (N) Inter-Bank (N)

307.00 362.93

306.95 363.14

306.90 361.91

BDC (N) Parallel (N)

0.00 360.00

0.00 360.00

0.00 360.00

Friday

Indicators

Friday

AVERAGE YIELDS (%) 30/08/19

Friday (%)

Change (Basis Point)

23/08/19

3-Year 5-Year

0.00 14.37

0.00 14.49

0 (12)

7-Year 10-Year 20-Year

13.85 14.16 14.23

14.05 14.29 14.33

(20) (13) (10)

30-Year

14.56

14.50

6

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

(Basis Point)

Friday

(%)

Friday

Change

(%)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

BOND MARKET Tenor

Friday

(%)

Change

(%)

(Basis Point)

30/08/19

23/08/19

Index

2,989.74

2,992.54

(0.09)

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr)

9.05 5.73

9.07 5.71

(0.18) 0.37

YTD return (%) YTD return (%)(US $)

21.71 (34.13)

21.82 (33.99)

(0.11) (0.14)

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

Rate(%)

Date

91 Day 182 Day

24,372.79 38,751.85

11.1 11.58

28-Aug-2019 28-Aug-2019

364 Day

145,475.02

12.89

28-Aug-2019

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

Global Economy In the US, Federal Reserve Chairman Jerome Powell delivered his highly anticipated speech at the Jackson Hole Economic Policy Symposium, reiterating the Fed will "act as appropriate" to sustain the U.S. economic expansion. The Fed Chief cited President Donald Trump's announcement of new tariffs on Chinese imports as well as further signs of a global economic slowdown, notably in Germany and China. Powell also pointed to several geopolitical events, including the growing possibility of a hard Brexit, rising tensions in Hong Kong, and the dissolution of the Italian government. As a result of the subsequent uncertainty, Powell said the Fed is "carefully watching developments as we assess their implications for the U.S. outlook and the path of monetary policy." In a separate development, Eurozone economic confidence improved in August driven by industry and services, survey data from the European Commission showed. The economic sentiment index rose to 103.1 in August from a 40-month low of 102.7 in July. The slight improvement resulted from markedly higher confidence in industry and retail trade, while morale deteriorated significantly in services and construction. The industrial sentiment index climbed to -5.9 from -7.3 in July. The strong increase in the retail trade confidence was fueled by more optimistic views on the present business situation and the adequacy of the volume of stocks.

The index advanced to +0.5 from -0.7 in July.

Elsewhere in Japan, the total value of retail sales was down a seasonally adjusted 2.3% month-onmonth in July, the Ministry of Economy, Trade and Industry reported. On a yearly basis, retail sales sank 2% following the 0.5% increase in the previous month. Large retailer sales tumbled 4.8% year-onyear, following the 0.5% decline a month earlier.

Domestic Economy Data by the National Bureau of Statistics (NBS), revealed that the Federation Accounts Allocation Committee (FAAC) disbursed the sum of N763.6 billion among Federal, States and Local Governments in July 2019 from the revenue generated in June 2019. The amount distributed was from the statutory account, value added tax (VAT) and exchange gain differences comprising of N652.95 billion, N108.63 billion and N1.02 billion respectively. A breakdown of the sum disbursed among the three tiers, revealed that the Federal Government received N309.43 billion, states received N201.16 billion and the local governments received N151.38 billion. The oil producing states received N38.70billion as the 13% derivation fund.

In a separate development, the Manufacturing Purchasing Managers' Index (PMI) stood at 57.9 index points in August 2019. This indicates an expansion in the manufacturing sector for the twenty-ninth consecutive month. The index grew at a faster pace when compared to the previous month (57.6 points). This was shown in the latest PMI report by the Central Bank of Nigeria. A PMI above 50 points indicates that the manufacturing sector is generally expanding, while a reading below 50 points indicates a contraction. Thirteen of the sub-sectors surveyed recorded growth during the month, while the paper products subsector recorded decline in the period under review.

Elsewhere, businesses expressed optimism on Nigeria's macro economy in August 2019 according to the Central Bank of Nigeria (CBN) monthly Business Expectations Survey (BES). The report, which was posted on the apex bank's website stated: “at 28.6 index points, respondents' overall confidence index (CI) on the macro economy in the aforementioned period was more optimistic when compared to its level of 28.1 index points recorded in July 2019.” The respondent firms were made up of small, medium and large organisations covering both import- and export-oriented businesses. The positive outlook by businesses in August 2019, according to the report, was driven by the opinion of respondents from the following sectors: services (15.4 points), industrial (10.1 points), wholesale/retail trade (2.4 points) and construction (0.7 points) sectors. The surveyed firms listed insufficient power supply, high interest rate, financial problems, unfavourable economic climate, unclear economic laws and unfavourable political climate in that order as the major factors constraining business activity in the reference month. The business outlook for September 2019

showed greater confidence on the macro economy with 64.7 index points.

Stock Market The bears dominated the nation's stock market last week, with sell pressures witnessed in the banking, i n d u s t ri a l a n d c o n s u m e r g o o d s s e c t o r s .

Accordingly, the All Share Index (ASI) declined 1.05% to 27,525.81 points from 27,818.50 points the preceding week. Market capitalization also fell

by N140 billion to N13.39 trillion from N13.53 trillion the prior week. This week, we envisage that the market will remain bearish amidst profit-taking and investors reshuffling their portfolios in anticipation of interim earnings reports of dividend-paying companies.

Money Market Rates at the money market saw a decline as liquidity was boosted by Federation Account Allocation Committee (FAAC) payment of N763 billion into the system. Consequently, shortdated placements such as Open Buy Back (OBB) and Over Night (O/N) rates settled at 9.29% and 10.50% from 17.71% and 18.79% respectively last week. The 30 and 90-day NIBOR also dipped to 14% and 12.98% from 15.37% and 14.88% the previous week. This week, we anticipate that rates would rise due to expected Open Market Operation (OMO) auctions.

Foreign Exchange Market The naira recorded mixed performance against the green-back across the major market segments for the week ended August 30th, 2019. The NAFEX window, witnessed a slight appreciation of 21 kobo to close at N362.93/$. While at the parallel market, naira remained unchanged at N360/$ from the previous week. The official market saw a slight depreciation as it ended N307/$, a 5 kobo loss from the prior week. The stability recorded in the NAFEX and parallel market segment may be attributed to the apex bank's regular interventions. This week, we envisage the stability in the market would continue due to consistent FX liquidity injections by the CBN. Bond Market Average bond yields dipped across most segments last week. The decline was on the back of client demand which was boosted by the comparable lower yield seen in the market. Yields on the five-, seven-, ten- and twenty-year debt instruments ended lower at 14.37%, 13.85%, 14.16% and 14.23% from 14.49%, 14.05%, 14.29% and 14.33% respectively. The Access Bank Bond index decreased by 2.8 points to 2989.74 points from 2992.54 points the previous week. This week, prices of bond might decline due to profit taking as investors take advantage of the higher OMO rates.

Commodities The price of oil rose following a huge crude oil draw.

The Energy Information Administration ( EIA) reported a 10-million-barrel draw in crude oil inventories. Nigeria's crude oil benchmark, bonny light, edged up, recording a 6.35% increase to $61.21 per barrel compared to $60.33 the prior week. Likewise, precious metal prices soared, supported by buying from central banks looking to diversify their portfolio as global growth slows and trade and geopolitical tensions rise. Gold edged up by 2.02%, settling at $1,525.32 per ounce, while silver ended up 7.62% higher at $18.37 per ounce.

This week, we expect crude oil price to be pressured by softening global demand as an economic slowdown looms and uncertainty prevails on the U.S.-China trade front. In contrast safe haven assets will benefit from the trade wars as Central-bank accumulation of gold has further room to run.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Sept’19

Oct’19

361

361

361

Inflation Rate (%)

11.15

11.2

11.2

Crude Oil Price (US$/Barrel)

65

67

67

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

www.businessday.ng

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Nov’19

Exchange Rate (Interbank) (N/$)

@Businessdayng

Monday 02 September 2019

BUSINESS DAY

45

cityfile Flooding: Community seek intervention from Jigawa

T

he people of Maruta community in Gwaram local governmnt of Jigawa have appealed to the state government to come to their aid following the damage caused by flooding in the community.

Spokesman of the community, Bilya Maruta made the appeal in Dutse, saying more than 100 houses have been destroyed in the flooding, with many farmlands washed away.

According to Maruta, crops such as millet, maize, beans and guinea Godwin Obaseki (m), Edo State governor, with beneficiaries of an entrepreneurship training organised by Fate Foundation, Facebook Nigeria and Edo State Government at the Edo Innovates Hub.

Drug abuse: Group urges NDLEA to involve communities

Gunmen kill 5, burn houses A in Kaduna community WAHEED OLAYINKA ADUBI,

with agency report

G

unmen have reportedly killed five villagers and burned some houses in one of the villages in Kaura local government area of Kaduna State.

Bege Katuka, the interim management committee chairman of the local government, who confirmed this to news-

men, weekend, in Kafanchan, said that the attackers stormed the village at about 4 pm on Thursday.

“Five persons were killed, while two others are still missing. A number of houses, including the new police outpost, were vandalised and burnt.

Katuka urged the villagers to remain calm and have confidence in the security agents that have already secured the area, as investigations have com-

menced into the incident.

The village where the incident occurred borders Ryom local government area of Plateau.

Confirming the attack, spokesperson of the police in Kaduna, Yakubu Sabo, said it occurred at Kiri village bordering Plateau.

“One Daniel Monday who initially sustained injury later died while four other corpses were discovered.

“No police station was

burnt although a few houses were touched,” he said.

Sabo further disclosed that the police area commander in Kafanchan led a team of policemen to the affected area.

“On sighting them, the hoodlums fled to a hill top near Ryom local government in Plateau State.

“Preliminary investigation revealed that they came through Plateau State, but investigation is ongoing,” he said.

NSCDC nabs 4 alleged illegal oil dealers in Abia GODFREY OFURUM, Aba

A

bia command of the Nigeria Security and Civil Defence Corps in Umuahia has arrested four men for allegedly dealing in illegal petroleum products.

Parading the suspects at the command’s headquarters in Umuahia, the state commandant, Nnamdi Nwannukwu, said they were arrested in the night at Imo Gate in Ukwa local government area of the state.

Nwannukwu said that the suspects were arrested by a combined team of anti-vandalism squad of the command, while conveying automated gas oil

in three vehicles.

The suspects included Uwabunkonye Obioha (Imo) and his conductor, Ifeanyi Okereke (Enugu), Ebuka Obiekwe (Abia) and Chijioke Amajuoyi (Imo).

Nwannukwu said that they were arrested in a Volkswagen Passat (Abia: SSM 175 AA); Toyota Avalon (Rivers: AHD 310 RX) and Toyota Camry (Bayelsa: YEN 211 RD).

According to him, each of the vehicles contained 30 nylon bags of 25 litres of the gas.

“You can see that these criminals have devised wicked tactics in perpetuating their illegal acts.

“We are equally proactive in discovering them through sustained surwww.businessday.ng

veillance and intelligence of our anti-vandalism squad.”

The commandant said preliminary investigation by the command showed that the products had no purchase receipt, waybill or metre ticket and that the vehicles had no haulage permit.

He further said that they had no operational licence to deal in petroleum products and the arrest had shown that illegal oil dealers had resorted to the use of passenger vehicles “as against the conventional tankers, just to beat security.”

Nwannukwu said that the command had zero tolerance for all manner

of illegalities and criminalities that constituted economic sabotage and loss of huge revenue to the Federal Government.

According to him, the command has a forum that brings the corps officials, community leaders and youth together on a regular basis to fashion out ways to deal with the phenomenon.

The commandant further said that the command was working in synergy with other sister-security agencies, including holding joint operations.

He warned illegal petroleum products dealers to desist from it and look for lawful means of livelihood or be prepared to face the law.

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corn planted were completely washed away from the farms.

He said victims of the flooding urgently needed help from Jigawa government through the State Emergency Management Agency (SEMA) to enable them stabilise having been rendered homeless.

“As I am speaking to you now, most of our people affected are taking refuge in primary schools while others have left the town.”

“We are earnestly calling on the state government to come to our aid,’’ Maruta said.

nongovernmental organisation, Vanguard Against Drug Abus e ( V GADA), has urged the National Drug Law Enforcement Agency (NDLEA) to institute a culture of participatory and inclusive approach to fighting drug abuse in the country.

President of the group, Hope Abraham, while speaking in Abuja, said these impediments were militating against a drug free society.

He said that consumption of prohibited substances had become a serious challenge to the growth and development of the society, adding that curbing the menace was a collective responsibility.

According to him, involving the communities can help in tapping the resources available in addressing the menace of drugs among youths and children.

“VGADA can help to interact with communities in order to tap the resources we have. Examples of such resources are some of the healthcare centres we are in partnership with and also our counseling unit to

help rescue those who are addicted already, among others across the country,” he said.

Abraham, however, urged NDLEA to collaborate with communities to ensure that the society was free of drugs and drug peddlers.

He assured that the organisation would support NDLEA with campaigns and more sensitisation programmes to ensure that the country was also free from any form of social vices.

He called on the state government and wellmeaning to support the quest to ensure that every one was well informed on the dangers of doing drugs.

He advised parents should monitor what their children and wards were doing in order to encourage them shun abuse of drugs because of the health challenge on them and the society.

“It is disheartening that children at tender age already have problem using drugs. There should be deliberate and sustained efforts at educating the younger generation on drug prevention,’’ Abraham said. NAN

Prime Atlantic trains drivers, conductors on First Aid, CPR DIPO OLADEHINDE

N

igeria based Oil servicing firm Prime Atlantic, a subsidiary of Prime Atlantic Limited is training commercial bus drivers and conductors in basic First Aid and Car@Businessdayng

diopulmonary Resuscitation (CPR).

CPR is a life-saving technique that is useful in emergencies, including a heart attack or near drowning during which someone’s breathing or heart has stopped.

46

Monday 02 September 2019

BUSINESS DAY

news New agric minister Nanono, Daura...

Continued from page 1

Africa International Bank (AIB).

Daura and Kyari are key

figures in President Muhammadu Buhari’s administration.

Daura is the president’s nephew and trusted adviser while Kyari is his chief of staff.

Nanono, Daura and Kyari all worked together at AIB. Nanono was the managing director/CEO, while Daura was the board chairman and Kyari was the company secretary.

AIB came unstuck after a surge in bad loans dented the lender’s asset quality even as it was embroiled in cases of financial mismanagement, according to sources familiar with the matter.

Although AIB’s banking licence was only officially revoked by the Central Bank of Nigeria (CBN) on September 2, 2013, the bank closed nearly eight years before, prior to the banking consolidation of 2005.

The Nigeria Deposit Insurance Corporation (NDIC), as liquidator, commenced winding up of the affairs of the bank after the Federal High Court on March 20, 2015 issued the order to wind up the closed bank.

The liquidation didn’t mean the debtors of the bank were let off the hook. The NDIC said at the time that “all debtors of the closed bank are required to immediately effect payment of their debts”. It’s unclear how successful the process was.

The NDIC did not immediately respond to an email seeking comment. A former staff of AIB said he didn’t feel “comfortable” talking about what happened at the bank during his stay. He recommended a colleague who did not immediately return two phone calls.

Nanono made it to a 43-man shortlist of ministers for President Buhari’s second four-year term.

Nanono replaced Audu Ogbeh.

The Business Administration graduate, who says he has been in the agricultural sector since 1973, will be faced with the challenge of boosting growth in a sector beset by infrastructural challenges that have refused to go away and undermine the sector.

Bloody clashes between cattle herders and farmers in the North-Central and NorthEast regions of Nigeria have curtailed farming activities, even though growth in the sec-

tor picked up in the first quarter of 2019 to 3.2 percent, driven by improved crop production, according to the National Bureau of Statistics (NBS).

Some stakeholders say the growth rate of the sector has remained subdued despite the support from the government.

On a yearly basis, the sector has been declining, moving from growth rate of 4.1 percent in 2016 to 3.45 percent in 2017 and 2.12 percent in 2018.

Economists expect output in the sector to grow 3 percent by the end of 2019, higher than 2018’s figure but lower than the rate recorded during the recession-tainted 2016.

Under President Buhari, the agriculture sector has been a big beneficiary of government interventions. Some of these interventions are the Anchor Borrower’s Programme, the National Fertiliser Initiative, and the de-risking of agricultural lending through Nigeria IncentiveBased Risk Sharing System for Agricultural Lending (NIRSAL), with the assistance of the CBN. In the second term, the government has made it no secret that it aims to take its efforts a notch higher in several ways.

These include better provision of seedlings and access to finance for farmers to boost productivity, deepening of import substitution drive, strengthening of the capacity building arm of the Anchor Borrowers’ Programme to help support farming practices, and emphasising the need to link small-holder farmers to international buyers.

The CBN has said it will continue to support the interventions until the full potential of the sector is achieved.

As at March 15, 2019, the apex bank had committed a total of N171.35 billion in the Anchor Borrowers’ Programme, for instance, with active participation across the 36 states of the federation and the FCT. A total 920,788 have benefitted in the programme, cultivating about 960,643 hectares of land across the states and FCT. “I am very much interested in agriculture and most people identify me with that,” Nanono said after he was confirmed by the National Assembly.

“Agriculture has been a sector that has been holding the economy and we need to work in synergy to move to agriculture to the next level,” the former AIB CEO said.

Bangladesh’s silent industrial revolution ...

Continued from page 2 the area in 1970 and caused 250,000 deaths.

In the 1970s, three out of four Bangladeshis lived in poverty and the country was considered a test case for development. Rapid population growth, frequent natural disasters, and low economic growth throughout the 1980s suggested that a large number of households would remain trapped in chronic poverty.

Defying this outlook, Bangladesh began experiencing

more sustained economic growth since the 1990s, which was accompanied by impressive poverty reduction.

Today, the country has put its act together. Female enrolment in schools outnumber male and the economy grew by 7.86 percent last year. Bangladesh has in place a disaster preparedness programme to curb the effects of cyclones.

The garment industry employs 5 million workers who are mostly women. This is a model Nigeria can understudy. www.businessday.ng

L-R: ECN Obi, representative of Nigerian Army; Philomenah Lawrence, representative of Economic and Financial Crimes Commission; Mary Uduk, acting, director-general, Securities and Exchange Commission (SEC), and Reginald Karawusa, acting executive commissioner, legal enforcement, SEC, during a day with military, paramilitary and anti-graft agencies on investor programme in Abuja, Pic by Tunde Adeniyi.

FG’s lethargy traps $462.5bn in Nigerian...

Continued from page 1

Petroleum Corporation (NNPC), Nigeria has around 202 trillion cubic feet (Tcf ) of proven gas reserves, a number that was increased from around 187 Tcf late last year, plus about 600 Tcf of unproven gas reserves.

But despite having the largest gas reserves in Africa,

only about 25 percent of those reserves are being produced or are under development, according to Shell.

The proven gas reserves of 202 Tcf would be worth about $462.5 billion, based on Friday’s prices of $3.56 per thousand cubic feet, according to BusinessDay calculations.

“It’s a sad story and a combination of several factors which cut across the value chain,” Luqmon Agboola, head of energy and infrastructure at Sofidam Capital, said.

Agboola explained that the solutions are in a combination of factors such as consistent regulatory laws, more foreign investment, broader technical capacity and incentives to attract private funds.

Stakeholders say poor fiscal terms, the low governmentdictated gas prices and lack of infrastructure, are the major impediments to investments that would unleash gas into Nigeria’s domestic economy, helping to boost industry, jobs and growth rates.

“The government has to hands off major gas assets which are currently lying fallow and allow qualifying private investors to run such projects,”

Charles Akinbobola, energy analyst at a Lagos-based energy firm, said. For every $1 billion improvement in earnings from gas, the exchange rate should appreciate about 1 percent, the Bank of Israel has estimated.

That country (Israel), unlike Nigeria, has in less than four years moved to monetise huge gas resources discovered in the offshore Mediterranean Sea. Also, proven natural gas reserves in Nigeria could rise to 203 Tcf after the recent new discovery made by Eni, Italian oil major.

The well can deliver more than 100 million standard cubic feet/day of gas and 3,000 barrels/day of associated condensates, and will be immediately put on-stream to increase Nigerian Agip Oil Company’s gas production.

“If you take a holistic view of Nigeria’s economy and what it needs for industrialisation, gas is a bigger enabler of that than oil,” Bolaji Ogundare, CEO of NewCross Exploration and Production Limited, said.

Nigeria has never been short of big ideas and projects when it comes to gas. Nigerian Liquefied Natural Gas (NLNG) Trains 7 and 8, Brass LNG, and Olokola LNG have been awaiting final investment decisions for years.

The $12 billion Trans-Saharan Gas Pipeline Project (TSGP), expected to help Nigeria achieve zero gas flaring by 2020, remains an illusion 17 years after it was conceived.

While NNPC and the Federal Government delay in unlocking the long-term projects, some trickle of new

gas supplies, especially from International Oil Companies (IOCs) and indigenous players, is underway.

In the fourth quarter of 2018, Shell Petroleum Development Company of Nigeria Limited (SPDC) made the Final Investment Decision (FID) on the Assa North Gas Development Project in Imo State. The project is expected to produce 300 million standard cubic feet of gas per day and will be treated at SPDC JV’s gas processing facility and distributed through the Obiafu-Obrikom-Oben pipeline network.

Also, French oil major, Total, made a Final Investment Decision on Ikike Project in the OML 99 licence offshore Nigeria on Jan 29, 2019. The field is expected to commence production Q2 2021 and will deliver 70 Mboe to a maximum daily production of 32,000 barrels per day of oil.

ExxonMobil and Qua Iboe Power Plant Limited (QIPP) have initiated plans to invest a combined $1.6 billion in the development of gas and power projects in Akwa Ibom State.

The initiative would see QIPP invest $1.1 billion in the building of a gas power plant with ExxonMobil investing $500 million in a gas project in the area.

Also some smaller independents have managed to keep their eye on gas development despite challenges.

Seplat Petroleum is also working on the Oben and Sapele Liquefied Petroleum Gas projects scheduled to come on board in 2020 while Uquo gas project owned by Seven Energy and Frontier Oil readily

ABC Orjiako may lose assets to AMCON ...

Continued from page 2 through proxies.

Their equity holdings are in registered corporate entities like Seplat Petroleum Development Company Limited, Platform Petroleum (Joint Ventures) Limited, Abbeycourt Trading Company Limited, Helko Nigeria Limited, Shebah Petroleum Development

Company Limited BVI, Plumage Management Limited, Sinclair Commercials Limited BVI and Allenne Limited BVI. The court also authorized the Receiver/Manager to take over Ojiako’s property in Parkview Estate, Ikoyi, Lagos, and Maryland in the United States as well as London, United Kingdom.

By the order, counsel to

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AMCON said the Receiver/ Manager was also ordered to take steps to take over the assets of Shebah Exploration and Production Company Limited for the purpose of liquidating its outstanding indebtedness to AMCON. Orjiako and other directors of the Shebah Petroleum Development Company Limited was ordered to desist from ha@Businessdayng

comes to mind as well.

Pan Ocean Oil Corporation (Nigeria) Limited has also completed three key gas projects, such as Amukpe-Escravos Pipeline Project, 200mscfd Ovade-Ogharefe Gas Processing Plant Phases I and II and OML 147 Early Production Facility at Owa-Alidinma which is expected to process 11,000 barrels of crude oil and 90 million standard cubic feet of gas daily when fully operational, according to a statement from Pan Ocean.

“Significant opportunities exist in the gas value chain either in upstream, midstream and downstream with incentive already codify into law,” KPMG, a multinational professional services network and one of the Big Four accounting firms, along with Deloitte, Ernst & Young (EY), said in its Nigeria oil and gas outlook content.

With well over 187 Tcf of gas reserves, Nigeria is believed to have more potential in gas than in oil, especially if diversity in global energy consumption is considered. The nation’s gas reserves estimated as the largest on the African continent have been assessed at three times the value of its crude oil reserves.

“The Nigerian government has been in the process of implementing the Petroleum Industry Bill (PIB) since 2006 and it has been estimated that uncertainty around it has cost the country $50 billion in capital projects,” consulting firm PricewaterhouseCoopers (PwC) said in its Africa oil and gas report.

rassing the Receiver/Manager from doing his job.

The Federal High Court also granted a request for an order restraining Orjiako and his allies from interfering with or removing from the court’s jurisdiction in respect of the oil firm’s funds in the banks and financial institutions in and outside the country without the consent of the AMCON.

•Continues online at www.businessday.ng

Monday 02 September 2019

BUSINESS DAY

Government Enterprise & Empowerment Program

19

Brought to you by

Osinbajo interacts with MarketMoni, TraderMoni beneficiaries in Nasarawa

T

he Vice President, Prof Yemi Osinbajo in partnership with Government Enterprise and Empowerment Programme (GEEP) implementation partner, Bank of Industry held interactive town hall meetings in markets in Keffi and Masaka with beneficiaries of MarketMoni and TraderMoni on Tuesday. He was accompanied by the Governor of Nasarawa state, Abdullahi Sule and the Minister of State for Science and Technology, Mohammed Hassan Abdullahi.

Prof Osinbajo restated the commitment of President Buhari in providing collateral- and interest-free loans to traders and artisans across Nigeria. He explained that these loans will not only help the beneficiaries expand their businesses but improve their livelihood. He expressed his joy at seeing market people repaying their loans and promised to do more.

In his words: “So long as you continue to pay back, you will continue to get more money.

We want to make sure that every petty trader in the market has enough so that they themselves can even employ more people and pay their children’s school fees and also build their own houses.”

Executive Director, Bank of Industry, Mrs. Toyin Adeniji assured the traders that funds will be disbursed to all successful TraderMoni and MarketMoni applicants. She noted with delight that about 3,000 people across Keffi, Toto and Akwanga local government areas of the state had been registered in the last three days.

His Excellency, Yemi Osibanjo with Marketmoni & Tradermoni beneficiaries

Speaking earlier, Governor Sule commended the federal government for its commitment to the traders and artisans in Nasarawa state acknowledging that the facility will contribute to the economic prosperity of the state. He advised beneficiaries to utilise the funds judiciously to expand their businesses and create employment.

The town hall meetings which were well attended by petty traders and artisans provided an opportunity for beneficiaries to share their experiences and expectations of the programme.

MarketMoni beneficiary,

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Lawal Nkoyo who sells sewing materials in Karishi explained that the loan helped in stocking her shop with more materials.

This in turn improved her cash flow and made it easy for her to repay the loan in installments.

She said the additional funds will be invested in the business.

In a similar vein, TraderMoni beneficiary, Sabiu Bashir, a vegetable seller in Keffi Main Market said he will use the loan to buy more produce to add to his business. He thanked the government for remembering the market people expressing his pride of being a Nigerian and promised to repay the loan.

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As part of his visit to Nasarawa state, the Vice President made a courtesy call at the palace where he was warmly received by the Emir of Keffi, Alhaji Shehu Yamusa. He explained that GEEP products (MarketMoni, TraderMoni, FarmerMoni) are aimed at lifting millions of Nigerians out of poverty.

He also paid a visit to the family home of a MarketMoni beneficiary, Mrs Esther Bernard Ugweze who prior to receiving the loan was baking and hawking puff puff. As a mother and the sole breadwinner of her home, she was unable to support her family with her meagre

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income. After receiving training from the church on making soaps and disinfectants, she decided to diversify her trade but lacked the capital to start up. Although hesitant in the beginning, she registered for the MarketMoni loan and used the funds to kick start the business which has now employed several sales people to distribute the cleaning products. She said she was able to repay the loan fully and also used the profits to take care of her children’s education.

She thanked the government for the initiative and spoke excitedly about expanding her business further.

48

Monday 02 September 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 30 August 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 231,043.97 6.50 0.78 153 22,846,092 UNITED BANK FOR AFRICA PLC 200,066.62 5.85 -2.50 177 7,750,126 ZENITH BANK PLC 540,019.69 17.20 -4.71 309 9,260,708 639 39,856,926 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 170,502.64 4.75 -4.04 162 6,620,696 162 6,620,696 801 46,477,622 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,869,986.34 141.00 1.55 71 3,496,786 71 3,496,786 71 3,496,786 BUILDING MATERIALS DANGOTE CEMENT PLC 2,760,562.20 162.00 -0.31 97 874,176 LAFARGE AFRICA PLC. 229,536.09 14.25 0.35 35 885,559 132 1,759,735 132 1,759,735 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 234,024.40 397.70 - 26 46,793 26 46,793 26 46,793 1,030 51,780,936 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 0 0 0 0 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 39,587.27 41.50 3.36 45 1,866,177 PRESCO PLC 44,800.00 44.80 - 3 6,000 48 1,872,177 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,260.00 0.42 - 5 14,128 5 14,128 53 1,886,305 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 688.30 0.26 - 0 0 214.03 0.55 - 4 1,882 JOHN HOLT PLC. S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 41,460.95 1.02 -0.97 42 2,587,708 U A C N PLC. 14,406.48 5.00 9.89 52 2,893,661 98 5,483,251 98 5,483,251 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 24,486.00 18.55 - 5 1,814 ROADS NIG PLC. 165.00 6.60 - 0 0 5 1,814 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,286.59 0.88 - 8 33,237 8 33,237 13 35,051 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 11,979.13 1.53 - 3 1,600 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 1 249 GUINNESS NIG PLC 90,681.85 41.40 - 26 76,564 INTERNATIONAL BREWERIES PLC. 83,809.65 9.75 - 23 538,386 NIGERIAN BREW. PLC. 409,441.39 51.20 0.99 59 814,233 112 1,431,032 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 104,500.00 20.90 0.48 106 1,974,606 DANGOTE SUGAR REFINERY PLC 108,000.00 9.00 -6.25 90 1,622,171 FLOUR MILLS NIG. PLC. 55,355.12 13.50 - 54 3,735,354 HONEYWELL FLOUR MILL PLC 7,930.20 1.00 - 17 512,000 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 34,442.70 13.00 4.00 16 330,212 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 283 8,174,343 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 17,467.28 9.30 - 11 96,419 NESTLE NIGERIA PLC. 986,857.03 1,245.00 - 52 37,414 63 133,833 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 5,366.12 4.29 - 21 145,255 21 145,255 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 23,425.81 5.90 - 23 106,825 UNILEVER NIGERIA PLC. 163,732.65 28.50 1.79 21 227,387 44 334,212 523 10,218,675 BANKING ECOBANK TRANSNATIONAL INCORPORATED 133,034.25 7.25 -0.69 34 2,648,351 FIDELITY BANK PLC 48,677.66 1.68 1.20 125 11,332,413 GUARANTY TRUST BANK PLC. 804,942.75 27.35 1.11 250 11,118,544 JAIZ BANK PLC 11,785.70 0.40 - 7 140,500 STERLING BANK PLC. 71,976.05 2.50 9.17 33 2,830,771 UNION BANK NIG.PLC. 199,477.16 6.85 - 28 208,038 UNITY BANK PLC 8,182.54 0.70 7.69 6 323,759 WEMA BANK PLC. 23,144.68 0.60 5.26 43 2,612,100 526 31,214,476 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,504.63 0.65 -4.41 4 311,005 AXAMANSARD INSURANCE PLC 18,900.00 1.80 -3.23 8 337,000 CONSOLIDATED HALLMARK INSURANCE PLC 2,439.00 0.30 - 0 0 CONTINENTAL REINSURANCE PLC 15,040.48 1.45 -7.64 13 889,209 CORNERSTONE INSURANCE PLC 3,093.20 0.21 - 1 2,000 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 3.45 11 779,520 LAW UNION AND ROCK INS. PLC. 1,675.57 0.39 - 0 0 LINKAGE ASSURANCE PLC 3,840.00 0.48 - 1 10,000 MUTUAL BENEFITS ASSURANCE PLC. 2,458.00 0.22 4.76 9 1,063,354 NEM INSURANCE PLC 10,032.96 1.90 - 11 244,160 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,583.62 0.48 - 0 0 REGENCY ASSURANCE PLC 1,333.75 0.20 - 0 0 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 - 5 134,999 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 2,800.00 0.20 - 1 1,000 SUNU ASSURANCES NIGERIA PLC. UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 5,085.44 0.38 -2.56 24 1,342,202 88 5,114,449

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MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,583.90 1.13 -5.31 9 535,000 9 535,000 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,158.00 0.99 - 1 100 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 1 100 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,000.00 4.00 5.26 56 2,721,524 CUSTODIAN INVESTMENT PLC 35,291.19 6.00 -1.64 3 53,557 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 30,694.20 1.55 -6.63 51 2,594,456 ROYAL EXCHANGE PLC. 1,029.07 0.20 -9.09 5 663,903 STANBIC IBTC HOLDINGS PLC 389,141.01 38.00 8.57 29 102,701 UNITED CAPITAL PLC 12,000.00 2.00 1.00 76 3,239,264 220 9,375,405 844 46,239,430 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 1 166 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 817.22 0.23 - 2 34,720 3 34,886 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 9,388.62 4.50 - 0 0 GLAXO SMITHKLINE CONSUMER NIG. PLC. 8,610.31 7.20 -9.43 19 517,594 MAY & BAKER NIGERIA PLC. 3,622.99 2.10 - 8 216,417 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 949.58 0.50 - 3 3,170 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 30 737,181 33 772,067 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 6 601,200 6 601,200 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 534.60 4.95 - 0 0 TRIPPLE GEE AND COMPANY PLC. 336.57 0.68 - 3 6,725 3 6,725 PROCESSING SYSTEMS CHAMS PLC 1,220.98 0.26 -7.14 18 2,985,199 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 0 0 18 2,985,199 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,215,762.01 323.50 - 9 11,490 9 11,490 36 3,604,614 BUILDING MATERIALS BERGER PAINTS PLC 2,173.68 7.50 - 4 10,371 CAP PLC 17,325.00 24.75 - 25 492,104 CEMENT CO. OF NORTH.NIG. PLC 208,324.49 15.85 5.67 24 547,733 MEYER PLC. 313.43 0.59 - 1 1,000 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 2 120 PREMIER PAINTS PLC. 1,156.20 9.40 - 1 500 57 1,051,828 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,730.05 1.55 - 11 57,360 11 57,360 PACKAGING/CONTAINERS BETA GLASS PLC. 29,873.33 59.75 - 1 1,796 GREIF NIGERIA PLC 388.02 9.10 - 1 50,000 2 51,796 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 70 1,160,984 CHEMICALS B.O.C. GASES PLC. 2,547.42 6.12 - 6 252,200 6 252,200 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 92.40 0.42 - 1 200 1 200 7 252,400 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 7 455,000 7 455,000 INTEGRATED OIL AND GAS SERVICES OANDO PLC 48,482.51 3.90 2.63 30 872,646 30 872,646 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 56,974.05 158.00 - 15 36,807 CONOIL PLC 11,658.40 16.80 - 22 81,033 ETERNA PLC. 3,651.61 2.80 - 10 100,075 FORTE OIL PLC. 21,425.81 16.45 - 193 1,037,264 MRS OIL NIGERIA PLC. 5,729.98 18.80 - 4 35 TOTAL NIGERIA PLC. 33,952.18 100.00 2.99 46 101,178 290 1,356,392 327 2,684,038 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,387.46 4.05 -4.48 3 101,005 328.19 0.70 - 2 2,350 TRANS-NATIONWIDE EXPRESS PLC. 5 103,355 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 2 200 2 200 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 0 0 IKEJA HOTEL PLC 2,972.68 1.43 - 0 0 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 1 10 TRANSCORP HOTELS PLC 41,042.18 5.40 - 2 10,218 3 10,228 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 211.68 0.35 - 0 0 LEARN AFRICA PLC 1,072.32 1.39 - 2 5,306 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 591.03 1.37 -5.52 12 243,607 14 248,913 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 530.46 0.32 - 2 125,005

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Monday 02 September 2019

BUSINESS DAY

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49

50 BUSINESS DAY

Monday 02 September 2019

news PENGASSAN backs NLNG model to revive ailing refineries JOSHUA BASSEY

A

L-R: Peter Asade, chairman, Chartered Institute of Bankers of Nigeria (CIBN) Lagos State branch; Uche Olowu, president, CIBN, and Egube Samuel Avwerosuo, commissioner for Economic Planning and Budget, representing the governor of Lagos State, at the 2019 stakeholders Nite in Lagos.

Pic by Pius Okeosisi

NNPC DSDP: Masters Energy has capacity for big oil contracts ENDURANCE OKAFOR

I

ndustry experts have described Masters Energy Group as a conglomerate capable of executing bigger oil contracts than Direct Sale Direct Purchase (DSDP) crude contracts of Nigerian National Petroleum Corporation (NNPC).

Information gathered by our correspondent from industry experts revealed that the recent allocation of DSDP contract of 2019-2020 to Masters Energy Group was in recognition of the sustenance of the company’s huge investment in the upstream, midstream and downstream sectors of Nigeria’s oil and gas industry.

This outstanding capacity of the conglomerate according to industry experts was first identified by the NNPC in 2011 as a benchmark for the award of crude lifting to Masters Energy six years after the commencement of operation and incorporation in 2005.

However, the experts described the media report of political influence as not true by linking the DSDP crude contract to influence of the Minister of State for Mines and Steel, Uche Sampson Ogah, a former Chief

Executive Officer of Masters Energy Group who resigned to contest governorship election in Abia State.

The excellent capacity of the Group was corroborated as a fact by a former Deputy Director of the Department of Petroleum Resources (DPR) who attributed the track record, technical knowhow and financial capacity of the group as the yardstick for the DPR’s approval of the construction and utilisation of the largest fuel depot of Masters Energy commissioned over a decade ago in Port Harcourt, Rivers State.

He noted that these qualities made it possible for Masters Energy to be selected at that time for crude oil lifting contracts during the administration of former President Goodluck Jonathan.

A senior analyst in Multinational Oil &Gas firm explained that Masters Energy Group is known for transparency and commitment to excellent service.

He said: “I am not surprised with the feat recorded in crude lifting contract and inclusion of Masters Energy in DSDP contract since President Muhammadu Buhari’s aides and the NNPC management are only interested in awarding such complex contracts to companies with zero tol-

erance for graft and commitment to building of capacity within the country in line with Next Level agenda of the president”.

According to him, these attributes adopted in contract award process by the management of NNPC led by its Group Managing Director Malam Mele Kyari, made it possible for Masters Energy to win the DSDP contract again.

Experts at a conference of energy correspondents held at Eko Hotel , Lagos had described DSDP contracts as a factor that helped the NNPC to sustain excess supply of petroleum products in the country.

Masters Energy was also mentioned by these experts as one of the contractors known for good performance and positive contributions that helped the nation to save billions of naira and engaged several unemployed youths across Nigeria.

Findings revealed that Masters Energy Group with 100 per cent indigenous staff operates the largest fuel depot of West Africa in Port Harcourt, Rivers State and over 100 mega filling stations across Nigeria to add value to the nation’s economy.

It would be recalled that the immediate past Group Managing Director of NNPC Maikanti Baru

in a statement had disclosed that the DSDP had saved over $500 million, particularly through reduction in the amount paid on demurrage by the corporation.

The NNPC boss described the DSDP as a major component of the NNPC’s petroleum products supply portfolio, stressing that since inception, it has greatly helped in the stabilization of product supply to the nation.

rchaic rules compounded by the delayed Petroleum Industry Governance Bill (PIGB) part of which had been passed by the eighth National Assembly, but not yet signed into law, have been identified as a factor slowing investment in the Nigerian oil and gas sector, especially as it relates to refineries.

President of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Ndukaku Ohaeri, stated this when he led members of the Central Working Committee (CWC) of the association on a visit to Mele Kyari, group managing director of the Nigerian National Petroleum Corporation (NNPC), in Abuja.

Oha e r i b e l i e ve s t hat pending the PIGB, the Public Private Partnership (PPP) model that turned the Nigerian Liquefied Natural Gas (NLNG) around would help in reviving the nation’s ailing refineries.

“We acknowledge the huge challenge facing the refineries and note the efforts the government is making to

Expectations of N250bn capital injection excite insurance industry …as operators promise good returns MODESTUS ANAESORONYE

W

ith an estimated N250 billion expected to be injected into the Nigerian insurance industry after the ongoing recapitalisation by underwriters, the sector is hopeful to emerge stronger, contribute reasonably to the economy and also offer good returns to investors.

Industry experts believe that the sector post consolidation will have enough resources to attract quality manpower, acquire necessary skills to underwrite big ticket risks, increase retention in the local market, and be able to take advantage of untapped potentials to create shareholder value.

The National Insurance Commission (NAICOM) had

in a circular issued on May 20, 2019 announced increase in the paid-up share capital of life companies from N2 billion to N8 billion; general business from N3 billion to N10 billion; composite business from N5 billion to N18 billion; and reinsurance companies from N10 billion to N20 billion.

The minimum paid-up share capital requirement, NAICOM said, takes effect from the commencement date of the circular (May 20, 2019) for new applications, while existing insurance and reinsurance companies are required to fully comply not later than June 30, 2020.

Shareholder groups who have been pessimistic about investing in insurance companies had said there was not much to cheer about from the insurance www.businessday.ng

industry recapitalisation of 2007, having seen a lot of the companies being unable to pay good dividend since then, while a lot of their stocks have also been at par for a long time.

But operators say there is still much to hope for in investing in insurance as the industry holds a lot of untapped potentials that hold long-term prospect for savvy investors.

Daniel Braie, managing director/CEO, Linkage Assurance plc said the Nigerian investment climate is still one of the most attractive in the world in terms of investment returns, so that in itself is an impetus for new investors.

“Look at it from the point of our population demographics, the insurance industry is a huge market waiting to be unlocked. https://www.facebook.com/businessdayng

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rehabilitate them for optimal delivery.

“We had welcomed the initiative of bringing in investors to revamp the refineries in the area of funding and expertise. Though this did not work out as most investors are afraid of investing in a sector that is yet to come up with reforms to its archaic guiding rules, we do hope that the new method employed where NNPC will source for the funding of the rehabilitation internally and work with the Original Equipment Manufacturers (OEM) will make a huge success,” Ohaeri said.

Ohaeri noted that having identified the advantages that would follow the PIGB, there was the need for the new NNPC management to join in putting pressure on the National Assembly and the government to resolve issues delaying the expected new law.

He explained that with the uncertainty surrounding bill, investors were wary of long-term investment in the industry thereby affecting the creation and retention of jobs, which is one of the cardinal principle of the President Muhammadu Buhari-led administration.

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news Moribund assets: Oyo partners NIPC, NIMASA … Dugbe to become Central Business District REMI FEYISIPO, Ibadan

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overnor Seyi Makinde of Oyo State says before the first quarter of 2020, Oyo State would have become a major investors’ destination in Nigeria, as the state partners Nigeria Investment Promotion Commission (NIPC), Nigerian Maritime Administrative and Safety Agency (NIMASA) and the Development Agenda for Western Nigeria Commission (DAWN Commission).

Segun Ogunwuyi, executive assistant to the governor on Investment Promotion and Public Private Partnership, made this disclosure when he paid courtesy visits to Federal Government agencies in Ibadan.

Ogunwuyi, who was a former member of the Federal House of Representatives, said Oyo State was positioned to benefit maximally from partnership with the agencies in its quest to revive moribund state industries and assets in order to bring about progressive commercial climate to the state as a whole.

Speaking at the Ibadan office of DAWN Commission, Ogunwuyi pointed out that the state could not wait to fast track activities towards achieving financial independence through revitalisation of state-owned industries that would soon be co-owned by private individuals and corporate bodies.

He promised Seye Oyeleye, the director-general of the Commission, that the state was ready to key into the programmes of

DAWN Commission for the aim of promoting investment in the state.

“We appreciate the DAWN Commission for her pivotal role in the region on integration and development. Oyo State is on board with InvestWest 2020. The administration of His Excellency Seyi Makinde is ready and open for investment, especially in the area of resuscitating the state moribund companies and assets through PPP. “Other areas of interest the state is working on is to improve the business environment in Oyo State and make it more conducive. We know this is where DAWN Commission has been active at the regional level.

“Also, we are interested in having a functional investment promotion agencies backed by law in Southwest, likewise the recreation of Dugbe as Central Business District (CBD) while maximising the economic opportunities of the Lagos – Ibadan Railway project through the rail routes and stations.”

Seye Oyeleye, the DAWN Commission director-general, while welcoming the entourage from the state government, said the body was planning towards the Western Nigeria Investment Summit (InvestWest) 2020, calling for collaboration from the state.

Oyeleye thanked the Executive Assistant and his team for deeming it necessary to visit the office, asking newly appointed cabinet members across the region to do same.

AXA Mansard partners Children of Africa on ‘Back to School Fair’

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XA Mansard, a member of AXA, a leader in insurance and asset management, has partnered Children of Africa Agency to organise the 2019 Children of Africa Back to School Trade Fair and Expo.

It was a three-day trade fair held between August 23 and August 25 2019. The fair included entertainment and educative activity and a summer camp where children were impacted with skills such as leadership and entrepreneurship.

“A child’s education is undoubtedly very important.

This is because education is a tool that gives a person a lot of power. Apart from the fact that a well-educated child is a pride to his or her parents, he or she is also empowered for a better, brighter future, and is exposed to the opportunities to become a leader,” Nkiru Umeh, head of Brand and Communications at AXA Mansard, said.

“Not only is education central in enhancing the financial capability and independence of a person, it also plays a vital role in deciding growth of nation as educated citizens of the country brings

fame, wealth and prosperity to the country, which help in development of a country,” Umeh said.

The event also featured amazing games and served as an avenue for brands and manufacturers to express their commitment to the public and to create emotional bonding between their brands and their target audience by bringing school items closer to the public at prizes lower than the existing market prizes.

There were various side attractions, raffle draws and a celebrity corner. In attendance were over 20,000 children and parents and 50 schools. The event held in three different venues around Lagos: Maryland, Ilupeju and FESTAC. Umeh said, “AXA Mansard is proud to be associated with a movement such as the Children of Africa Trade Fair which is focused on engaging children, parents, schools and other education stakeholders to ensure an improvement in the country’s standard of education overall.

We recognise the role of education in quality of a person’s life and in nation building and therefore support initiatives like this.” www.businessday.ng

L-R: Mohammad Shah Ekramul Hoque, third secretary and head of chancery, Bangladesh High Commission; Chuks Oluigbo, news editor, BusinessDay; Shameem Ahsan, high commissioner, Republic of Bangladesh, and Stephen Onyekwuelu, energy analyst, BusinessDay, at the courtesy visit of Bangladesh high commissioner to BusinessDay head office in Lagos.

NBA seeks involvement in AfCFTA negotiations, determination of CCT status T OLUWASEGUN OLAKOYENIKAN

he 59th Annual General Conference (AGC) of the Nigerian Bar Association (NBA) adjudged as the most wellattended in the history of NBA has come,thoughended,itisnotgone as the association has resolved to moverecommendationsmadeat the 42 sessions of the conference fromdiscussionstotakingdeliberate steps for their actualisation.

The recommendations include the involvement of the NBA and the Office of the Attorney General of the Federation (AGF) in the African Continental Free Trade Agreement (AfCFTA) negotiations on services, owing to its potential impact on the legal professionuponfullimplementation; the determination of status of the Code of Conduct Tribunal (CCT) in the Nigerian system by the Supreme Court, among 16 others adopted at the conference.

“The status of the CCT has remained a gray area in Nigerian jurisprudence which has given rise to great contention,” NBA

said in a four-page communiqué issuedattheendoftheconference in Lagos. “With a view to resolving thisgreatcontention,theSupreme Courtisurgedtoavailitselfanyopportunity to make an unambiguous determination on the status of the CCT, and clarify whether it is an organ of the Executive or a quasi-judicial tribunal capable of being vested with criminal jurisdiction.”

Parts of the measures aimed at ensuring these resolutions become vital tools for resolving Nigeria’s current problems, developing legal practice, and takingthenationandbyextension Africa into the future were to set up a monitoring process to track implementationofallrecommendations and hold a monthly press briefing to keep the pubic abreast of progress made.

The theme for 2019 edition of the AGC “Facing the Future” was carefully chosen to underscore the future of the legal profession, businesses, the judiciary and government amidst a rapidly changing world driven by fast-paced

technological innovations and increasing external competition in a globalized world, according to NBA. “The conference achieved the objective of speaking to the task of ‘Facing the Future’ with new initiatives for taking our people forward,” NBA said. “In terms of the overarching policy objective, the message of the conference is to move from dialogue to taking positive steps.”

Astepinthisdirection,according to the association, would help NBA achieve its true potentials through scalable and sustainable solutions that would impact the dailylifeofNigerians;andthrough solutions anchored on the true rule of law; fair treatment of women and youths; and inclusion of all in the benefits of technological innovation and new thinking.

NBA noted it adopted the recommendations in “acknowledging the roles of the different stakeholdersin‘FacingtheFuture’ for the betterment of the legal profession,theNigerianeconomy and the general public.” These

recommendations comprise 11 relating to the Nigerian government and 7 others involving legal practice and other stakeholders.

In addition to involvement in AfCFTA negotiations and determination of CCT status, judicial officers were encouraged to be independent and fair in the execution of their functions in order to bolster and retain investor confidence, businesses and the public in the judiciary, while the government was advised to explore alternative financing structurestobridgefinancinggap.

Similarly, the conference urged the government to adopt the Voluntary Principles on Security and Human Rights, while it also resolved that the NBA should work with the Office of the Attorney General of the Federal (AGF) and Solicitor General of the Federation to amend existing laws and draft new laws to introduce appropriate structures that would advance the development interest of Nigerian lawyers and legal services delivery standards.

Internet market faces monopoly as Google, Facebook accelerate subsea cables to Africa ... existing cable investments yet to be fully utilised risk insolvency FRANK ELEANYA, Johannesburg

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he internet market in Africa faces a potential over capacity and monopoly by big-money investors such as Google and Facebook, as both have accelerated their subsea cable projects aimed at connecting Africa to the rest of the world.

Google’s Equiano cable, which ironically is named after Oluadah Equiano, a former Nigerian slave, seaman and merchant who wrote an autobiography depicting the horrors of slavery and lobbied UK Parliament for its abolition, is expected to start from Portugal’s capital in Lisbon and run down Africa’s West coast to connect with South Africa and

Nigeria.

The cable, which is Google’s 14th subsea cable investment and the third international cable funded entirely by the company, is expected to cost around $300 million. When phase 1 is completed by 2021, Equiano may have used between 12 fibre pairs (large for a subsea cable) and 16 fibre pairs, coupled with the latest optical networking technology, to deliver a design capacity of about 120Tbps (terabyte) or 360Tbps far in excess of anything that has been built around Africa to date.

“Equiano will be the first subsea cable to incorporate optical switching at the fibre-pair level, rather than the traditional approach of wavelength-level switching,” Google noted in a

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statement on its website. “This greatly simplifies the allocation of cable capacity, giving us the flexibility to add and reallocate it in different locations as needed.”

Simba, meanwhile, will be owned by a consortium Facebook is putting together. The plan, according to the Wall Street Journal, is to build the cable in three phases with around 300 to 400Tbps.

Both Equiano and Simba will add nearly 1Pbps (petabyte) of capacity. Google said in June 2019, that the Equiano system will have 20 times the capacity of the more recent cables laid along the route.

The active fibre optic cables in Africa include SEACOM (12Tb), TEAMS (1.2Tb), MainOne @Businessdayng

(10Tb), SAT3/SAFE (800Gb); Glo1 (2.5Tb); ACE (5Tb); NCSCS (12.8Tb); WACS (14.5Tb); SAIL (32 Tb); SACS (40Tb); EASSY (10Tb); and LION2 (1.2Tbs) among others. The carriers – about 30 of them – have invested more than $1 billion so far.

In West Africa where five major cables – MainOne, SAT3/ SAFE; Glo1, ACE and WACS – with a combined capacity of 32.800Tbps are responsible for providing internet services, only 10 percent of the existing capacity has been utilized so far. Years of trying to get the government to provide an enabling policy environment and invest in infrastructure that enables carriers to deploy remaining capacity has yielded little results.

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news Regulatory agencies stifling businesses, NECA tells FG … as government considers clearing desk for OPS’ complaints

JOSHUA BASSEY

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Luqman Edu (m), chief visionary officer, FilmoRealty, with representatives of Microsoft (US HQ office), during a visit to launch project in Lagos.

FilmoRealty partners Microsoft in move into Proptech

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ilmoRealty, a real estate services company in Nigeria with a focus on facilities and project management, has partnered Microsoft to transform the real estate services industry in Nigeria.

With a 25-year track record of delivering real estate services to high-profile companies and individuals spanning 12 states, FilmoRealty is accelerating and investing in the development of technologydriven solutions necessary to better serve its clients and drive forward the evolution of real estate services.

Through its partnership with Microsoft, FilmoRealty is now uniquely positioned to

execute its new tech-driven business strategy, which will optimise real estate service delivery and also place it at the forefront of proptech (property technology) in Africa.

Representatives from Microsoft’s US headquarters recently paid a visit to FilmoRealty’s Lagos office to spotlight its tech-focused strategies and processes as an innovative company. The visit resulted in a spotlight feature video, which highlights FilmoRealty’s adoption of Microsoft’s cloud-based, highly secure workplace tools to optimise its services and build its growing portfolio of proptech products.

One such tool includes Mi-

Anxiety for parents as school resumption draws near PEACE DANIEL

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s schools prepare to resume for the 2019/2020 a ca d e m i c s e s s i o n , many parents have expressed concern at the high cost of school items.

Some parents, who spoke with BusinessDay, said it was time to start thinking of how to pay school fees, do school errand, meet the demands of their wards, new and old students, especially those in boarding houses.

Stella Amodu, a civil servant, said school fees remained the same from the previous session, but prices of textbooks, writing materials, school bags and shoes had gone up.

“We learnt that Nigeria is out of recession but it is yet to reflect on the cost of living because things are still expensive. I am tempted to believe that the traders are taking undue advantage of the economic situation to exploit consumers,’’ she said.

Another parent, Adekoya

Lawrence, a businessman, said the cost of textbooks and stationery was quite high, saying, “We parents and guardians have already set aside funds for the preparation of their children and wards for this new academic session.

However, the market prices are beyond our expectations.”

Lawrence narrated that August and early September season was also fearful months because some father had three or four children or (more) to cater for, “this season requires a lot of planning and discipline because most schools don’t even allow for part of instalment payments.”

Ukpong Casper, the principal of Royal Christian College Essien Udim AKS, said schools were making preparations for new laboratory equipment, library books, and putting in school facilities in order to equip students with the skills and academic success required to access new opportunities and enhance their life chances. www.businessday.ng

crosoft’s Power BI, which supports FilmoRealty’s operations with big data analysis and insights that equips clients with the information needed to make powerful strategic business decisions related to the management of their real estate portfolio.

“We are moving from just managing sites and responding to situations, to understanding trends in maintenance issues, resolution times, contractors’ SLAs, customer satisfaction levels – everything we need to optimise management services,” says Luqman Edu, FilmoRealty’s chief visionary officer. “Our new operations control center runs on VAMP, our flagship

proprietary software which monitors our clients’ sites and is the engine that supports our services.”

Through its partnership with Microsoft, FilmoRealty will continue to set the pace for the paradigm shift in the Nigerian real estate industry, ensuring the development of innovative tools, technologies and service delivery models necessary to produce breakthrough results for its clients.

FilmoRealty is a leading real estate services and proptech company in Nigeria with a focus on property and facilities management, development and project management and advisory and consultancy services.

Job creation: Dangote scales up investment in agric

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etermined to contribute to significant reduction in the number of unemployedNigerians,DangoteGroup overtheweekendannouncedthat it was scaling up its investment in agricultural sector.

Agriculture, according to the group, is the only most visible way of addressing the high unemployment rate in the country. Dangote further assured that its huge investments in the sector would lead to real growth and development of the country’s economy.

Fieldingquestionsfromnewsmen on the sideline of the just concluded 2nd edition of the Agribusiness Summit in Abuja Group Executive Director, Strategy, Capital Project and Portfolio Development Devakumar VG Edwin said the new investments aresignificantandtimelygiventhe current rate of unemployment in the country.

According to Edwin, agriculture employs 37 percent of the population, adding that this is against the backdrop of 23 percent unemployment rate in the

country.

He said going forward his company was upping its investment in rice, tomato paste, and sugar and dairy products.

Hesaidpresentlythepan-African conglomerate was constructingstateoftheartstoragesilos,and as well carrying out parboiling, rice milling, polishing, sorting and parking units for a total capacity of one million tons of paddy.

Edwinsaidthereisanongoing “investment in 15,000 hectares to produce and process tomato paste of 150,000 tons per year. The current import is 0.5 million tons per year.”

He said his conglomerate was equally investing in 40,000 hectares to produce sugar, just as he hinted about the ongoing construction of a 3 million tons fertilizer plant.

He said part of the company’s plannedalsoincludedinvestment in dairy products and oil seeds.

With adequate arable land and availability of water, he expressedoptimismthatNigeriahas all it takes to grow the agricultural sector.

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egulatory agencies are stifling rather than promoting and creating the much-desired enabling environment for businesses to thrive in Nigeria.

This was the submission of Nigeria Employers’ Consultative Association (NECA), when a delegation from the Organised Private Sector (OPS) met with Vice President Yemi Osibanjo in Abuja, todiscusswaysofmakingtheNigerian environment more attractive to investors and investments.

Arising from the concerns raised, the Federal Government is considering setting up a clearing desk within its ease-ofdoing-business framework to receive and address complaints from the OPS. According to Timothy Olawale, director-general of NECA, who spoke with journalists after the visit, it is worrisome that while the government is promoting ease-of-doing-business, regulatory agencies at the same time are putting spanners in the work.

“What we are seeing and saying is that it is not all regulatory bodies of government the are on the same page with government on the desirables.

“Even when you have cases in court and there is restraining order; we have instances where some the regulatory bodies go against such restraining orders and still go ahead to disrupt businesses,” Olawale said.

Olawale made reference to instances where some of the regulatory bodies shut down businesses without recourse to dialogue and instances, where there were interventions from the agencies of government

outside their enabling Act. Noting that the regulatory agencies were working at cross purposes, the director-general submitted that except the vision behind the ease-of-doingbusiness, supervised by the office of the vice president, was allowed to work, the OPS might have to regularly approach the court to check the excesses of the agencies.

The NECA DG said the meeting with Osinbajo afforded the OPS the opportunity to raise issues of concerns to businesses in Nigeria, including competitiveness and tax burdens.

“There are several of them but key among them are the issue of regulatory bodies that are working at cross purpose.

The ease-of-doing- business that is being championed by the Office of the Vice President and Presidential Enabling Business Environment Council (PEBEC); what we are saying is that we may not have access to Office of the Vice President every now and then to escalate issues for his attention.

“While also we do not want to be running to the court to seek relief because of the issue of non-accessibility of some of the chief executives of some regulatory bodies, we want a situation where there is a clearing desk on the Office of the Vice President, where we can escalate these issues and they can be resolved amicably, in the interest of national development and national economy,” he said.

The vice president, Olawale said, has promised to look into the concerns of the OPS by setting up a desk where these issues can be escalated because government is desirous of partnering OPS to better the economy.

MTN calls for entries for 2019 mPulse kiddies’ hackathon

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n f u r t h e ra n c e o f i t s commitment to bridging the skills gap, providing world-class learning opportunities for Nigerian children, and contributing to the growth of the country’s education sector, MTN Nigeria has announced call for entries for the 2019 mPulse Kiddies Hackathon.

Themed, “Design the Future of Technology,” this initiative aims to promote the grooming of Nigeria’s next generation of innovators and inventors. The Hackathon is open to digital savvy children from ages of 9 to 14, resident in Lagos.

“At MTN, we see the kids as the future in its true terms. Building the future brick by brick, through technology is a vital process of preparing the young generation for the challenges of tomorrow. The country stand s to gain a lot from a generation well @Businessdayng

equipped to provide the technology innovations required to propel the nation to greatness in the future.

That’s why we are commissioning the mPulse Kiddies Hackathon,” said Bayo Adekanmbi, chief transformation officer, MTN Nigeria.

Participants will be provided with tools to work with, gain access to the hackathon portal and receive mentoring from some of the leading lights in Nigeria’s technology and startup scene on how to apply tech knowledge to tackling real life problems.

The top 15 projects will be selected and invited to the grand finale on 6 September, at MTN Plaza, Ikoyi, Lagos while the top five winners will pitch their ideas and the three best ideas rewarded with prizes as winners. To participate, eligible kids can register on the hackathon portal (bit. ly/mpulsehackathon).

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news Memfys Hospital, GE Healthcare collaborate to improve disease diagnosis in Nigeria ANTHONIA OBOKOH

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n strengthening the knowledge of technology use by laboratory scientists in order to improve Nigeria’s health care system, GE Healthcare has partnered Memfys Hospital to provide the SIGNA™ Explorer 1.5Tesla MRI system services and training to advance early diagnosis of diseases.

According to a press statement made available to BusinessDay, the collaboration will help provide innovative technology to enable early diagnosis and detection of diseases; by providing clinicians with detailed information about diseases such as cancer, neurological disorders and heart diseases. The new equipment will help the hospital deliver high quality medical services and better care to more patients across the region.

Memfys is the first hospital in South-East Nigeria to install GE Healthcare’s SIGNA™ Explorer 1.5Tesla MRI system, as the only dedicated neurosurgery hospital in South-East Nigeria. Memfys Hospital is serving a population of over 60 million people.

Memfys further states that investing in the latest tech-

nologies such as the SIGNA™ Explorer 1.5Tesla MRI system will help improve the hospital’s diagnostic capabilities for early detection of diseases and at the same time keep up with global best practices to provide the very best for the country and West Africa region at large.

“As a leader in the neurosurgical space, we are committed to continue providing high quality patient care using modern, high tech and reliable equipment that meets the recommendation by the World Federation of Neurosurgical Societies (WFNS). Acquisition of the SIGNA™ Explorer is a huge milestone towards this commitment,” Samuel Ohaegbulam, CEO, Global Memfys & Co. Limited, states.

To ensure sustainability of such investments, Memfys Hospital is providing training for both young and experienced doctors embarking on a career in Neurosurgery and Spinal surgery. The hospital is accredited by the West African College of Surgeons (WACS) for full training in neurosurgery making it the only private health institution to enjoy this status in all of Africa. To date, Memfys has trained 20 neurosurgeons and about 10 senior residents.

Nigeria’s capacity to harness agric value chain hangs on stimulating local demand Josephine Okojie

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or Nigeria to fully take advantage of its agricultural value chain opportunities and create jobs for its teeming youth population, it must first stimulate local demand, enforce quality and continue to improve the business climate, experts say.

The experts, who spoke at the First Bank 2019 Agric Expo with the theme ‘Agricultural Value Chain: Spotlighting Opportunities and Managing Risks,’ said the ability of the country to drive local consumption of agro produce without necessarily placing a ban on food imports will enable Nigeria stimulate economic growth and reach its target of diversification.

“We need to look for ways to stimulate local demand, create standards and enforce quality while we continue to improve our business climate if we are to fully harness our agric value chains opportunities,” Babatunde Shodipe, senior manager-export development financing, African Export-Import Bank, said in his keynote address.

“We need to adopt the Brazil coffee model and the Egyptian cotton model to grow our agricultural com-

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modity value chains. We need to create markets that can sustain the industry for decades,” Shodipe, who represented Ben Oramah, president/chairman – board of directors, African ExportImport Bank, said.

He called on financial institutions in the country to explore innovative financial tools to support the sector with adequate finance.

The greatest opportunities in the agricultural value chains lie in the value chain that is closer to the final consumer, he said, saying the higher the value chain the lesser the investor is affected by price volatility of the commodity.

“Processing to retailing accounts for 80 percent of the profits in the agricultural value chain,” he said.

Brazil was able to grow its coffee industry and became top global producers of the crop owing to its ability to spur local consumption of the produce.

Speaking also at the expo, Adesola Adeduntan, CEO of First Bank, identified policy flip flop and low understanding of the sector by the banking industry as some of the risks associated with financing the sector.

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CITN seeks FIRS collaboration to drive revenue generation HOPE MOSES-ASHIKE

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hartered Institute of Taxation of Nigeria (CITN) is seeking the collaboration of the Federal Inland Revenue Service (FIRS) in its quest to make taxation the foremost driver of revenue generation in Nigeria.

The CITN notes that FIRS has severally adopted unique innovative strategies and initiatives in the collection of VAT during the period (2015 – 2017) that led to approximately 40 percent increase over 2012 – 2014 collection figures.

The various initiatives included ICT innovations, taxpayer education, taxpayer enlightenment and evaluation, among others.

Adefisayo Awogbade, registrar/chief executive, says CITN as the only tax professional regulatory body in Nigeria has keenly observed that since August 2015, the FIRS target for two major non-oil taxes were increased by 52 percent for Value Added Tax (VAT) and 45 percent for CIT. This period, he states, has not only witnessed increase in absolute collection figures, but has more than ever increased taxpayers base @Businessdayng

and has brought tax compliance consciousness to the Nigerian populace, among others. There has never been a time in the modern history of Nigeria that taxation has become a serious issue for conversation.

“As part of our tax review mechanism, our Institute exudes confidence that the current strategies and initiatives will improve revenue collections and meet the expectations of the government. It is hoped that with the adoption of more tax compliance strategies, the tax base will experience further widening to include more people, sectors and businesses into the tax net for enhanced revenue generation,” Awogbade states.

The registrar says the FIRS has done credibly well and needs to be commended for these great steps by government and all well-meaning Nigerians. The job of tax collectors is a tough one as taxpayers do loathe them.

“We are convinced that we have made some progress but yet to reach our objectives as regards taxation in Nigeria. We urge the FIRS to join hands with CITN in its avowed quest to make taxation the foremost driver of our revenue generation in Nigeria,” he says.

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FINANCIAL TIMES

World Business Newspaper CHRIS FLOOD

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lackRock chief executive Larry Fink took a pay cut last year — but the head of the world’s largest asset manager still earned more than double any rival mutual fund company boss.

Pay awards to asset management chief executives are under scrutiny due to widespread public anger at the huge growth in salaries taken by top company bosses during the past decade, when earnings for ordinary workers have stagnated.

Many of the world’s biggest fund companies, including BlackRock, also face increasing interest in their voting records following accusations that they have been rubberstamping exorbitant executive pay deals in the US and Europe.

This has created numerous problems for leading asset managers, which must balance their roles as corporate stewards with pressure to reward and retain top staff.

FTfm went through the annual reports and regulatory filings of almost two dozen US and European fund managers to shine a light on the salaries of chief executives who together oversee close to $18tn.

Eight chief executives in the US and 10 at European fund companies saw pay cuts in 2018 as rising costs and adverse market movements dented profits for traditional asset managers.

Tim Wright, leader of the asset management reward practice at PwC, the professional services provider, says: “Fund company CEO pay is strongly correlated with the performance of financial markets,

Fund management chiefs hit by big pay cuts in 2018 Sector reins in awards but CEO remuneration still faces scrutiny

From left, Larry Fink of BlackRock, Tom Faust of Eaton Vance and Yves Perrier of Amundi

which had a pretty abysmal year in 2018.

“Productivity measures, such as revenue per employee, also weakened, due in part to the increase in headcounts seen across the industry last year. This also contributed to downward pressure on CEO pay.”

Mr Fink topped the league table with a pay award of $26.5m in 2018, a drop of 4.3 per cent on the $27.7m he was granted the previous year, based on disclosure guidelines specified by the Securities and Exchange Commission, the US regulator.

The SEC specifies that annual remuneration disclosures should include all cash earnings and equity-based incentive payments made in a particular year, even if some of these awards are based on performance in another period.

BlackRock reported in April

that Mr Fink had taken a $4m cut last year, reducing his pay by 14 per cent to $24m. The timing of some performance-based stock awards means this $24m headline figure announced by BlackRock is below the figure reported here, which follows the SEC’s rules.

BlackRock’s independent compensation committee, chaired by Ivan Seidenberg, a former CEO and chairman of Verizon Communications, decided to cut Mr Fink’s pay after some aspects of the company’s financial performance failed to meet expectations. It was also due to underperformance of products designed to produce excess returns.

At the time, Mr Fink said he felt “deep disappointment” in the performance of BlackRock’s share price, which fell 23.5 per cent last year.

Mr Fink is also entitled to about $46.6m in stock awards that have not yet vested.

Stock awards can increase significantly in value over the period from when they are granted to when they are vested, or cashed in. As a result, some analysts argue that it is more accurate to report pay data that includes the contribution made by vested stock awards instead of the fair value estimates used when stock awards are granted.

Salvini’s failed gambit leaves Hong Kong protesters his political future in balance blockade city’s airport

Leader of rightwing League party criticised for trying to force fresh election HANNAH ROBERTS AND DAVIDE GHIGLIONE IN ROME

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ith his everyman appeal and social media savvy, Matteo Salvini’s popularity has soared since he became a key figure in Italy’s unsteady coalition government 14 months ago. But the pugnacious leader of the rightwing League party now faces an array of critics who claim he has over-reached.

Since pulling the plug on the government three weeks ago, his plan to capitalise on his lead in the polls by forcing fresh elections has backfired after other parties unexpectedly united to block his power grab.

If the Democratic party and the Five Star cement their new partnership under prime minister Giuseppe Conte — which could yet fall apart — Mr Salvini would be relegated to the sidelines.

He claims to have no regrets. “It’s better that you win with your political scheming today and we win the hearts and minds of Italians tomorrow,” he said in a Facebook video on Thursday.

But his opponents say he is a victim of his own hubris. “There is no

doubt that he was drunk on power,” former prime minister Matteo Renzi of the centre-left PD told the Financial Times. “Until a month ago [he] seemed invincible but now he is in a corner.”

The League insists that Mr Salvini did not make a mistake and that this manoeuvring will pay off in the end, when the new coalition falls apart.

They “have nothing in common, there is no trust”, said League MP Edoardo Ziello. “The other parties will disappear after a year or two but sooner or later the Italian people will vote.”

A poll on Thursday found that 32 per cent of Italians intended to vote for the League. Mr Salvini is still lauded in some quarters as the man who made the League a contender in mainstream Italian politics, garnering 34 per cent of the vote in European elections in May. “Until August he never put a foot wrong,” says Giovanni Orsina, professor of politics at the University of Luiss, Rome.

His first mistake was timing. He should have called for elections after the European polls, analysts say. Instead, by waiting, he set the country on course for autumn elections during budget season for the first time in 100 years. www.businessday.ng

Demonstration at aviation hub follows night of mayhem in Asian financial centre SUE-LIN WONG, JAMIL ANDERLINI AND NICOLLE LIU IN HONG KONG

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ong Kong protesters blockaded the city’s international airport on Sunday, capping off a weekend of chaos that involved some of the most intense clashes yet seen in the city’s nearly threemonth-old political crisis.

On Sunday afternoon thousands of demonstrators converged on the airport, the world’s third busiest by passenger numbers, shutting down its train shuttle service and barricading roads with shared bikes, trolleys and traffic barriers. Most flights continued operating as normal, although some travellers were unable to arrive in time for their departure.

Riot police eventually cleared the crowds of protesters.

“The airport is Hong Kong’s most important economic lifeline,” said Cary, a 19-year-old student, standing in front of makeshift barricades designed to block the major road leading to the airport.

“We have to try to shut it down to pressure the government.”

Riot police also entered a sub-

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way station near the airport after protesters smashed ticket machines and broke a fire hydrant which flooded the station. The Hong Kong authorities have been sporadically halting subway services, also known as the MTR, in recent weeks in an attempt to stymie the flow of protesters around the city.

“The MTR no longer serves Hong Kongers so we don’t need to treasure and protect it. Now the MTR just serves the Chinese Communist party and the police,” said a 20-year-old protester holding a pole inside the station.

The airport blockade and subway destruction followed an evening of mayhem on Saturday in which protesters besieged the city’s government offices and set fire to barricades, leading police to respond with water cannons, rubber bullets and pepper spray.

Hong Kong’s summer of discontent was triggered by a controversial extradition bill that would allow suspects to be tried in mainland China. But the protests have since broadened to include demands for an independent inquiry into the police and universal suffrage.

The protests on Saturday were @Businessdayng

organised to mark the fifth anniversary of Beijing’s rejection of full universal suffrage for the city, but they quickly degenerated into violent clashes, with protesters throwing Molotov cocktails at police and government offices.

Police also arrested at least 63 people including some inside a subway station after a scuffle broke out between protesters and other passengers on a commuter train.

The territory’s elite, masked Special Tactical Contingent — known as the “raptors” — then stormed the subway station, using pepper spray and batons to attack mostly unarmed passengers, according to footage from local media.

Public outrage grew as scenes of the police violence spread on social media on Sunday, with protesters heading en masse to the international airport in an attempt to shut it down. The move echoed a similar protest at the airport last month that led to a two-day closure of the regional aviation hub.

In other incidents on Saturday evening, police fired two warning shots in the air after protesters tried to snatch their guns. This was the second weekend in a row that police have fired live ammunition.

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Monday 02 September 2019

BUSINESS DAY

FT

NATIONAL NEWS

Moscow collects its spoils of war in Assad’s Syria Company controlled by friend of Russian president gains foothold in lucrative phosphate sector CHLOE CORNISH AND ASSER KHATTAB IN BEIRUT AND HENRY FOY IN MOSCOW

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t the state-run fertiliser plant near the city of Homs, gun-toting Russian mercenaries are on patrol, protecting a key element of Syria’s important phosphates industry.

President Vladimir Putin’s decision to throw Russia’s military weight behind Syria’s leader Bashar al-Assad helped turn the eight-year civil war in the regime’s favour. The Homs factory points to what Moscow received in return: a lucrative foothold in a key Syrian strategic resource.

Syria is estimated to have one of the world’s largest reserves of phosphates, which is essential to make fertilisers. And a company controlled by Russian oligarch Gennady Timchenko, a friend of Mr Putin, appears to have built an increasingly dominant position.

Syrian state-owned media reported in March 2018 that the country’s People’s Assembly was set to ratify a contract for Mr Timchenko’s company, Stroytransgaz Logistic, to operate the phosphate mine near the Syrian city of Palmyra.

According to such press reports, it is also partnering with state-owned General Fertiliser Company (GFC) at the Homs plant and this year received a contract to run the port of Tartous, from where raw phosphate rock and fertiliser are shipped overseas.

Iran, which also gave military support to the Assad regime, has been promised access to key industries, including rights to another phosphate mine.

Syria’s phosphates trade is not illegal — but it is shadowy. One reason, say businesspeople, is that according to contract terms reported by Syrian state-owned media, some profit from the sale of the resource ends up in the hands of the Assad regime, an international pariah for its brutal conduct during the civil war.

Phosphates are not subject to US, European and UN sanctions that have hurt the country’s other industries, notably its oil sector.

But the fear of dealing with sanctioned entities ensures that foreign companies are generally wary of Syrian exports.

Mr Timchenko and Stroytransgaz were also sanctioned by the US for “materially assisting” Russian government officials following the 2014 invasion of Crimea.

When it was reported last year that phosphates traded under the Stroytransgaz deal had reached Greece, it prompted questions in the European Parliament.

Executives at other phosphate companies say that to circumvent the reluctance to deal with Syria, their teams label raw Syrian phosphate as Lebanese, even though there are no phosphate mines in

Lebanon.

The true extent of relabelling is unclear, but EU data show phosphates worth €2m arrived in the Netherlands from Lebanon in 2018. According to one person who clears goods at the Syrian border, a regular flow of phosphate-loaded trucks crosses into Lebanon.

Lebanese and Syrian customs documents seen by the Financial Times show two near-6,000-tonne shipments of phosphate fertiliser were transported from the Lebanese port of Tripoli in May and June. The first vessel, Raouf H, later docked at the Greek port of Nea Karvali, according to data from MarineTraffic.com.

Shipping documents for the second vessel, Tenacity, also show Nea Karvali as the cargo’s discharge port. There are several fertiliser plants in the surrounding Kavala municipality.

Cedar Marine Services, the Lebanese company that operates Raouf H, did not respond to a request for comment. Tenacity’s operator could not be reached for comment. Greece’s statistical authority told the FT it would search for import data covering phosphates and fertiliser, then stopped responding to messages.

Syria’s phosphate exports jumped this year, despite the obstacles. Data from CRU, a commodity research firm, showed exports would hit 460,000 tonnes this year, from 328,000 tonnes in 2018. The data may not include all exports. In 2010, exports were 3.1m tonnes, but crashed to zero in 2016 as civil war raged.

People with knowledge of the trade said current phosphate exports were from stockpiles, and that no fresh mining had started.

Stroytransgaz appears to have rights to mine Syrian phosphate but it is unclear whether it has actually begun mining.

Stroytransgaz has won dozens of contracts to build energy infrastructure and logistics projects in Russia and other countries with strong ties to Moscow. Mr Timchenko is an old friend and judo sparring partner of the Russian president. The pair worked together during Mr Putin’s time in the St Petersburg administration in the 1990s.

Mr Timchenko’s connections to the Kremlin and the fact he has already been sanctioned make him a rare industrialist able and willing to oversee Russian involvement in Syrian phosphates, fertiliser industry executives and analysts say. “It’s a simple bit of business for [him],” said one. “It’s low cost and the market is there.”

Stroytransgaz told the FT it “had nothing to comment on” as it and its subsidiaries had no contracts in Syria, although Syrian state media reported in April that the group’s engineering arm had won a 49-year investment contract for the Tartous port. www.businessday.ng

Supporters of populist party Alternative for Germany at a pre-election rally in the Brandenburg town of Königs Wusterhausen © Reuters

AfD makes strong gains in eastern German elections

Mainstream parties wane but set to cling to power in polls in Brandenburg and Saxony

GUY CHAZAN IN BERLIN

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he anti-immigration Alternative for Germany has made strong gains in elections in two east German states but the mainstream parties of left and right also performed better than expected, bringing relief to Chancellor Angela Merkel’s government in Berlin.

According to projections broadcast by Germany’s ZDF TV channel, the AfD won 28.1 per cent in Saxony, one of its best results in a German election, and 24.5 per cent in Brandenburg, the state around Berlin.

The result showed that “the AfD is here to stay”, said Andreas Kalbitz, the party’s leader in Brandenburg, and that “no politics is possible without us”.

The outcome of Sunday’s vote means the two parties that govern in the two eastern states — the Christian Democratic Union in Saxony and the Social Democratic

party in Brandenburg — are likely to be able to stay in power.

However, both will require the support of the Greens, which increased their share of the vote in both states, to form viable coalition governments.

“Whether a government made up of the CDU, SPD and Greens will really be stable is for me a big question mark,” said Jörg Urban, the AfD’s leader in Saxony.

While some polls had indicated that the AfD could emerge victorious in both elections, the CDU won convincingly in Saxony, with 33.1 per cent, and the SPD won in Brandenburg, with 26.6 per cent.

It was still the worst result for each party since German reunification in 1990. The CDU’s vote in Saxony declined by about 6 percentage points, and the SPD’s by 5 points.

The two parties are allies in Ms Merkel’s “grand coalition” in Berlin.

The AfD hailed the result but it brings the party no closer to real political power. All the main parties have ruled out alliances with the populists.

Saxony is at present governed by the CDU in coalition with the SPD. Brandenburg is run by the SPD in coalition with Die Linke, a hard-left grouping with its roots in East Germany’s former ruling Communist party.

The CDU’s good showing in Saxony will relieve the pressure on its leader Annegret KrampKarrenbauer, who has struggled to impose her authority on the party since succeeding Ms Merkel as party boss last December. She was blamed for the CDU’s dismal performance in the European elections in May, but the respectable result in Saxony could mark a turnround in her and the party’s fortunes.

The result in Brandenburg will be a relief for the SPD, which had feared being beaten by the AfD.

France to trial no-deal Brexit customs system at Calais Plan includes 700 extra customs officers and a ‘smart border’ HANNAH COPELAND AND VICTOR MALLET IN PARIS

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rance will start trials from mid-September in Calais of the electronic customs system that it will put in place for freight crossing the Channel if the UK leaves the EU without a deal.

Announcing the plans to test the system ahead of a possible no-deal Brexit on 31 October, Gérald Darmanin, the French minister in charge of customs, told French radio station RTL: “For a month, we’re going to pretend there is Brexit. For a lot of companies, we are going to have a sort of dress rehearsal so that we are ready at the end of October.”

His comments came ahead of a meeting with Michael Gove, the UK minister co-ordinating “no-deal”

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Brexit planning, in Calais on Friday afternoon to showcase France’s preparations. These include 700 extra customs officers and a “smart border” to ease the burden on the 100,000 French companies that Paris estimates trade with the UK. The UK economy is heavily reliant on road freight that comes from Calais — via ferry to Dover and through the Channel tunnel to Folkestone — carrying just-in-time and perishable items, such as car parts and food.

Under a no-deal Brexit newly introduced customs controls could create a choke point as lorries converge on either side of the Channel.

A recent leak of the UK’s contingency planning for a no-deal Brexit, known as Operation Yellowhammer, found that between 50 and 85 per cent @Businessdayng

of lorries travelling between Calais and Dover were not expected to be ready to cope with new French custom controls. The documents estimated that this could lead to a reduction in traffic flows of between 40 and 60 per cent.

“Our duty is to prepare our country for all scenarios,” Mr Darmanin added on Twitter. “To be ready on D-Day to ensure the smooth flow of trade, including in case of Brexit without an agreement.”

He said the French system would allow companies to fill out an online declaration of goods heading for the UK before the trucks set off. This would generate documentation, including bar codes, that would feed into the electronic customs system and combine with number plate recognition technology.

Monday 02 September 2019

BUSINESS DAY

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FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Investors pull billions from UK on prospect of no-deal Brexit Portfolio managers reduce equity exposure in Britain after Boris Johnson’s rise to power CHRIS FLOOD AND SIOBHAN RIDING

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ore than $4bn has been pulled from UK equity funds since T h e re s a May a n nounced her decision to step down as Britain’s prime minister as fears mount that the UK is heading for a no-deal Brexit under her successor, Boris Johnson.

Investors have withdrawn $4.2bn from UK equity funds since late May, according to EPFR, a data provider. Outflows since the Brexit referendum in 2016 have climbed to $29.7bn.

Luke Ellis, chief executive of Man Group, the UK-listed hedge fund manager, said investors had put the UK into the “too hard to think about basket”.

Neil Dwane, global strategist at Allianz Global Investors, said the UK stock market was “unloved, underowned and cheap” and Mr Johnson’s positive rhetoric would fail to shift investors’ cautious stance.

“Boris must first resolve Brexit.

It will always get in the way until he does,” said Mr Dwane.

Portfolio managers running 250 global equity funds with $450bn in assets have also reduced their UK exposure, with the average holding sinking to 7.9 per cent, according to Copley Fund Research.

This is below the trough reached immediately after the 2016 referendum and down from a peak of 11.5 per cent in 2011 when Copley started the survey. As much as $2bn has been withdrawn from the UK by this group of managers over the past six months.

“We’re seeing a marked shift out of Britain and into mainland Europe by international fund managers,” said Steven Holden,

chief executive of Copley Fund Research.

The FTSE All-Share index has risen 20.5 per cent since the eve of the referendum in 2016, helped by sterling weakness to dollar earnings for many large international companies that are listed on the London market.

Arnab Das, a global market strategist at Invesco, said that the threat of a no-deal Brexit was increasingly being priced in by investors.

“The political dynamics have shifted from trying to negotiate unworkable compromises with the EU and within the UK parliament towards a fundamental reboot. That may lead to no-deal but there is also a significantly increased chance that there will finally be some sort of resolution to the thorny issue of Brexit itself,” said Mr Das. No-deal fears also hit investor appetite for UK property funds, which suffered net withdrawals of £410m in July — their highest monthly outflows since January — according to Morningstar.

“With the appointment of Boris Johnson as prime minister, a hard Brexit became increasingly likely and investors further shunned UK property assets,” said Bhavik Parekh, associate analyst for manager research at Morningstar.

Property funds, which invest heavily in commercial real estate, the value of which is sensitive to changes in the macro environment, have been hit by the Brexit unease.

Investors pulled £1.9bn from the products over the 12 months to the end of July, with outflows peaking around times of particular uncertainty, such as the original March 29 Brexit deadline.

Dorian is strongest hurricane to strike Bahamas Storm is upgraded to category five as it heads for Abaco Islands PATRICK TEMPLE-WEST IN NEW YORK

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urricane Dorian became the strongest storm on record to hit the northwestern Bahamas after it was upgraded to the most extreme “category five” designation on Sunday, according to the US National Hurricane Center.

As of Sunday morning, the hurricane was about to hit the northern Abaco Islands of the Bahamas with maximum sustained winds near 180mph, the NHC said. A life-threatening storm surge and dangerous winds are possible along Florida’s east coast through midweek.

“It seems to be one of the biggest hurricanes that we’ve ever seen,” President Donald Trump said on Sunday morning. “Its effects will be felt hundreds of miles or more from the eye of the storm and long before it potentially makes landfall . . . We expect that most of the Eastern Seaboard will be ultimately impacted,

and some of it very, very severely.”

Mr Trump had cancelled a trip to Europe to monitor the storm.

As it crosses the northwestern Bahamas, Dorian should weaken slightly, the NHC said, and should continue to do so as it moved north to the southeastern US. In the days since Dorian reached hurricane strength on August 28, the storm has strengthened with startling speed and now threatens to impose fatalities and billions of dollars worth of damage.

Four Florida counties have ordered mandatory evacuations for some residents, including those in mobile homes, on barrier islands and in low-lying areas, according to Reuters. Some coastal counties have announced voluntary evacuations.

Kevin Graham, director of the NHC, said: “You look at the structure, the structure is just a textbook case of a very powerful hurricane.

180 miles an hour, a dangerous situation and moving west at seven miles an hour. So a very slow storm.” www.businessday.ng

Demonstrators march along Corrientes avenue against the economic policies of the government of Argentine President Mauricio Macri during a protest on August 30. © AFP

Argentina prepares next steps to tackle debt crisis Likely next president Alberto Fernández faces dilemma in approach BENEDICT MANDER IN BUENOS AIRES

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resident Mauricio Macri’s administration is preparing to send plans to Congress on Monday to reschedule Argentina’s long-term debt, after rating agencies said the country had defaulted on its short-term obligations last week.

The measures are part of Mr Macri’s attempts to stave off a fullblown debt crisis by changing the repayments schedule for up to $50bn of obligations.

Argentina’s central bank was also making preparations over the weekend to try to shore up foreign reserves, the country’s media reported, after the government last week failed to sell new short-term bonds, leaving it struggling to find the cash for hefty upcoming repayments.

The peso fell by 26 per cent against

the dollar during August.

The crisis comes less than two months before an election, damaging the president’s economic credibility and cementing Alberto Fernández, the opposition presidential candidate, and his Peronist party as firm favourites.

But the further the crisis deepens the more difficult it would be for Mr Fernández to run the country. That has forced the opposition leader to tread a fine line between moderation in a bid to calm markets and fierce campaign attacks on the government.

Gustavo Marangoni, a Peronist and political consultant, said Mr Fernández was “playing good cop, bad cop”.

“In a highly unstable situation, there are no guarantees [as to what might happen],” he said. “It is a very complex dilemma . . . On the one hand you have the logic of competi-

tion; on the other hand you have the logic of co-operation to avoid collapse.”

Almost two decades ago a Peronist-dominated Congress burst into rapturous applause as foreign debt payments were suspended during the country’s 2001 financial crash.

This time around they must choose between co-operating with the government in clarifying how future debt payments will be made, or taking a more aggressive stance that could risk prolonged instability.

The debate in Congress “will give the first signal of what kind of administration we can expect going forward. But there are a lot of factions in the opposition, and it’s not clear which will have the upper hand, especially when it comes to economic policy,” says Jimena Blanco, head of Americas research at Verisk Maplecroft, a risk consultancy.

US consumers in firing line as new China tariffs kick in Beijing and Washington expand trade war with duelling levies on each other’s goods BRENDAN GREELEY IN WASHINGTON

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ashington added tariffs of 15 per cent to $112bn of goods from China on Sunday, expanding the trade war in a move that will probably raise prices for American consumers.

In retaliation, China triggered the imposition of additional tariffs on US goods including crude oil.

Until now tariffs levied by the Trump administration have raised costs for businesses with supply chains that reach across the Pacific.

Inflation remains low in the US, and importers have had difficulty passing their costs on to consumers.

The new tariffs, however, will hit “final goods” such as shoes and clothing, and could show up in household costs in the autumn.

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“Trump’s newest tariffs are bad news, but don’t expect consumers to start seeing the result of higher prices today,” said Chad Bown, who follows trade for the Peterson Institute for International Economics in Washington.

“It will take a bit of time for the more expensive clothes and shoes now being unloaded at the ports to make it on to store shelves and into online retailers’ warehouses.”

Trade threats against China and Mexico have depressed business investment in the US for the past year, and it declined in the second quarter of 2019. But consumer spending, an important part of America’s economy, has remained strong.

July spending data published on Friday by the Department of Commerce showed continued growth, though a survey by the University of Michigan released on the same @Businessdayng

day showed a drop in consumer confidence in August, to its lowest level since the election of President Donald Trump.

One in three respondents to the Michigan survey mentioned tariffs as a reason for concern.

Under the current schedule, tariffs on consumer goods will expand further to include toys and sports equipment on December 15.

Speaking on ABC’s This Week Pat Toomey, a Republican senator from Pennsylvania, expressed hope that the tariffs were part of a larger plan to protect US companies operating in China.

“If we get the Chinese to change their behaviour in a meaningful way in that area, and then drop the tariffs, then we will have ended up in a better place,” he said. “In the meantime, we’re doing damage. It’s a double-edged sword.”

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Monday 02 September 2019

BUSINESS DAY

FT

ANALYSIS

Conservatives cackling at Boris Johnson’s prorogation wheeze should beware Sometimes breaking a code can have more serious consequences than breaking a rule ROBERT SHRIMSLEY

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ometimes it is the cleverest wheezes that come back to haunt you. Boris Johnson’s daring move to suspend the UK parliament, to limit the time for opponents to frustrate his Brexit strategy, has delighted his supporters. Yet even if it proves decisive, Conservatives may still come to rue his contentious but legal gambit.

Among Mr Johnson’s allies there are those — his chief strategist Dominic Cummings, for example — who take a revolutionary approach to politics, yearning to refashion the old institutions of state. Rather more of Team Johnson, though, including the prime minister himself, believe in those institutions. Once the fight is won, they imagine normal political service will resume. Jacob ReesMogg, the Leader of the House, insists that the British constitution “can bend to a passing storm”. This may be a fond hope. Parliamentary democracy has been irrevocably altered by the Brexit battle.

Politics has become so polarised that reaction has largely divided along Leave and Remain lines.

A constitutional outrage is now something only the other side commits. Mr Johnson’s opponents see an unelected leader of a minority government suspending parliament for fear that it may block his plan to leave the EU on October 31, with or without a deal. For them this is an egregious and populist assault on democracy to drive through an extreme Brexit that was never on the ballot paper.

Leavers argue, with some justification, that many Remain-minded MPs have abandoned the principle of “losers’ consent” and are using parliamentary guerrilla warfare to block Brexit entirely. For Mr

Johnson, the extended suspension is simply a fighting of fire with fire.

Perhaps as important is that he believes he cannot secure fresh terms from the EU unless the threat of parliamentary sabotage is removed.

The reality is more nuanced, but then nuance was an early casualty of Brexit. Many of those Tories now dismissed as wreckers actually voted three times for Theresa May’s Brexit deal. Many of those now assailing parliament for blocking Brexit were those who fought most ferociously against that deal.

Underpinning everything, though, is one fundamental fact.

This government has no majority. In the 2017 election, voters made clear they expected Brexit to be delivered while denying the Tories sole custody of the policy. Yet both Mrs May and Mr Johnson have tried to govern as if they had the kind of majorities enjoyed by previous Tory prime minister Margaret Thatcher. Rather than bow to the arithmetic and seek consensus, both have tried to defy the numbers. In response, Remainers became equally belligerent. Many of those now fulminating against no deal helped bring this moment to pass by voting down Mrs May’s deal and failing to back any alternative.

Conflict between the legislature and the executive is the essence of parliament. What is unusual is the extent of the indifference both sides have shown to convention.

With Conservative rebels unwilling to countenance voting down their own government, anti no-dealers sought other paths. They have seized control of the House of Commons’ timetable, aided by an activist Speaker overturning conventions apparently to assist their struggle.

These breaches matter less. A government with a solid majority would not be stopped in this way.

US inflation remained below Fed target in July Data underscores dilemma for central bank looking for direction on monetary policy BRENDAN GREELEY IN WASHINGTON AND COLBY SMITH IN NEW YORK

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he Federal Reserve’s most closely watched measure of US inflation remained under the central bank’s target in July, as it wrestles with whether to cut rates further despite robust consumer spending.

The core personal consumption price index was up 1.6 per cent in July versus the same month last year, as it had been in June, according to the US Department of Commerce. It was up 0.2 per cent from the previous month.

Personal spending adjusted for inflation rose 0.6 per cent in July from June, well over analyst predictions of 0.3 per cent. All types of spending rose, but the trend was particularly apparent in non-durable goods, such as shoes or batteries, which rose 1 per cent in July.

Growth in spending on services, such as meals and haircuts, stayed above 4 per cent on a year-over-year

basis. Purchases of both non-durable and durable goods, such as washing machines, dipped sharply at the end of last year but have now recovered.

The Fed aims at a core PCE target of 2 per cent year-on-year growth, a goal it has had difficulty reaching consistently since the global financial crisis. The index has remained below target for all of 2019, even as wage growth accelerated.

Members of the Fed, including chairman Jay Powell, have spoken this year about the difficulty of reaching their inflation target, a problem shared by central bankers in Europe and Japan.

But with a central bank searching for new signals to inform monetary policy, after its single quarter-point cut in the fed funds rate in July, Friday’s data was inconclusive and market reaction was muted.

The policy-sensitive two-year Treasury bill yield was steady at 1.53 per cent. The dollar was largely unchanged. www.businessday.ng

Prue Leith: ‘We shouldn’t be so screwed up about food’ ‘The Great British Bake Off’ judge on why cakes make the world a better place JO ELLISON

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meet Prue Leith in the lift on our way to Galvin at Windows, which sounds like the name of a hair salon but is actually a rather ritzy restaurant offering modern French haute cuisine on the 28th floor of the Hilton, Park Lane. Despite the acreage of empty dining space on offer, at midday, in the middle of the week, we are seated next to the other diners to enjoy the panoramic views over west London. The guests are mostly out-of-towners, longtime gal pals meeting up for an annual chat over Pinot Grigio, or couples on the brink of becoming engaged. But the room prickles with excitement when the 79-year-old takes her seat.

Leith has enjoyed a decades-long career as a restaurateur, businesswoman, novelist and broadcaster, but her celebrity has taken on a new dazzle since appearing on the global television phenomenon The Great British Bake Off, the reality show in which amateur bakers are whittled to a winner according to their ability to produce self-portraits in choux pastry, or recreate Blackpool Pier with breadsticks. She took the job in 2017 when the show’s makers moved it from the BBC to Channel 4, a controversial moment. Many doubted the woman who had snatched the pastry fork from the fingers of former presenter Mary Berry, who chose not to make the move, but the critics have been largely silenced. Last year’s finale drew a live audience of more than 7.5m, and there exists a fairly broad consensus (well, in our house anyway) that the Leith-era GBBO is better than ever.

This week the show returned for a 10th series, as 13 new contestants entered the tent to proof their bakes and have their “soggy bottoms” prodded

by Leith’s co-host Paul Hollywood.

Notwithstanding a nasty leg injury, Leith retains her crown as contessa of the cake house.

Few are better qualified for the title. Born and raised in South Africa, Leith founded her first catering company in 1960, aged 20, on graduation from the Cordon Bleu cookery

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school in London. She opened Leith’s, her first restaurant, in 1969; the Prue Leith School of Food and Wine followed in 1975. She has written numerous cookbooks, nine novels and has held a number of nonexecutive director positions. None of her previous work, however, has had the same extraordinary reach.

“I don’t think anybody understands why it became so amazingly successful,” says Leith of GBBO’s tremendous popularity. “I think it’s partly that people like eating cakes, and the vicarious pleasure of seeing all that cake. But also because nobody’s out to humiliate anybody.”

In many ways GBBO has come to represent those things western society is said to be lacking: comradeship, dedication, the celebration of ordinary domestic skills — and filthy innuendo. “I don’t get most of them, but Paul is always seeing huge rudeness,” says Leith of the low-level smut that glazes almost every GBBO interaction. “But what is interesting is that Bake Off is genuinely watched by every age, and all sexes, cooks and non-cooks, and every class. People may be stuck on a benefits budget and eating really not good food but they’ll watch Bake Off.” Nevertheless, having campaigned for many years about the hideous levels of sugar in our diets, I wonder if Leith doesn’t feel a bit guilty about taking the dough for a show that oozes with the stuff. She shrugs off the charge of hypocrisy.

“I just feel that any way that gets kids into cooking is a good thing. I think it’s the start of a — I can’t bear the word journey, but if you ask people how they started cooking, they nearly always made cornflake cakes with chocolate at school, or they watched their mother baking. They don’t say, ‘I watched my mother making roast chicken’.”

Naturally, Leith is all about getting the kiddos interested in cooking.

She was served food prepared by house staff for most of her childhood. Her mother, Peggy Inglis, a famous actress in South Africa, never went near a kitchen, and her father, Sam Leith, was too busy producing dynamite for ICI to teach her how to bake. But even as a tree-climbing @Businessdayng

tomboy, Leith was able to knock out a few rock buns. She believes all children should be encouraged to cook, but does have some reservations about the generation of young gastronomes emerging as a result of the new foodie culture.

“I do find it a bit odd when a 10-year-old comes up to me at a book signing and asks me how to improve a tiramisu,” she laughs. “And it’s scary when children with very middleclass tastes ask things like: ‘What kind of gremolata should I serve with fish?’ I want to say: ‘What’s the matter with a bit of ketchup?’ ” No ketchup at Galvin’s, but there is a choice of three menus, mostly written in French and offering a range of dining opportunities. “Well, I don’t want the dégustation — that’s when they keep bringing you lots of little bits and pieces and talk to you about them all the time,” says Leith as she quickly edits the options. She settles on a starter of stuffed courgette flowers, followed by a smoked duck salad. I opt for the mackerel starter with crème fraîche and rocket, and then the hake. We drink water. I destroy the bread basket.

Leith has always been passionate about food and the business of its production. She first discussed the challenges of running a catering business with the Financial Times in 1972, and her take on managed growth seems as eminently sensible today as it did then. When she opened Leith’s, she was mentored by Albert Roux, with whom she would shop for vegetables because he had a refrigerated van. She recalls him sniffing the air “like a bloodhound”, in search of overripe melons, and learning to share his obsession for seasonal ingredients. “If I have bought two ready meals in my life it’s a lot; I can’t remember any,” she says of her fondness for the cooking pot. When she sold her cookery school in 1993, she had educated a generation of professional chefs and enthusiastic amateurs, and was turning over more than £15m a year.

The catering academy she founded in South Africa, in 1995, continues to place chefs in the top restaurants in Africa each year.

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Monday 02 September 2019

BUSINESS DAY

FIXED INCOME

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Here are the top 10 companies to work for in Nigeria

Why it makes sense to start Investing in Dollar Assets

The Central Bank of Nigeria (CBN) on Friday re-issued the N400 billion Open Market Operation (OMO) auction, which recorded improved sales with a slight increase in the stop rate especially for the longer term instrument.

Whether it’s the jumbo pay, prospects for career growth, organizational culture or management structure, some companies just know how to treat employee right.

The earnings season is here again as half-year results of public quoted companies pour in.

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The earnings season is here again as half-year results of public quoted companies pour in.

Page 66

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Savvy investors who have paid keen attention to recent news have two facts and one speculation: Nigeria’s naira is wobbly and the Central Bank of Nigeria is fighting tooth and nail to support the currency. The guess is that a devaluation is in offing.

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Monday 02 September 2019

BUSINESS DAY

BD Weekly Tenders Wrap-up Tenders Wrap-up The National Centre for Agricultural Mechanization: s calling for expression of interest from contractors/suppliers with relevant experience to submit tender for the following projects – capital related projects, constituency projects, zonal intervention projects. Prospective bidders are required to possess the following under listed requirements to be eligible to participate in the procurements: evidence of certificate of incorporation, evidence of current industrial training, evidence of Current Nigeria Social Insurance Trust Fund among others. Interested companies are to collect the Standard Bidding Documents from the office of the Procurement Officer on evidence of payment of non-refundable tender fees of N10, 0000. Only technical bids will be opened immediately after the deadline of submission at 12 noon on Tuesday, October 8, 2019 The ECOWAS commission: Within the framework of the execution of its 2019 budget (under Africa Peace and Security Architecture funding) intends to carry out the supply of visibility materials for the Peacekeeping and Regional Security Directorate of ECOWAS Commission, invites sealed bids from eligible bidders for the supply of visibility materials for the peacekeeping and regional security directorate of ECOWAS commission. A complete set of bidding documents may be purchase by interested bidders upon submission of a written application addressed to the Directorate of General Administration and upon payment of a non-refundable fee of Twenty thousand Naira only (N20, 000). Bids should be delivered in a sealed envelope and deposited in the ECOWAS Tender Box located at General Administration, Procurement Division, 1st floor of the ECOWAS Commission Headquarters. Submission deadline is September 27, 2019 which should clearly indicate price, specifications, delivery period, bid, validity period and bid security validity period as these will determine the acceptance of bids received.

International Rescue Committee: Is inviting bid from contractors/suppliers in Nigeria for Fund Transfer Services in Borno, Yobe and Adamawa states. Interested and qualified companies are invited to obtain a Request for Proposal from IRC offices located at International Rescue Committee, No7 Jimina Street Off. Damboa Road Maiduguri Borno State, Nigeria. Or International Rescue Committee Behind Adsu Guest House, GRA Mubi North LGA Adamawa State. Bid Submission closes 13th September 2019 at 12.00noon.

Request for Bids from Akwa-Ibom State Government: For procurement of a contractor for the

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construction of surface and underground drainage structures for collection and final discharge of Uyo Metropolis flood water at IBB Way, Uyo Akwa-Ibom State. Reference No: AKS/PMU/CW/RFB/19/01. Bids must be delivered to the address on October 15, 2019. Address to State Project Coordinator, Akwa-Ibom State Project Management Unit (AKSPMU), Nigeria Erosion and Watershed Management Project (NEWMAP) Plot7, G-line Ewet Housing Estate, Uyo Akwa-Ibom State.

Adekunle Ajasin University, AkungbaAkoko, Ondo State: Has called interested contractors with requisite competence in construction for prequalification and tender for the remodelling of its proposed business school in Akure. The project bid fee is N100,000 and the bid documents including pre-qualification and financial tender will be collected in person not later 10am 24th, September. It should be address to the Registrar, Adekunle Ajasin University, Akungba, Akoko, Ondo state.

Creative Associates International: A dynamic, fast-growing global development firm that specialises in education, economic growth invites firms to express interest in submitting offers for the printing and distribution of educational materials in Northern Nigeria. All offers must include the cost of shipment to Sokoto & Bauchi before 6th, September. The contractor must demonstrate capability, based on technical expertise, management capability, workload capacity and financial resources to implement and manage this contract. Candidates may obtain an electronic copy of the RFP including terms, conditions, and specifications by visiting http:// www.creativesassociatesinternational.com/ procurement-consultant-notices/ The Nigerian Petroleum Development Company Limited (NPDC): Has tendered an opportunity for contract for the procurement of four Single Cameron Xmas Trees and Accessories for Oredo Wells 12ST and 9T in Oredo Field (OML 111). Visit the Nigerian Petroleum portal www.nipex-ng. com for further details. Tenders are expected by 3pm Thursday, September 12.

The federal ministry of water resources: Is inviting bids for the supply of leak detection equipment (IFB No. EKSWC/3NUWSRP/ NCB/GS/002). The bid security is not less than 2.5% of the total bid price, delivery period is 90 days, and location is #NUWSRP, Ado Ekiti.

Bidding will be conducted through the National Competitive Bidding (NCB) and interested eligible bidders may obtain further information from the project coordinator of 3rd National Urban Water Sector Reform Project (#NUWSRP) and inspect the bidding document.

Emails can also be sent to ekiti3nuwsrpspiu@yahoo.com, kayessus@yahoo.com, adebolaw@yahoo.co.uk. Bids must be delivered to the address before 12 noon on September 17, 2019.

The Federal Ministry of Water Resources, Lower Niger River Basin Development Authority (LNRBDA): Has announced invitation to tender and expression of interest for projects involving in two categories: works and Goods and Consultancy Services.

Deadline is 12:00 noon on Tuesday, 8th October 2019.

For further enquiries visit www.lnrbda.gov. ng or email 2019procurement@lnrbda.gov.ng The Federal Ministry of Agriculture and Rural Development: Is requesting for expression of interest on its IFAD Assisted Value Chain Development Programme. Interested bidders will be engaged for engineering design and supervision especially on agriculture, agriculture production services, market enterprise, development & advisory services, market/value chain infrastructure services and procurement advisory services among others. The criteria that will be used to short list applicants include – evidence of legal status of the firm which should not be less than seven years of relevant working experience.; profile of ownership of the firm including ownership, technical and managerial capability of the firm and experience of working in similar geographical region. Expression of interest must be delivered in a written form to the following: The National Programme Coordinator, FGN/IFAD Value Chain Development Program, Office of Permanent Secretary, Enugu Ministry of Agriculture.

Office of Permanent Secretary, Kogi Ministry of Agriculture.

Office of Permanent Secretary, Nassarawa Ministry of Agriculture.

EOI must be delivered not later than 12 noon on 18th September 2019.

The Federal Ministry of Agriculture and Rural Development: Received a loan from the International Fund for Agricultural Development (IFAD) towards the cost of the Value Chain Development Programme (VCDP) and intend to use part of the proceeds towards carrying out various consultancy and non-consultancy service activities. The VCDP is an investment programme presently being implemented in six states – Adamawa, Benue, Ebonyi, Ogun, Niger and Taraba. The VCDP invites qualified candidates to express interest in offering their services to the following specialization – agricultural production consultants; market enterprise and

development consultants, agro-processing and quality management consultants, market value/chain infrastructure consultants, monitoring & evaluation/information system consultants, procurement consultants, financial management and knowledge management consultants. The criteria for evaluating individual consultants include general (education, qualification and membership of professional bodies); specific experience to related assignment; participation in similar assignments in IFAD and other donor projects and adequate knowledge of the terrain. Tender should be submitted or on before September 18, 2019.

Federal Ministry of Water Resources call for interested bidders for the Procurement of Operational Equipment-Phase II Including Hiab Mounted Bed Flat Lorries and Cabin Truck.

Interested Bidders may obtain information from: 3rd National Urban Water Sector Reform Project (3NUWSRP) at Project implementation Unit, 2nd floor, MTN Building, 11, Iyin Road, Beside Captain Cook Eatery, Fajuyi Area, Ad0-Ekiti.

Deadline is 12:00 noon on September 17, 2019.

The United Nations High Commissioner for Refugees (UNHCR), Family Health International (FHI 360) is collaborating with its affiliate Achieving Health Nigeria Initiative (AHNi) to improve access of Cameroonian Refugees to quality health and nutrition services in Cross River and Benue States.

AHNi is calling for interested and qualified bidders to submit quotations to supply Essential Medicine, Medical Services Equipment and Consumables Under a Framework Agreement.

Interested Bidders should visit https://bit. ly/2KK67Y2 to access and download list of items.

Closing date for Tender is Tuesday 2nd September 2019 at 5:00pm.

Cocoa Research Institute: Has announced the invitations for prequalification to interested applicants for the execution of the institute’s capital projects for execution in 2019. Completed tende document should be in three copies (Marked ‘one origibal and two copies’) for technical and financial bids addressed to the Executive Director Cocoa Research Institute of Nigeria, KM 14, Ibadan/Ijebu-Ode Road. P.M.B. 5244 Idi-Ayunre, Ibadan, Oyo-State. Bid collection starts 26th August 2019 and closes 7thOctober 2019.

The National Orthopaedic Hospital Enugu: Intends to execute some projects as provided in the year 2019 appropriation. The hospital invites reputable and experienced contractors/suppliers to tneder in respect of the

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder.

Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Israel Odubola; Olufikayo Owoeye; David Ibidapo; Graphics: Fifen - Famous www.businessday.ng

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following projects – supply of theatre/hospital equipment, rehabilitation of wards, offices, hostels, supply of utility vehicles, construction of outpatient complex, drilling of boreholes/ water-wells. Interested companies are to collect the Standard Bidding Document (SBD) from the office of the Head of Procurement at the Ground floor of administrative blocks of the hospital on evidence of payment of a nonrefundable tender fee of N10, 000 per Lot, paid into National Orthopaedic Hospital, Enugu’s Remita Account. Bidders are also invited to witness the opening of the bids on Monday, 16th September.

The Federal Ministry of Education, Federal Government College New Bussa, Niger state: Has published its invitation to tender for execution of 2018 appropriation. The project is titled: Rehabilitation/ Re-modelling of Boys

BUSINESS DAY

hostel. Interested companies are expected to collect the Standard Bidding Document (SBD) from the office of the Vice-Principal (SD), FGC, New Bussa with evidence of N10,000 paid into the FGC New Busa, Niger state Remita account in any commercial bank.

Prospective bidders can contact the institution for further information. Deadline is 12 noon, 6 September, 2019.

National Orthopaedic Hospital Enugu: Invites reputable and experienced contractors/suppliers to tender in respect of the following projects as contained in 2019 Appropriation: LOT 1: Theater/Hospital Equipment. LOT 2: Service Vehicles-Water tanker and Hiace 14-seater bus. LOT 3: Rehabilitation of wards.

LOT 4: Rehabilitation of offices. LOT 5: Renovation of student’s hostels. LOT 6: Construction of General Outpatient Complex. LOT 7:

Drilling of Borehole/Water well.

Interested contractors/ suppliers are advised to obtain Tender Document from the Procurement Department on presentation of evidence of payment of Non-refundable fees of N10,000 for each LOT direct to National Orthopaedic Hospital account.

Further information can be obtained from the institution. Deadline is 9:00am Monday 16, September 2019.

Lagos State Government: Invites expression of interest for the engagement of vendors to provide catering, office stationeries, consumables supply, ICT repair, hotel, travel management, 3rd party logistics, and insurance provision services. The interest should be addressed to the coordinator, Grants Management Unit, LSMOH, GMU, Office, Folarin Coker Staff Clinic, Alausa, Ikeja between the hours of

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8.00AM -5.00PM from Thursday 8th August to Thursday 5th September 2019.

Agip energy and natural resources: Has opened advert for tender opportunity revamping upgrade od distributed control system and fire & gas system at Agbara platform.

To be eligible, tenders must comply with the Nigerian Content requirements in the NipeX system. The closing date of the advert is 2nd September 2019. Additional information on www.nipex.com West African Power Pool (WAPP) Secretariat: Is inviting interest from a reputable consulting firm. Interested consultants should submit an expression of interest in French and English latest September 16, 2019, by 10.00am addressed to West African Power Pool, Mr. Siengul A. K1 Secretary-General Zones des Ambassess, Pk-6 Akpapkpa Cotonou 06 BP Cotonou, Benin.

Fixed Income Improved sales, rate seen in CBN’s N400bn OMO re-issue HOPE MOSES-ASHIKE

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he Central Bank of Nigeria (CBN) on Friday re-issued the N400 billion Open Market Operation (OMO) auction, which recorded improved sales with a slight increase in the stop rate especially for the longer term instrument.

In a bid to mop-up excess liquidity from the system, the CBN on Thursday issued N400 billion via OMO but this recorded low sales as investors demanded higher rate, which the regulator was not willing to grant.

The CBN was able to sale N48.05 billion out of the total amount offered (N400bn) on Thursday at the stop rate of between 11.59 percent and 13.00 percent for the various tenor days of the OMO instrument.

OMO simply means the buying and selling of government security, which enables a central bank to control the supply of money in the banking system.

On Friday, the CBN re-auctioned the same amount with slight improvement on the longer tenor bill rate and it recorded improved sales.

Consequently, a total sale of N222.12 billion was recorded on Friday compared to the sum of N48.05 billion achieved the previous day. The stop rate for the 364 days tenor bill increased to 13.5 percent on Friday from 13 percent on Thursday.

“In line with our expectation, the stop rate improved for the 364 day instrument from 13.0 percent to 13.5 percent. This will guide rates upwards in the secondary market on Monday,” Ayodeji Ebo, managing director, Afrinvest Securities Limited said in response to BusinessDay. On Thursday, N100 billion each was offered for the 91 days tenor and the 189 days at the stop rate of 11.59 and 11.79 percent respectively. The same amount was issued on Friday at the same stop rate but for 90 days and 188 days tenors.

The maturity date remained the same at November 28, 2019. Investors’ bid range of between 11.59 percent and 12.50 percent, also remained the same but total subscription for the Friday auction was higher at N5.39 billion compare with N12.50 billion

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on Thursday. Total sale of N2.89 billion was recorded on Friday vs N1 billion the previous day.

A total subscription of N2.99 billion was achieved on Friday for 188 day tenor bills but N2.48 billion was sold. The stop rate and the maturity date remain the same as on the previous day. On Thursday, total subscription for the 189 days OMO instrument stood at N7.31 billion, which was far too below the initial amount offered. The offer which matures on March 5, 2020, recorded a total sales of N1.38 billion at a stop rate of 11.79 percent although the investors earlier demanded between 11.79 and 13.10 percent rates.

For 363 days tenor, the CBN re-issued N200 billion, which it offered for 264 days on Thursday but the auction recorded

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N216.75 billion sales as against N45.67 billion sold on Thursday. Total Subscription stood at N228.75 billion on Friday compared with N290.83 billion on Thursday.

The offer, which matures the same day of August 27, 2020 saw investors requesting at a bid range of between 12.98 percent and 14.50 percent vs. 12.99 percent and 14.50 percent on Thursday.

The overnight inter-bank rate - the rate at which, banks borrow from and lend to each other increased by 3.14 percentage point to 10.50 percent on Friday from 7.36 percent the previous day.

Also, Open Buy-Back (OBB), which is the money market instrument used to raise short term capital, rose from 6.29 percent on Thursday to 9.29 percent on Friday according to data from the FMDQ. Ebo explained on Thursday that investors demanded for higher rates as observed in the range of bids especially for the long term bill. However, the CBN did not succumb to investors demand, hence the low sales level.

Godwin Emefiele, governor of the CBN said recently in London that the regulators will offer more OMO auctions to counter the upcoming maturities due in September /October.

Ayodele Akinwunmi, head, research, FSDH Merchant Bank Limited said over N9.6 trillion worth of government securities are expected to mature in the financial market between August and December

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Cover Story Here are the top 10 companies to work for in Nigeria Israel Odubola

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hether it’s the jumbo pay, prospects for career growth, organizational culture or management structure, some companies just know how to treat employee right.

This subject matter ‘Top companies to work for in Nigeria’ is often searched and researched by job hunters to better prepare and position themselves for gainful employment in these organizations.

Jobberman, one of Nigeria’s biggest recruitment agencies, published a broad-based report titled “The Best 100 Companies to Work for in Nigeria” ranking Nigerian-owned companies and multinationals on six indicators: job satisfaction, employee happiness, career growth & advancement, work-life balance, welfare benefits and job security, to determine the best companies people can work in Nigeria.

Their survey captured the thoughts of over 2, 000 career professionals and employees across all sectors in the Nigerian corporate environment.

Below are the top ten companies to work for in the country based on Jobberman’s compilation.

Andela Established five years ago, Andela was birthed with the mission to build and raise a technology dream team to disrupt the IT workforce and showcase to the rest of the world that Africa is actually of age in technology advancement.

The tech firm focuses on software and web development. They train and pay young, vibrant and enterprising youths with tech-driven solutions and high productivity level.

United Bank for Africa (UBA) UBA is one of Nigeria’s biggest banks.

The lender took the first spot among Nigerian companies to work for in the banking industry and came second across all sectors.

Founded in 1949 by Nigerian business mogul Tony Elemelu, the bank is rated as one of Africa’s largest financial services providers with operations in 20 African nations and three global financial centers: New York, London and Paris. It has a large workforce with an attractive package for staff.

Monday 02 September 2019

BUSINESS DAY

Banking

What these bank billionaires would earn as interim dividend OLUFIKAYO OWOEYE

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he earnings season is here again as half-year results of public quoted companies pour in.

While few have performed so poorly (especially players in the consumer goods sector) and declared losses in their operations, some have been profitable and returned value to investors.

Some have also gone a step further by declaring an interim dividend for their shareholders to smile home.

An interim dividend is a dividend payment made before a company’s annual general meeting and the release of final

Courteville Business Solutions Simply known as Courteville, it’s a foremost Nigerian advisory firm that is into the development of electronic business solutions for process re-engineering in all sectors.

Courteville is Nigeria’s first publicly quoted IT firm on the Nigerian Stock Exchange with shareholders fund over USD five million, and also West Africa’s biggest e-business solutions firm. It has evolved from a mono-product company to be in 17 states in Nigeria, with presence in Sierra Leone, Kenya, Guinea and Jamaica.

Union Bank The mid-sized bank has been operating in Nigeria as far back as 1917, serving individuals, small and medium-scale enterprises as well as large corporates. In July 2009, the bank was rated as 556th largest bank in the world and the 14th largest in Africa.

As of March 31, 2018, Union Bank’s asset base stood at N1.38 trillion (USD 4.1 bn) with shareholder equity at N286 billion (USD 851m).

The bank maintains a vast network of interconnected branches in all Nigerian states, with expansive staff size. www.businessday.ng

Access Bank Nigeria’s biggest lender by assets, Access Bank is an indigenous multinational commercial bank owned by Access Bank Group.

It merged with Diamond Bank in the first quarter of 2019 which saw the combined entity becoming Africa’s largest bank by customer base. The bank has presence in United Kingdom and eight other African nations.

MTN Nigeria The company is the Nigerian unit of South Africa-based MTN Group Limited. The shares of the telco giant were listed on the Nigerian Stock Exchange (NSE) with market capitalization close to N3 trillion. Its parent company operates in over 20 countries across Africa, Asia and Europe, with one-third of revenue coming from Nigeria where it holds about 35 percent market share.

Guinness Manufactured by Diageo, Guinness is one of the most successful beer brands globally. The beer is brewed under license internationally in several countries, including Nigeria, Kenya, Cameroun, Bahamas, Namibia, Indonesia and

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Uganda among others.

KPMG It’s a multinational professional services network, and one of the ‘Big Four’ accounting organizations. Seated in Amstelveen in the Netherlands, KMPG has three lines of services: financial audit, tax and advisory. It has a global workforce of about 210, 000.

PricewaterhouseCoopers (PwC) PwC is a multinational services network with headquarters in London, and ranks as the second-largest professional services firm globally. PWC operates in 158 countries, 721 locations with about 251, 000 people. PwC’s core business lines include assurance, tax and advisory practices.

Dangote Cement Owned by Africa’s richest man, Aliko Dangote, the company is Nigeria’s biggest cement producer headquartered in Lagos. The company deals in the manufacture, preparation, import, packaging and distribution of cement and related products in Nigeria with plants in nine other African nations.

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financial statement.

Here we take a look at what billionaires in the banking sector of the stock market would earn as interim dividend.

1.

Jim Ovia Tier-1 bank, Zenith Bank has declared an interim dividend of 30k, payable to shareholders whose names appear in the register of members as at the close of business by 29th August 2019. Jim Ovia, chairman of the tier-1 bank directly owns 3.54bn units of shares and an indirect stake of 1.5bn units of shares. He earns N1.06bn as a result of his direct stake in the bank and N453.9mn from his indirect stake in the bank.

2. Tony Elumelu United Bank for Africa (UBA) has declared an interim dividend of 20k for

Ifeoma Esiri

Segun Agbaje

“

An interim dividend is a dividend payment made before a company’s annual general meeting and the release of final financial statement

Jim Ovia

every ordinary share of 50 kobo. This will be paid to shareholders whose names appear in the Register of Members as at the close of business on Thursday, Sep-

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tember 12, 2019.

Tony Elumelu, chairman UBA has 189mn direct holding and 2.1bn indirect holding in the tier-1 bank. He earns N37.9m by his direct stake and N422.8mn from his indirect holding.

3.

Ifeoma Esiri Stanbic IBTC declared an interim dividend of N1.00 per ordinary share of 50 kobo each paid to shareholders whose names appear in the Register of Members as at the close of business on Wednesday 04 September 2019.

Ifeoma Esiri is a non-executive director at Stanbic IBTC she has a direct holding of 36.34m units of shares and an indirect shareholding of 2.66mn ordinary shares through Ashbert Limited.

She earns N36.34mn as interim dividend form her direct holding and N2.6mn from her indirect holding.

4.

Segun Agbaje Guaranty Trust Bank declared an interim dividend of 30k per ordinary shares of 50k and would be paid to shareholders whose name appear in the register of members as at Monday, September 2.

Segun Agbaje, CEO, GTBank has a direct stake totaling 32.14mn while his indirect shareholding is 9.48mn.

He earns N9.64mn as dividend from his direct shareholding and N2.84mn from his indirect stake in the bank

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Monday 02 September 2019

BUSINESS DAY

Investing

Why it makes sense to start Investing in Dollar Assets SEGUN ADAMS

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avvy investors who have paid keen attention to recent news have two facts and one speculation: Nigeria’s naira is wobbly and the Central Bank of Nigeria is fighting tooth and nail to support the currency. The guess is that a devaluation is in offing.

While no one knows for sure what would follow, a wait-and-see approach in 2016 bit hard on investors who sat on their hands. Lagos-based EUA Intelligence estimates that the last devaluation of the Naira saw a 30 percent gain in the value of dollars.

The Central Bank of Nigeria has stated its commitment towards stabilizing the naira amid foreign investors demand for higher yields to invest in the Nigerian debt market.

Fitch warns that “Inflation at about 11% already raises the risk of an overvaluation of the real effective exchange rate,” The international rating agency says the situation could put more pressure on the naira and increase the risk of a sharp adjustment following an oil price shock.

Investing in dollar-backed assets or simply having the greenback sitting in your account is one measure of financial fitness as it is a hedge against value erosion from weaker naira.

Even though Nigeria’s financial market has not deepened to offer a lot of products, there are interesting options that retail investors can avail.

Setting up domiciliary accounts: One of the right moves to take if you are want to hedge against a weaker naira would be liquidating part of your asset and buying dollars to hold in your bank account.

The amount of naira asset to sell so you can hold dollars would depend on your preference, risk appetite and net worth.

Your money in the bank would earn some interest too and offer a buffer in events of a sharp decline in naira.

Entering Futures and Forward Contracts: Typically entering futures and forward contracts is another way to prepare for the erosion of wealth that follows a devaluation.

The CBN and FMDQ have a platform for Naira-settled OTC FX Futures product which was introduced in 2016, with the Central Bank of Nigeria as the pioneer seller of the OTC FX Futures contracts.

Naira-settled OTC FX Futures are contracts where parties agree to an exchange

rate for a predetermined date in the future, without the obligation to deliver the underlying US Dollar on the maturity/settlement date.

That is, upon maturity, both parties are assumed to have transacted at the Spot FX market rate.

The OTC FX Futures contracts are cash-settled in Naira and the differential between the contract rate and the NA-

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FEX (Nigerian Autonomous Foreign Exchange Fixing) rate on the maturity day determines the settlement amount, i.e. the gain/loss inherent in the contract.

You should, however, consult with your financial adviser before taking these kinds of decisions.

Investing in Dollar Mutual Fund: Mutual funds provide an excellent way to earn attractive yields whilst investing in as-

Investing in dollar-backed assets or simply having the greenback sitting in your account is one measure of financial fitness as it is a hedge against value erosion from weaker naira

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sets (an investment vehicle) whose value would not erode with a weaker naira.

Take for instance investing N1000 in a stock when the exchange rate is, say, N50/$. This means the dollar worth of your investment is $20.

If the stock rallies 100 percent to N2000 within a year but naira (hypothetically speaking) devalues to N200/$, the value of your stock is just $10, half its worth the year before.

Dollar Mutual funds can afford you the opportunity to earn returns on your investment and at the same time protect its value in dollar terms.

Fintech Dollar-backed Savings and Investment Product: A popular Fintech company recently launched a product that allows everyone and anyone invests in Dollar-denominated Eurobonds floated by the Federal Government and Bluechips.

Disclaimer: BusinessDay is neither suggesting the naira would be devalued nor is recommending any investment class or platform. Information provided should be discussed with your professional financial adviser to understand the implication of such a decision.

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Data

Federal government Eurobond Yields on Eurobonds rose slightly week on week by 0.0136 percent point from an average of 6.65 percent when the market closed last week to 6.659 percent as interest in Nigeria’s Sovereign Eurobonds was muted.

Corporate Eurobond Yields on corporate Eurobonds fell 0.0775 percent points across all tickers week-on-week with average yield dipping slightly from 5.71 percent last week to 5.79 percent. www.businessday.ng

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Market

Equity Market Review

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ast week, a total turnover of 713.141 million shares worth N13.295 billion in 16,237 deals were traded this week by investors on the floor of the Exchange in contrast to a total of 2.337 billion shares valued at N19.712 billion that exchanged hands last week in 18,379 deals.

The Financial Services industry (measured by volume) led the activity chart with 401.887 million shares valued at N4.069 billion traded in 8,627 deals; thus contributing 56.35 percent and 30.60 percent to the total equity turnover volume and

value respectively.

The Conglomerates industry followed with 123.330 million shares worth N197.298 million in 755 deals.

The third place was ICT industry with a turnover of 53.887 million shares worth N5.296 billion in 852 deals. Trading in the Top Three Equities namely, Transnational Corporation of Nigeria Plc, Access Bank Plc and Zenith Bank Plc (measured by volume) accounted for 242.657 million shares worth N1.808 billion in 2,990 deals, contributing 34.03 percent and 13.60 percent to the total equity turnover volume and value respectively.

Week Ahead (Monday, September 2 – Friday, September 6, 2019) Week Ahead

Chart of the week Trade war bites hard on Emerging Market Currencies in August

Commodity

Week 8ththe April – Friday, 12th April, Oil:Ahead Brent (Monday, traded below Nigeria’s government $60 2019) per barrel benchmark for third

straight week. Going forward, oil prices are expected to continue trading below the budget peg due to reduced demand as the lingering trade tensions between US and China continues.

This will choke Nigeria’s reserves.

Wheat: Wheat decreased marginally by 0.68% to $470.25 per bushel despite decrease in US production. Prices of wheat are likely to decline in wheat harvest in Russia, third largest producer of wheat. Nigeria imports about 3% of world’s output, therefore, there will be an increase in Nigeria’s import bill.

Fixed Income: The local debt market was bearish in most of trading sessions last week as trade spat reignited. Analysts expect yields to remain relatively stable, barring a significant increase in OMO T-bill stop rates by the CBN. Currency We expect the naira to trade between N361/$ - 363/$ at the parallel market. Currently, the exchange rate at the Investors & Exporters Foreign Exchange (IEFX) window hovered N363 per dollar last week, which is more expensive than the parallel window (N360/$). By implication, we could see a shift to the parallel market, thus increasing demand pressures.

Data Release The Nigerian Bureau of Statistics will on Tuesday, September 3, release the Gross Domestic Product report for second quarter of 2019. Analysts expect growth of the Nigerian economy to further trend upwards in the second quarter.

Event The Economic Forum Series on Mobile Money Market & Fintech will hold Friday, September 5 at the Civic Center, Ozumba Mbadiwe, Victoria Island, Lagos. The forum is themed Leveraging Fintech Innovation for Unlocking Growth and Competitiveness in Nigeria’s Mobile Money Market and Payment EcoSystem.

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An index that tracks the total return of 25 EM currencies relative to the US dollar, sustained its bearish streak last week, down 1.5 percent year-to-date.

The 17-month old trade war weighed on EM currencies in August after attempts at a truce between the US and China failed.

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abujacitybusiness Comprehensive coverage of Nation’s capital

Bello reads riot act to heads of agencies, councils chair in FCT

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inister of the Federal Capital Territory (FCT), Muhammad Bello has warned heads of Agencies, Departments and the six Area Council Chairmen, that he will no longer tolerate any act of indolence in his second tenure.

Bello who declared that his second term as FCT Minister would be tough for those that would fail to live up to expectations, said he used his first tenure to persuade the cabinet members

to work, yet there was no positive result from them.

He stressed that building a nation’s capital that will meet up with the dreams of its founding fathers is a collective task and everyone must sit up to work for the realization of set objectives.

The Minster made this know n while receiving hand over notes from the FCT Permanent Secretary, Chinyeaka Ohaa in Abuja, stressing that those who will be part of his cabinet must deliver in line with the mandate of the Buhari

led government or would be shown the way out.

“During my first tenure I spent a lot of time working closely with you, trying to encourage you to reengineer yourself and to appreciate the responsibilities assigned to you which I was patient with heads of agencies, councils and traditional leaders, by ensuring that everyone gets the right funding, yet there was failure.

“I spent time in my first tenure encouraging heads of agencies and others to do good work but now I am not

going to waste the time again, except providing of funding, every department and agency is clearly aware of its roles, not like in my first tenure with the support of Permanent Secretary we were persuading people to the extent that I was doing everything” Bello lamented that Public Relation Officers in connivance with their Heads of Agencies and Departments failed to showcase their activities, making the public unaware of the giant strides of his administration in the first term.

50,000 benefit Guinness Water of Life project in Nasarawa Solomon Attah, Lafia

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ver 50,000 residents of Nasarawa State who have had to deal with sourcing for portable water for many years have gotten succour with a mini water project donated by Guinness Nigeria via the Diageo Africa Water of Life Programme.

At the commissioning of the project, located in Angwan Albarka Community in Karu local government area, Head of Agribusiness, Guinness Nigeria, Jacquelyne Yawa explained that to live healthy, access to clean water cannot be substituted; hence, the desire of Guinness Nigeria to contribute its quota in support of government’s effort in this regard.

“For us and people of Angwan Albarka Community, this project marks an important milestone. As part of our ongoing commitment to the communities in which we source, make or sell our products, Guinness Nigeria has established several water schemes under the Diageo Africa Water of Life Programme, a project that provides access to clean drinking water and sanitation facilities, thereby contributing to the social economic development of Nigeria,” Yawa said.

“As at the last count, Diageo has completed twenty-two mini water project across Nigeria to serve millions of people in households and rural communities who may not have access to portable water.

“We have commissioned water mini projects in several states including Abia, Rivers, Lagos, Ogun Niger, Nasarawa, Edo, Benue, Oyo, Imo, Ondo, Enugu, Ekiti, Kwara, Anambra and Kebbi.

We are happy that members of these communities appreciate our intervention”, she informed.

NACCIMA elects Kayode National Deputy President Ex-officio Harrison Edeh, Abuja

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detokumbo Kayode, President of Abuja Chamber of Commerce and Industry (ACCI) has been elected National Deputy President Ex-officio of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA).

The Chamber which quoted its Acting Director General, Victoria Akai in a statement noted said it is convinced that Kayode who is experienced in infrastructure development, business network building, mentor, commercial dispute mediator and arbitrator as well as a great manager of human as well as financial resources will deploy his energy to advance the NACCIMA cause.

“We are delighted to have our President, Prince

Adetokunbo Kayode, CON., SAN elected into the ex-officio ranking of the OPS movement in Nigeria by NACCIMA. We are particularly pleased because of the antecedents of our President. He has deployed his entire time, energy, contacts, personal resources and Midas touch to the development of the Chamber movement and the Nigerian economy.

“The monumental strides he has achieved at ACCI within a record time has attracted accolades for the ACCI from its peers and other economic actors across the federation. Within this short time he moved the chamber from an amorphous organisation to one with functional structures and Centres which are carrying out specialised functions to deliver on the mandate of a chamber of commerce and industry”, she emphasized.

Tijani pledges harmonious working relationship with Bello

T L-R: Motodi Maserumule, divisional group executive mining, Manufacturing, Defence and Security Council for Scientific and Industrial Research (CSIR) South Africa; Felix Donkor, research associate, Cenre for Higher Education, Innovation and Development (CHEiD); Khungeka Njobe, CSIR, group executive, business excellence and integration Council for Scientific and Industrial Research (CSIR), South Africa; Ndumiso Cingo, strategic partnerships manager, Council for Scientific and Industrial Research (CSIR) South Africa, and Odinaka Iloh, interim CEO, Cenre for Higher Education, Innovation and Development (CHEiD)

he Minister of State for Federal Capital Territory FCT, Ramatu Tijjani has pledged to ensure harmonious working relationship with the Senior Minister, Muhammad Bello for the rapid transformation of the nation’s capital city.

Tijani who made the pledge during interaction with journalists covering the FCT Administration, said unlike in the past when acrimonious relationship between the two Ministers

hampered the implementation of policies and programmes aimed at fostering development and expressed determination to work closely with Bello to move FCT forward.

She said harmonious working relationship among the two Ministers and the staff of the FCT Administration was not only imperative, but the most essential ingredient for sustainable development and actualisation of President Buhari’s vision for the Territory.

CHEiD research team completes the first leg of benchmark international visits

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he Centre for Higher Education, Innovation and Development (CHEiD) “Rethinking Nigeria’s Higher Education” documentary research team led by its interim CEO, Odinaka Iloh has successfully completed about two weeks benchmark visits to top universities and other institutions shaping South Africa’s innovation ecosystem.

Some of the institutions visited include the University

of Witwatersrand, University of Johannesburg, Council for Scientific and Industrial Research and the National Research Foundation during which, there were extensive interactive sessions, interviews, presentations and facility tours that enabled a deeper understanding of those institutions and constructive knowledge exchanges.

According to Iloh, one of the key objectives of the higher education documentary film

series is to clearly capture and portray the convergences, contrasts and weaknesses in the operations of the Nigerian higher education system compared with the way globally competitive institutions operate elsewhere.

“With this film series CHEiD seeks to provide alternative views, new insights and fresh ideas to leaders, policy makers and stakeholders in academia, government and industry. Ultimately, the

purpose is to catalyse positive action and lead a monumental shift in the way Nigeria’s higher education system is functioning and performing and elevate it to a level where it may be comparable with other globally competitive institutions in Africa and beyond.

“The documentary’s focus areas include, but not limited to, funding, infrastructure, intellectual capital and partnerships.This project is being supported and crowd-funded

through donations from wellmeaning individuals, agencies and corporate organisations.

“While productive engagements and interactions within Nigeria is ongoing, the final leg of the international visits will commence late in October, with the goal of covering other top universities and institutions in South Africa, Egypt and Uganda which are shaping the innovation ecosystems of those respective countries.”

DPR launches “Seraphin can” to scale up surveillance on petrol retail outlets Cynthia Egboboh, Abuja

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he D epar tment of Petroleum Resources, DPR has i nt ro d u c e d t h e use of seraphin cans to scale up surveillance and ensure accuracy in petrol retail outlets as the yuletide season approaches.

Buba Abuja, DPR Zonal Operations Controller said that the agency will not relent in its effort to ensure

adequate supply and total compliance to standard by retail outlets adding that efforts are ongoing to ensure stringent monitoring of the activities of the retail outlets in Abuja.

Abubakar explained that some outlets have remained sealed and out of business as they do meet up to the expected standard, adding that the agency has introduced seraphin can to ensure accuracy and

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safety in sales of petrol.

“We will continue our monitoring activities on all retail outlets to ensure they are prepared for supplies in the ember months, the launch of the seraphin can is to ensure accurate measurement of quantity sold”, he noted.

According to Mohammed Saidu, DPR Head of Public Affairs, the Agency has deployed several teams and informants to ensure

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control in outlets around Abuja, saying most fuel stations that has been shut down cannot be renewed due to poor infrastructure, poor equipment as well as usage of inaccurate pumps.

He said after the technical audit DPR conducted, it was discovered that most outlets were not fit for operations and have been sealed up pending when they meet the required @Businessdayng

standard, adding that the move which is timely will address under dispensing and safety in fuel stations.

“These efforts are aimed at ensuring a stable supply of fuel and promote the best practices among retailers. we have seen that there are no much fractions in the outlets within Abuja metropolis apart from those at the suburb and we are still working to ensure they come up to standard”.

Company IN FOCUS

BUSINESS DAY Monday 02 September 2019 www.businessday.ng

Olam: Three decades and no slowing down on Nigeria’s agribusiness value chain OLUFIKAYO OWOEYE, ISRAEL ODUBOLA & SEGUN ADAMS

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he Kewalram Chanrai Group, one of the oldest international companies in Africa and Asia with more than 150 years of trading history, established Olam in 1989 as a means of obtaining foreign exchange for its businesses in Nigeria.

Similar to a mustard seed sown in Nigeria, the company which started as a modest cashew exporter has in the last thirty years grown into a giant tree, playing a leading role the agri-space value chain, from sourcing, to processing, storing, transporting, shipping, distributing, trading and marketing various agricultural products.

From a single operation in Nigeria, Olam grew into other markets starting from within West Africa then to East Africa and then India.

With a total investment of $1.5 billion, Olam is Nigeria’s largest non- oil exporter bringing in foreign exchange to the tune of about $300m majorly from cocoa, cashew and Sesame.

Sunny George Verghese, now CEO and Co-founder of Olam, was saddled with the responsibility of starting the non-oil based export operation of the group. Earlier, Verghese had helped the privately-owned Indian conglomerate implement a backward integration that enabled its Nigerian cotton factory source raw material locally.

The company flourished exporting cashew to India where it was processed and expanded into the export of cocoa, cotton, and shea nuts from Nigeria.

Four years after it was founded, Olam expanded operations into other markets following the deregulation of agricultural commodity markets.

Olam’s strategy was based on finding near adjacencies and migrating to businesses that allowed for customer-sharing or supplier-shar ing or costsharing or capability-sharing with its existing operations. The success of the business led to Olam’s listing on the Singaporean exchange in July of 1995.

A year after going public, the Singapore Trade Development Board (now International Enterprise Singapore) invited Olam to relocate their entire operations from London to Singapore.

Olam had operated in London as Chanrai International Limited but with the relocation, to Singapore, the Group’s agri-business was reorganised to be wholly owned by Olam International Limited in Singapore.

As perks, Olam was granted a concessionary tax of 10 percent following the award of the Approved International Trader status (now called the Global Trader Program)

by the Singapore Government.

The concessionary tax was halved in 2004.

Olam continued its expansion across Europe, Africa, Asia, and South America. Today Olam International Limited operates in more than 50 countries across the globe.

The shareholding structure shows that Temasek Holdings with 53.5 percent is majority stakeholder, others are Mitsubishi Corporation 17.4%, Kewalram Chanrai Group 7.0%, Olam Management 6.3%, and Other Institutional and Public 15.8%.

Group’s financials show mixed performance Revenue of Olam surged 54.2percent to S$30.5 billion (Singaporean dollar) in the full year 2018 from S$19.8 billion five years earlier.

However, the agro-giant has been struggling to sustain a positive profit growth trajectory since incurring S$114.9 million losses in 2015.

The regional distribution of top-line showed the 43percent of the Group’s sales revenue came from Asia and the Middle East ; 25percent from Europe; 17percent from America and 16percent from Africa.

Profit tanked 40percent in the full year 2018, slowing to S$347.8 million from S$580.7 million a year earlier, after a 65percent rebound from S$351.3 million in 2016.

The company’s profit after tax and minority interest declined 8.5percent to S$230.3 million in the first six months of 2019, from S$251.9 million a year earlier on the heels of higher depreciation and amortisation, higher net borrowing cost and exceptional losses.

The agro-business giant noted that the adoption of Singapore Financial Reporting Standard (SFRS) which took effect January 1 also weighed on bottom-line; saying excluding exceptional losses and the impact of SFRS, net income would have jumped 3.6percent to S$261 million.

Olam’s sales revenue grew 16.2percent to $ 15.9 billion from $13.7 billion realized in the preceding comparable period. Sales of goods spiked 40percent to 19.1 billion metric tonnes on increase in grain trading volume.

Also, earnings before interest, tax, depreciation, and amortization (EBITDA) jumped 14percent due

to improved EBITDA from all segments except industrial materials, infrastructure, and logistics.

“We delivered a steady set of results amid growing political and macroeconomic uncertainties affecting most of our markets,” said Sunny Verghese, the Group’s CEO in a note to investors.

“We are making good progress in executing our new strategic plan, and also investing in several new initiatives to offer differentiated solutions to our customers”, he said.

Olam bettered performance in terms of cash flows and gearing.

The firm generated positive cash flows to equity worth S$864.2 million half-year 2019 compared with deficit S$167 million posted last year, hinging it on the lower deployment of working capital.

A further dive into the company’s earnings report showed mixed performance across its four business segments.

While proceeds from food staples & packaged food and industrial materials, infrastructure & logistics rose some 38percent and 15percent respectively, cash from edible nuts & spices tanked 1percent and 10percent respectively.

Anantharaman Shekhar, Olam’s Chief Operating Officer, stated that the improvement recorded in gearing and free cash flows helped strengthen the group’s balance sheet.

“We are well-positioned for H2’19 as we approach the peak of the procurement season for several of our commodities with likely increases in working capital deployment”, Shekhar noted.

No slowing down on growth In what came to many industry watchers as a surprise, Olam announced plans to acquire Dangote Flour Mills, Nigeria’s third-largest miller by market capacity.

In April, Dangote Flour announced an offer by Olam through

Crown Flour Mills 5,000,000,000 issued shares at N130bn this has however been revised to N120bn amounting to N24.00 per ordinary shares following the adjustments.

For Olam, the acquisition of Dangote Flour Mill, which is currently been concluded is part of its strategic plan to be a major player in the flour and wheat milling industry.

The deal scheduled to be sealed in Q4 2019 could transform Olam into the biggest miller in Africa’s biggest economy with 43percent market share, a position currently occupied by Flour Mills of Nigeria Plc with 32percent, Olam’s crown flour mills currently has 24percent, Dangote Flour having 19percent share, Chagoury Group 11percent and Honeywell 10percent come fourth and fifth in market ranking, while others share the remaining about 4percent according to a 2016 research report by KPMG on Nigeria’s flour milling industry.

According to the United States Department of Agriculture (USDA), Nigeria is currently 11th largest importer of wheat in the world, bringing in the product worth $1.15bn annually.

To meet Nigeria’s 4.7 million metric tonnes wheat requirement of which the country only produces 60,000 metric tonnes, Olam has continued to support the research of wheat seeds that can grow in tropical conditions like Nigeria through its project in Senegal.

Ade Adefeko, vice president corporate and governmental relations, Olam Nigeria, in a response to BusinessDay’s questions said over the last 10 years, Olam has invested over N25bn to improve the productivity and efficiency of its mills noting that the company has remained committed to its backward integration program spread across the country.

It has also shown its preparedness to mitigate Central Bank’s restriction on access to forex for food importers by working with Wheat Farmers Association of Nigeria to improve their productivity and assure them of a guaranteed off-take for the wheat produced in Nigeria.

Backward integration program Olam continues to participate in backward integration by setting up its Rice plantation and Mill and is the biggest investor in that value chain in Nigeria and one of the

biggest off-takers of Nigerian agricultural production for crops like Cocoa, Sesame, Cashew, Wheat, Maize, and Soybeans.

It was the first Company in Nigeria to export hulled sesame to Japan as far back as 1995, establishing a state of the art multi-billion naira Sesame hulling plant in Sagamu, Ogun-State.

The Wheat milling business generates direct and indirect employment for 10 million Nigerians as it provides the raw material for Bread Industry worth more than 300,000 bakers, Biscuit industry, Noodles industry, and Pasta Industry. Wheat Bran forms a crucial input for the cattle rearing industry of Nigeria.

“Applying these across the combined manufacturing facilities and leveraging on economies of scale as well as strengthening branding would deliver improved operational metrics, including capacity utilization and extraction rates and cost efficiencies,” Adefeko said.

In 2013, Olam invested over N19bn in a 10,000-hectare farm with integrated mill which created employment for Nigerians producing 36,000 metric tonnes of rice (Mama’s Pride and Mama’s Choice brands) for the local market, with support for backward integration through an ‘outgrower program’ for rice farmers, among others.

The agribusiness company in 2017 made a $150m greenfield foreign direct investment in Animal Feeds and Day-Old-Chicks (DOC).

It also set up West Africa’s largest and most modern breeding and hatchery facilities to produce over 30m Broiler DOC annually. At full capacity, these DOCs will enable the production of 50,000 MT Poultry meat, thus reducing Nigeria’s (cross border) import bill by $125m.

O l a m’s s t a t e - o f - t h e - a r t Aq u a f e e d l i n e c a n p ro d u c e 75,000 MT of high-quality, affordable extruded feed, which can support 60,000 MT of farmed fish production, this will help substitute frozen fish imports of $100-120m annually.

The company’s feed mills are currently providing a market for locally produced corn and soybeans over 350K MT, accounting for 25% of the total market arrivals. This investment: Spurred a market for locally produced corn and soybeans such that for 2 years it ran its animal feed plants to manufacture poultry & fish feed largely on locally produced corn and soybean, making it one of the biggest buyers of locally traded corn and soybean accounting for 20% of the local corn & soybean market.

Will reduce Nigeria’s import bill by 200 million dollars every year based on a large number of broiler Day Old Chicks (DOC) we have produced, all of which have gone to substitute imported poultry meat.

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