BusinessDay 03 Jan 2019 by BusinessDay

businessday market monitor FMDQ Close

Everdon Bureau De Change

Bitcoin

NSE

FOREIGN EXCHANGE

Biggest Gainer

Biggest Loser

JBerger N22.1 9.95 pc

Nestle N1475

31,070.06

-0.67 pc

Foreign Reserve - $43.19bn Cross Rates - GBP-$:1.26 YUANY-N53.12 Commodities Cocoa

Gold

Crude Oil

US$2,397.00

$1,285.90

$55.28

NEWS YOU CAN TRUST I **THURSDAY 03 JANUARY 2019 I VOL. 15, NO 216 I N300

₦1,352,694.01

+2.73 pc

BUY

SELL

$-N 358.00 362.00 £-N 453.00 470.00 €-N 404.00 410.00

www.

Market I&E FX Window CBN Official Rate Currency Futures

($/N)

FGN BONDS

TREASURY BILLS

Spot ($/N)

364.41 306.95

-0.64 12.63

-0.24 13.17

15.14

NGUS MAR 27 2019 364.89

0.57

NGUS JUN 26 2019 365.34

10 Y 0.00

20 Y 0.00

15.57

15.54

NGUS DEC 24 2019 366.24

NCAA hits Medview, Police Airwing, Skybird with fines over violations

... as Medview denies being sanctioned ... Green Airways not on NCAA’s list for AOC issuance – Adurogboye

IFEOMA OKEKE

usinessDay checks have shown that some of the airlines which may have been involved in the recent sanctions by the Nigeria Civil Aviation Authority (NCAA) are Medview Airlines, Police Airwing, and Skybird. A source in NCAA yesterday disclosed to BusinessDay that the above operators were sanctioned for various degrees of violations; however Medview denied being sanctioned by the authority. Obuke Oyibotha, Medview’s media consultant told BusinessDay that the airline was not among those sanctioned and if the airline was sanctioned, it will not be operating. However, the source insisted that Police Airwing was fined for failure to train their maintenance personnel and Medview was fined for not carrying out maintenance according to the required maintenance programme. Skybird operator which was involved in deliberate violation of the Regulations had its Air Continues on page 35

Inside New Year - same story as stocks shed 1.15 % P. A3

L-R: Patrick Akinwuntan, managing director, Ecobank Nigeria; Segun Aina, president, Fintech Association of Nigeria/convener, Africa Fintech Network, and Denike Laoye, company secretary/chief legal counsel, Ecobank Nigeria, during the presentation of recognition award to Ecobank by the Fintech Association of Nigeria in Lagos.

These ten CEOs delivered most value to shareholders in 2018 A LOLADE AKINMURELE & OLUWASEGUN OLAKOYENIKAN

loss of 17 percent in 2018 meant Nigerian equities endured their worst year since 2009, yet some Chief Executive Officers (CEOs) led their companies through the gloom and put smiles on the faces of shareholders. BusinessDay ranked the topten best performing CEOs based on the stock return of their com-

panies, with Yusuf Binji leading the line. Binji is the Managing Director and Chief Executive Officer of Cement Company of Northern Nigeria (CCNN) Plc, which emerged the best performing publicly-traded company. CCNN, which opened the year at N9.50 per share, gained 104 percent to end the year at N19.40 per share. As a result, investors with holdings in the stock booked some N130.12 billion in capital appreciation.

CCNN could yet rise higher this year on the back of an expected surge in revenues likely to come from a merger with Kalambaina cement plant which takes its total installed capacity to two million metric tonnes per annum. The increasing focus on infrastructure development in Nigeria is a boon for the cement sector, which expanded 8 percent in the third quarter of 2018, according to the NBS, the fastest pace since 2014.

The second best performing CEO is Oluwatomi Somefun of Unity bank. The tier-2 lender recorded the largest increase among the banks following a 101.89 percent share price increase to N1.07 from 50 kobo, bringing shareholders’ return to N6.31 billion in 2018. The company turned the corner in 2018 after a turbulent 2017 where it recorded a negative Continues on page 35

2 BUSINESS DAY NEWS

www.

Thursday 03 January 2019

FMDQ OTC market records N165trn in turnover for 2018 IFEANYI JOHN

midst sell offs and the predominant rout in the equities market the Financial Markets Dealers Quotations Over-the-Counter (FMDQ OTC) Securities exchange recorded huge volumes in 2018 as transaction turnover was little over N165.1 trillion. The FMDQ OTC Market Turnover Report shows the turnover on all products traded on the FMDQ secondary market – Foreign Exchange (FX), Treasury Bills (T-bills), Bonds (FGN Bonds, other Bonds (Agency, Subnational, Corporate & Supranational) & Eurobonds)) Commercial Papers and Money Market (Repos/Buy-Backs and Unsecured Placements/Takings). These figures exclude primary market auctions in T-bills and Bonds. This figure was an improvement over 2017 turnover of N142 trillion which represents a 16.3 percent growth in the business transacted by the largest financial market in the country. Treasury Bills dominated the volumes of transactions made in 2018 accounting for 39.7 percent of total turnover while Foreign Exchange and Buy Backs followed with 24.2 percent and 16.2 percent of the total turnover respectively. The top 3 transactions represents over 80 percent of the entire market turnover leaving bonds, commercial papers, unsecured placements and money market derivatives with the remaining 20 percent. Stanbic IBTC Bank was the leading dealer member by overall market turnover with Access Bank and United Bank for Africa completing

the list. The top ten (10) Dealing Member (Banks) accounted for 75.77 percent (N125.14 trillion) of the overall turnover in the market, with the top three (3) accounting for 58.44 percent (N73.13 trillion) of this sub-section of the market. On bind listings, the newsletter stated that “A review of market participation for bond listings revealed that of the thirty (30) FMDQ RMLs, only eight (8) were sponsors to bonds listed on the OTC Exchange in the period. FBNQuest Merchant Bank Ltd., Lotus Financial Services Ltd. and Chapel Hill Advisory Partners Ltd. came 1st, 2nd and 3rd respectively in this category, with FBNQuest Merchant Bank Ltd. and Lotus Financial Services Ltd. co-sponsoring the Federal Roads Sukuk Company, 1 PLC bond and Chapel Hill Advisory Partners Ltd. sponsoring the N85.14 billion Lagos State Government of Nigeria bond.” “The CP market saw the participation of four (4) RMQs out of thirty- two (32) FMDQ RMQs in this category. The top three (3) positions were occupied by Stanbic IBTC Capital Ltd., Coronation Merchant Bank Ltd. and Chapel Hill Advisory Partners Ltd. with market participation of 61.30% 31.34% and 27.52% respectively, of the total value of the CPs quoted within the period,” as stated in the document The data, collated from the weekly trade data submissions by FMDQ Dealing Member (Banks), represents trades executed amongst the Dealing Member (Banks), Dealing Member (Banks) & Clients, and Dealing Member (Banks) and the CBN.

US Embassy says open for visa interviews despite shutdown

…as Nigerians lament missed consular appointments IFEOMA OKEKE, Lagos & INNOCENT ODOH, Abuja

he US embassy in Nigeria has said that the U.S Embassy Abuja and Consulate General Lagos, will remain open for all consular business, including visa interviews. The embassy yesterday tweeted that all applicants should attend their regularly scheduled interviews. This development is coming few days after the US embassy in Nigeria said in a Facebook post that recent inability to conduct Visa interviews was caused by the government shutdown in the US. The statement had read, “Due to the current US government shutdown, the American centres located in the embassy, Abuja and Consulate-General, Lagos are unfortunately closed. They will re-open once the US government shutdown is resolved. Sorry for any inconvenience to our valued patrons.” There were concerns that with the US government shutdown, thousands of Nigerians scheduled to leave for the US any time from now will be affected and their visa interviews postponed indefinitely. The embassy has now allayed those fears. “Please attend your regularly scheduled interview,” the embassy tweeted, much to the relief of many. The executive arm of government led by President Donald Trump and the legislative arm have been at loggerheads for nearly two month over

Trump’s attempt to build a wall along the Mexican border. Meanwhile Nigerians who had applied for United States visas and whose interviews fell between 28th of December 2018 and 2nd of January 2019 are lamenting missing their appointments after an earlier announcement by the US consulate that it would be closed. Some people took to their tweeter handle to lament that they had missed their visa interviews over the earlier announcement by the US embassy. “Thousands of people scheduled today for interview have been disenfranchised already with this conflicting news. Money lost, no Visa they are just ripping us off legally,” Akewu stated in his tweeter handle @Akewu2. Another person with a tweeter handle @shamrock80s, tweeted “This is so sad. I got the shutdown news and I had to cancel my trip to Abuja this morning. Now this news just popped up from nowhere, how do I fly from Akwa Ibom to Abuja to attend my interview scheduled for 7.30am? This is so mean.” The new statement from the US embassy, said that American Centers and Education USA offices operating on embassy and consulate grounds that are managed by Mission Public Affairs Sections will remain closed throughout the shutdown. American Spaces, such as American Corners operated by partner institutions and located off embassy or consulate grounds, however, will remain open, the statement added.

L-R: Peter Amangbo, group managing director/chief executive officer, Zenith Bank plc; Jim Ovia, chairman; Adaora Umeoji, deputy managing director; Ebenezer Onyeagwu, deputy managing director, and other executive management of the bank, at the opening of the “Style by Zenith” Fair in Lagos.

OPEC supply cap dampens Egina first oil euphoria

... as Brent slides to $53 a barrel ISAAC ANYAOGU

igeria’s daily crude oil production will rise by 200,000 barrels per day (bpd) from February when the first cargoes from Total’s newly producing offshore Egina Floating Production Storage and Offloading (FPSO) which hit first oil on December 29, 2018, comes into the market, lifting output above 2 million bpd, and pushing the country’s output past the Organisation of Petroleum Exporting Countries (OPEC) quota. On December 7, 2018 in Vienna, Austria, OPEC committed to cutting 800,000 bpd from global output, and 10 non-OPEC producers led by Russia agreed to further slash another 400,000 bpd from their production for six months, beginning January this year, under a preliminary deal reached after two days of intense negotiations. Nigeria, which had enjoyed exemptions in 2016 when OPEC and

its allies first agreed to cut 1.6m bpd from global production is now required to cut 52,530 bpd, which represents 3 percent of its October production of 1.751million bpd according to OPEC rules. Based on the agreement, exemption was granted to Iran, Libya and Venezuela while the rest countries will cut up to 3 percent from their production using October output levels as the baseline. Kuwait, was granted an exemption to use September production volume as baseline, due to bad weather which affected its production in October. This effectively caps Nigeria’s production at 1.7million bpd and creates the problem of what to do with spare capacity. One analyst says the cuts are a good thing. “The choice is between having increased production with low oil prices or to implement cuts which can boost oil prices and increase bigger revenue for Nigeria and other oil producers,” Chuks Nwani, an energy lawyer said.

But Rafiq Raji, chief economist at Macroafricaintel says he doubts that Nigeria would cap its production since the government desperately needs revenue. “Production fluctuates, so an average over a period might be within range of the cap,” he said, insisting that “there would be no punitive measures” even in the event of Nigeria exceeding the cap. This prospect will gladden the Federal Government whose 2019 budget benchmark is premised on production of 2.3million bpd and an average oil price of $60 per barrel. Brent crude, the benchmark price used for Nigeria’s output hovered around $53.25 on Wednesday, remnants of a quiet rally that started during the last week of December. “I am almost certain Nigeria would be able to easily persuade other OPEC members about its desperate need for revenue in the aftermath,” Raji argues. Nigeria secured output exemp-

Continues on page 35

Despite fight, corruption still thrives in Nigeria, NBS says … FCT records highest number of reported corruption cases … officials directly request for bribe in 65.4% of cases MICHEAL ANI

orruption, which Nigerian President Muhammadu Buhari said he came into office to fight, is flourishing under his nose, with the Federal capital territory recording the highest number of cases, according to data released by the National Bureau of statistics, covering year 2016. NBS data show that corruption cases increased in about 15 states in the country, while only about six and two states reported a decline and zero in the number of corruption cases, respectively. Abuja, the capital city of the country where major political and administrative activities hold, had

the highest number with 657 reported cases in that year, according to the report. Abuja was followed by Lagos and Kaduna, with each reporting over a 100 cases, according to a graphical representation by the NBS, as the statistical agency did not provide exact numerical values of corruption cases in other states besides President Buhari assumed office as president in May 2015 vowing to intensify eliminate corruption and set Africa’s largest economy on a path of sustainable development. His administration has since embarked on prosecution of persons alleged to have looted public funds, using the anti-corruption watchdog, the Economic and Financial Crimes

Commission. It may not be entirely true to assess President Buhari’s anti-corruption fight of corruption based on the NBS data alone since the figures reflect barely one year of his presidency. However, the 2017 Corruption Perception Index released in 2018 by Transparency International, placed Nigeria as number 148 among 180 countries, from 136 in 2016, showing a retrogression of 12 places. “The initial optimism that accompanied the Buhari’s government following his anti-corruption agenda appears to have waned and this is not unconnected to the observed

Continues on page 35

Thursday 03 January 2019

C002D5556

BUSINESS DAY

C002D5556

Thursday 03 January 2019

C002D5556

BUSINESS DAY

6 BUSINESS DAY NEWS

www.businessday.ng

www.facebook.com/businessdayng

Analysis

Why oil price drop is bad news for manufacturing sector ODINAKA ANUDU

he price of Brent Crude has been on a downward trend, fluctuating between $50 and $55 per barrel in the last one week. At the close of the market on Wednesday, Brent was about $55 per barrel, after trending $3 lower in the morning. This is not good news for Nigeria’s manufacturing sector. The Nigerian economy depends on crude oil for over 90 percent foreign exchange and more than 70 percent revenue. A drop in crude oil price means lower foreign exchange receipts for Nigeria’s mono-product economy. The Nigerian manufacturing sector relies on foreign exchange for the importation of raw materials, inputs and packaging materials. Local manufacturers have since embarked on backward integration projects to source more raw materials domestically to stave off pressures that may result from oil price drop. In 2016, during a severe foreign exchange crisis, many manufacturers visited the Federal Institute of Industrial Research Oshodi for the fabrication of local machineries that would suit local inputs. But the trend seems to be changing as manufacturers are now cutting down on their local input sourcing, which went down by 4.12 percent in the first half of 2018, following the stability achieved in the foreign exchange market. Data from the Manufacturers Association of Nigeria (MAN) show that local sourcing declined from 60.72 percent in H1 of 2017 to 56.6 percent in the H1 of 2018. The 56.6 percent represents 9.1 percentage fall from 65.7 percent recorded in the second half (H2) of 2017.

“Local sourcing of rawmaterials in the manufacturing sector slowed in the first half of 2018 with the exception of motor vehicle and miscellaneous assembly group. This may be adduced to the general sluggishness of the economy and a renewed ability for importation of raw-materials considering the tranquillity in the foreign exchange market,” MAN disclosed. If the local input sourcing continues to go down, a big crisis will likely hit the manufacturing sector. A similar scenario played out in 2016 when oil price fluctuated between $28 and $40, resulting in several manufacturing companies cutting production and shutting down completely that year. Joseph Babatunde Oke, former chairman, A.G Leventis, complained to BusinessDay in 2016 that the firm got only two percent of its dollar needs throughout August that year. Oke said Leventis Foods, which used to produce 1.5 million loaves of bread every week by June 2015, and then churned out only 400,000 loaves weekly because of dollar challenge. Flour Mills of Nigeria and Unilever Plc also complained about the impact of foreign exchange crisis on their production levels. Haffar Industrial Company Limited, producer of sewing and embroidery thread used by other manufacturers, requested $300,000 to import textile inputs but got only $42,000 through the interbank market. Haffar could not meet about 50 percent of demand and recorded a 25-percent drop in produciton, Tarek Harfer, a director of the company, told BusinessDay. A report done by NOI Polls Limited and the Centre for

the Studies of Economies of Africa said in August 2016 that 222 SMEs and 50 manufacturing firms had shut down in the 12 months preceding August 2016. “It is even more. There are about 54 firms that have so far shut down,” said Frank Jacobs, immediate past president of the MAN, had told BusinessDay in Lagos then. To save the manufacturing sector, the CBN came up with measures to stave off factory closures. The apex bank directed that 60 percent of FX be allotted to manufacturers. It also placed a ban on 41 items from accessing foreign exchange, to reduce pressure on the FX market, which did not augur well with many importers of those items. As things stand today, another crisis could happen if oil price trends below $40 per barrel. Like typical Nigerians, many manufacturers have resorted to importation and this will become bad news should oil price trend fall below $40 per barrel. Analysts believe that though Nigerian manufacturers have invested in backward integration projects, many are still relying very much on foreign inputs and machinery basically due to stability in foreign exchange. An analyst asked, “What happened to the local machinery which manufacturers resorted to during the 2016 crisis?” “Have they abandoned the machines? What is the state of the available inputs in terms of quality and availability?” But Patrick Eguakhide Oaikhinan, professor of ceramics engineering and chief executive officer of Epina Technologies Limited leaped on the defence of manufacturers: “We still need to invest more in local inputs.”

Business outlook for January up 67.2 index point driven by service sector HOPE MOSES-ASHIKE

igerian businesses are looking up to a brighter January 2019 as their confidence on the macro economy rose to 67.2 index points in December 2018, from 65.6 index point in November 2018. This is in spite of concerns raised by household on likely weaker economy if the prices of goods and services increase faster than they do currently. The Central Bank of Nigeria (CBN) on Wednesday released the December 2018 Business Expectations Survey (BES), which it carried out between December 10 and 14, 2018, with a sample size of 1050 businesses nationwide. A response rate of 98.6 percent was achieved, and the sample covered the services, industry, wholesale/ retail trade, and construction

sectors. The respondent firms were made up of small, medium and large organisations covering both import- and export-oriented businesses. Services sector led in the drivers of the optimism for January by 36.8 points, industrial was 21.4 points, wholesale/retail trade 6.0 points, and construction sectors 2.9 points. Reacting to the development, Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited, said, “It is an indication of a renewed confidence in the economy.” In terms of businesses with expansion plans in January, the report shows that financial intermediation, which is categorised under services sector, led with 44.1 percent as against 38.5 percent in November. This is followed by renting and business activities, which

rose to 38.3 percent in December from 35.1 percent in November 2018. At 30.5 index points, respondents’ overall confidence index (CI) on the macro economy in December 2018 was optimistic when compared to its level of 24.0 index points recorded in November 2018. “In light of the current developments in both the global and domestic economies, and based on extensive simulations, the CBN is of the view that the short-term outlook of the Nigerian economy remains good,” Godwin Emefiele, governor of CBN, said November 30, 2018, in Lagos. According to the report, the optimism on the macro economy in December was driven by the opinion of respondents from services by 16.7 points, industrial 9.4 points, wholesale/retail trade 3.3 points, and construction sectors 1.1 points.

@businessDayNG

@Businessdayng

Thursday 03 January 2019

C002D5556

BUSINESS DAY

C002D5556

Thursday 03 January 2019

C002D5556

BUSINESS DAY

C002D5556

comment

Thursday 03 January 2019

comment is free

Send 800word comments to comment@businessdayonline.com

Will parliamentary democracy engender economic growth and end corruption in Nigeria?

Martin Ihembe Ihembe is a Doctoral Candidate at the University of Ibadan with Research interests in Political Development, public policy, Democracy and Democratization, Governance and Political Theory. He can be reached via 07036396194

ecently, 71 members of the lower chamber of the National Assembly (NASS) and some notable Nigeria’s have called for a switch from the American-styled presidential democracy to the Westminster model, otherwise known as parliamentary democracy. The 71 legislators who have already sponsored an alteration bill argued that the change is necessary because parliamentary democracy is better at delivering economic growth, development, and efficient in conducting government business than presidential system. In fact, the legislators went further to state that “empirical studies” show countries under presidential system record low economic growth than those under parliamentary system. What they failed to do was to show us the empirical evidence. Other people like Professor Ango Abdullahi argued that presidentialism should be abolished because it is corrupt and expensive. The question is: how true are the arguments of the pro-Westminster model? The intellectual argument Britain, which is the paragon of Westminster majoritarian democracy has one elected parliament (unicameral legislature), even though there’s a House of Lords, which does not have substantial powers. Members of parliament are elected in a direct election. Amongst them, a Prime Minister (first among equals) is elected who heads the government and also constitute his/her cabinet by appointing elected parliamentarians, not outsiders, as ministers, who with him/her, are “collectively responsible to parliament through the confidence mechanism, by which a parliamentary majority may remove and replace the executive between elections.” This was the system of government

Lawrence Gamade Gamade wrote in from Abuja via gemade.lawrence@gmail.com

A “

delusion is something that people believe in despite a total lack of evidence.” Does this definition remind you of something? This definition is by all means an accurate description of President Buhari over the last few weeks. This has been

bequeathed to Nigeria by the colonial masters before the country relapsed to military dictatorship in 1966. In parliamentary democracy, there is no separation of power. Instead, both legislative and executive powers are fused in one body, which explains why it is considered less expensive to run. However, the absence of checks makes it difficult to check the excesses of an all-powerful parliament as is the case in the United Kingdom. In addition to this advantage, scholars like Jaun Linz have argued that parliamentary democracy is more conducive to stable democracy than presidential system, and this applies to political societies with deep political cleavages and numerous political parties. He also argued that it offers more hope for preserving democracy. Based on Nigeria’s First Republic experience, this argument is constable. Nigeria had (and still has) deep political cleavages with numerous political parties that were essentially ethnic parties in the First Republic, yet parliamentary democracy broke down. Another downside of parliamentary democracy is that it has no term limits. Theoretically speaking, it is possible to have a PM for life if he/she enjoys the confidence of his/her colleagues. This form of government is common in continental Europe. The America styled presidential democracy is common in the Western hemisphere. Unlike parliamentary democracy, both ceremonial and governmental powers are invested in one person – the President. Presidential democracy has term limits; it has clear separation of powers between the three tiers of government, namely, executive, legislature and judiciary, which are all independent. The former are separately elective arms of government. Pure presidential democracy has bicameral legislature in which the two Chambers are equally powerful, not like France’s and Italy’s bicameralism where the Senate is honorific. Presidential system is known for efficiency in political results and governance, representativeness of the entire political society and checks and balances which is not found in parliamentary democracies. In terms of economic performance, studies by William Keech and Kyoungsan Park, Dian Evans, to mention a few, have shown

‘

What is obstructing economic growth in Nigeria is not a creation of presidential democracy as presented, but greed and corrupt acts of the governing elite which is not restricted to any form of government as the Nigerian experience has shown

’

that presidential system brings about open trade policies and more spending, while Jose Cheibub’s study shows that parliamentary democracies have 1.5 higher average per capital income and 1.5 higher average rate of economic growth rate than presidential democracies. This is the argument of the promoters of the alteration Bill in Nigeria. But as we shall see, switching to parliamentary democracy does not imply Nigeria would immediately start reaping economic benefits. Cheibub’s study also shows that presidential democracies are more likely to slip into dictatorship than parliamentary democracies are. Latin America is a good example. Another downside of presidentialism as indicated in Joseph Robbin’s study is the tendency of the powerful president to circumvent the power of the Congress to make laws as seen in America, and the executive power Presidents’ wield in Russia and Ukraine which is equal to that of the legislature. The political argument There is no amount of political engineering that Nigeria would embark on that would yield the kind of result the reports of the Constitution Drafting Committee(CDC) of 1975 and that of the Political Bureau of 1986. These bodies had some of the crème in Nigeria who painstakingly debated how best Nigeria can forge a durable political order. Bearing in mind the personality clash in the First Republic, between the Head of State, Nnamdi Azikiwe, and the Head of Government, Abubakar Tafawa Balewa which culminated in Nigeria’s first military interven-

tion in 1966, the CDC stated in its report that “the unity of a single executive clearly conduces more energy and dispatch than disunity of many wills.” Elsewhere, the report also states that “the chief executive must function as (i) a symbol of national unity, honour and prestige; (ii) a political leader in his own right (iii) someone who can offer leadership and a sense of direction to the country. This can only be found in a presidential system of government; hence, its recommendation. While working on the transition to civil rule under the Ibrahim Babangida’s junta, the Political Bureau stated in its report that no issue attracted more attention in the course of its assignment like the issue of form of government. The Political Bureau which recommended presidential democracy also stated that some Nigerians in their submission said “neither the 1963 nor the 1979 constitution failed us, it was the actual behaviour of the operators that failed us.” This resonates with contemporary Nigeria. Based on this, it then means that whether the country switches to parliamentary democracy or semi-presidentialism as practiced in France without attitudinal change from the ruling elite, this argument about parliamentary democracy having the capacity to engender economic growth and also end corruption will only amount to nothing but wishful thinking. NASS is culpable of Nigeria’s economic challenges Yes, it is a fact that presidential democracy is expensive and also leads to waste of scarce resources as some have argued. But that is not actually the reason why Nigeria has not witnessed economic growth under presidentialism. Nothing has had deleterious effect on governance, economic growth and development in Nigeria like the grand corruption of the 1960s and 1980s which led to the coupists’ intervention in the past. Sadly, the same act is deeply entrenched in the current dispensation, and the NASS which is calling for a change to parliamentary democracy is culpable. Sometime in 2010, the then Central Bank Governor, Mallam Sanusi Lamido Sanusi complained about the growing overhead of the NASS which kept raising from 21% in 2008, to 26% in 2009, and 25% in 2010 overhead of the national budget. According to him, the rise was more than any other component of the national

budget. This generated a lot of tension, as those implicated attempted to make damage control without success. The Governor remained resolute and he was right as no one could disprove the facts he presented. Given the steady increase in NASS’s overhead, it’s possible the percentage is higher today, especially now that a Senator’s take home is N14 million per month; that is aside what comes from budget padding, extraction from oversight functions to Ministries, Departments, and Agencies, to mention a few. All of these monies are expended on servicing a parliament that is not productive while railway, electricity, industries, hospitals, roads and other infrastructure needed to drive economic growth are not functional. To compound the problem, unemployment and under-employment are at an all high. How can a nation achieve economic growth under such condition when resources that should be channeled into capital projects end up in servicing profligacy? What our legislators clamouring for a switch to parliamentary democracy fail to understand is that, the profligacy they indulge in has consequences on inflation rate which is currently in double digits. That is why Sanusi clearly stated that NASS overhead was a threat to economic growth. What is obstructing economic growth in Nigeria is not a creation of presidential democracy as presented, but greed and corrupt acts of the governing elite which is not restricted to any form of government as the Nigerian experience has shown. Therefore, Nigeria does not need a change in form of government to record economic growth and end corruption. What it needs is transparency and accountability from a fiscally responsible government, be it presidential or parliamentary, and a sense of nationhood from a class of ruling elite that is selfless, committed to seeing Nigeria become an economic hub in world, and working towards it. Lastly, Ghana is a presidential democracy with a single digit inflation rate (9.6) and an impressive economic growth rate which more than doubled in 2017 to 8.5%. Its economy expanded at a fast rate in five years. So what are the proponents of parliamentary democracy saying?

delusion, without being called out on it immediately? It seems like he has lost complete touch with the crisis facing all of us Nigerians. He probably believes that every citizen enjoys 24-hour electricity and that the Naira can be exchanged one-to-one for the US Dollar (both campaign promises!). Apparently, the President’s health problems are more serious than previously reported. And this is no laughing matter – it is a

question of life and death for our brethren in the North. We can’t afford to be led by a President so delusional about the state of Nigeria. In such dire times of crisis, we need a different, clear-sighted leader, someone with a clear plan to make Nigeria safe and prosperous again. This is not the time for delusion. This is the time for change.

Send reactions to: comment@businessdayonline.com

A delusional leader exemplified most glaringly over the last few days. To recapitulate: Boko Haram terrorists overrun the brave soldiers of the Nigerian army at Metele, killing over 120 soldiers. Officials complain that the organisation is exploiting the army’s weaknesses, which means that the terrorists have figured out exactly how to sow horror, without an adequate response by the armed forces. Then, some weeks after-

wards, Islamic State militants seized the town of Baga, capturing a base of the Navy. It is a disgraceful and embarrassing defeat to let these people gain territory like that on our soil. Yet a day later, President Buhari claims - for the umpteenth time - at a campaign rally in Uyo that he has defeated Boko Haram, and that all the other campaign promises have been fulfilled too. Is the President serious? How can he proclaim such an obvious

Send reactions to: comment@businessdayonline.com

Thursday 03 January 2019

C002D5556

comment

BUSINESS DAY

comment is free

Send 800word comments to comment@businessdayonline.com

Finding a mean between the liberal arts and professional education Francis Iyoha Professor Iyoha is of the Department of Accounting, Covenant University and Research Fellow, the Institute of Chartered Accountants of Nigeria (ICAN). He wrote viafoiyoha@ican. org.ng

ithout exception, professions across the world face issues about ethics and professionalism. The situation has reached such a level that public trust in government and institutions is at a level below expectations. There is, therefore, an urgent need to address the situation and restore calm to the nerves of the public. The accountancy profession, through the International Federation of Accountants (IFAC) which represents the voice of the global accountancy profession, is taking the lead in this crusade in three main areas- ensuring the profession is appropriately engaged in a shared public/private standard-setting; preparing the profession for the future with “an emphasis on implementing a comprehensive, integrated approach to international accountancy education” with a view to equipping current and

future professional accountants with the skills, capabilities and ethical behavior required for a rapidly changing environment, especially in the context of the 4th industrial revolution, and “speaking out even more effectively as the voice for the global profession on critical matters including the need for reporting that aligns with societal values and provides a holistic, timely view of organizational performance and sustainability.” The thoughts and initiative of the IFAC are imperative given that, along with its member organizations and over three million professional accountants, serve the public interest by “enhancing the relevance, reputation, and value of the global accountancy profession.” For too long, accountants have been introverted. This may not be unconnected with the technical nature of their training at the expense of the social dimension of the profession. To a large extent, professional accountants see accounting as mediating only in commercial exchange relationships. This is not quite so as accounting is also implicated in other areas of human endeavour- social, cultural, political among others. This explains, for instance, the role accounting played in sustaining apartheid in South Africa. Accounting is a powerful and complex technology. No doubt, professional education

‘

The advocacy in this thesis is that the skills offered by liberal education would be more widely needed as artificial intelligence subdues human workers in almost all technical areas in accounting over which we currently pride ourselves. The solution to the ethical issues that have troubled the accounting profession unending lies in liberal education

’

is important for the development of industrial society up until now. But things are changing and professional education alone is narrow and thus, not sufficient to help develop character and does not shape gentleman in the ‘Confucius’ sense, especially in the context of the fourth industrial revolution. The time has become auspicious to strengthen professional accounting education with liberal arts education. Liberal arts education stresses the broad study of the arts and science and helps students to develop reasoning

skills, collaboration, and art of discussion. These would assist to put the students in a stead to more appropriately debate matters of public interest and arrive at a reasoned argument and agreement or disagreement with peers, not only in business but also in other areas such as social and political. These are areas where accountants currently lack the required clout. As opined by Pericles Lewis, there are many positive sides of liberal arts education that make it worthy of mention- it shapes more innovative contributors to the economy and society because softer skills such as creativity, the ability to think outside the box, and openness to multiple perspectives are developed. This is liberal arts students find it easier to relate and hobnob with the global elite. It is also to the credit of liberal arts education that students are prepared well for life outside their own immediate cultural environment thereby making them aware of a variety of cultures and the need to communicate effectively. One of the issues confronting the accounting profession is ethics. Liberal art education helps to develop the character which is fundamental in the practice of accounting. A professional accountant without character cannot be given a copy of the code of professional ethics and expect that ethical conduct would occur. No one gives what he does not have. Liberal educa-

tion as has been noted by several authors “makes us aware of the importance of examining our own prejudices and assumptions by fostering habits of selfawareness and self-criticism.” It has also been noted that liberal education “allows the individual a greater enjoyment of life, whether it is in appreciating a work of art, understanding an argument in philosophy or exploring the diversity of the natural world.” In spite of the appeal of liberal education, some persons still think that Universities should take a more vocational approach to teach young students and provide them with specific skills relevant to the job market. The job market is heterogeneous and only skills that are applicable to them all should be given more emphasis. The advocacy in this thesis is that the skills offered by liberal education would be more widely needed as artificial intelligence subdues human workers in almost all technical areas in accounting over which we currently pride ourselves. The solution to the ethical issues that have troubled the accounting profession unending lies in liberal education. Unless there is an adequate mix of professional accounting education and liberal education, very shortly, our pride in the profession will grow insipid and the relish would be lost. Send reactions to: comment@businessdayonline.com

Why Chinese reforms will stay the course

Dan Steinbock Dr Dan Steinbock is the founder of the Difference Group and has served as the research director at the India, China, and America Institute (USA) and a visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see http:// www.differencegroup.net/

s Chinese President Xi Jinping gave his highlyanticipated speech on Monday on the 40th anniversary of Chinese reforms and opening-up policies, it was closely watched internationally in light of the 90-day truce in the U.S. trade wars. Xi called the pursuit of reform and opening-up and socialism with Chinese characteristics “a milestone in realizing the Chinese nation’s rejuvenation.” He emphasized the importance of innovation, which has been prominently displayed by world-class productivity in the Greater Bay Area of South China, and international coopera-

tion, as evidenced by the One Road One Belt initiative that’s fueling 21st century globalization. In particular, Xi’s speech was very clear about China’s historical debt to Deng Xiaoping other reformers – and the need to go further. China’s pragmatic transitions In Chinese modern history, it was Sun Yat-sen, the founding father of the nation, who paved the way for sovereignty with his “three principles” of nation, democracy and socialism. But followingr imperial disintegration and Western colonialism, these efforts could be started only after world wars, Japanese invasion and a Civil War. When in 1949 Mao Zedong could finally declare that “the Chinese people have stood up!”, China began the march to a new future. In the early 1950s, Mao’s economic policies unleashed stateled industrialization, which started promisingly but stagnated amid the Cold War polarization. In historical view, Mao’s crucial contribution was the establishment of Chinese sovereignty. Already by the early 1960s, foreign minister Zhou Enlai called for the “Four Modernizations” in agriculture, industry, defense, and science and technology. These reforms started in the late ‘70s, when Deng Xiaoping initiated the

“reform and opening” era, with the Special Economic Zones (SEZs) first in Southern China, then in Shanghai, Beijing and elsewhere. It was Deng’s bold pragmatism “It doesn’t matter if the cat is black or white as long as it catches the mice,” as he put it - that finally led to the inflow of foreign investment and technology, business success, and parallel price structures. With extraordinary foresight, Deng understood the opportunities of globalization, but also knew the risks of the international environment in the Reagan-Thatcher era when “one had to cross the river by feeling the stones” - a phrase that Xi quoted approvingly in his speech. As President Jiang Zemin pushed the role of the private sector – “the Three Represents” doctrine – and Premier Zhu Rongji began the struggle against corruption in the 1990s, China became the member of the World Trade Organization (2001). That paved the way to a decade of export-led double-digit growth, which President Hu Jintao characterized as “China’s peaceful development.” The fourth great transition – the shift to post-industrialization – has been intensified by the Xi leadership. Trade, markets and the Party Just as the WTO membership allowed China to execute tough reforms, U.S. trade wars may actually accelerate Chinese reforms, as long

as compromise makes pragmatic sense. Xi’s reform speech offered clarity in a difficult international environment that is often overshadowed by ideological misinterpretations of economic fundamentals. Recently, New York Times reported that China was amid “a steep downturn.” Yet, the growth forecast for the year remains 6.5- 6.6%, after a strong first half. Moderation will ensue in the second half and especially in 2019, depending on U.S. tariffs and slower demand worldwide. U.S. may be navigating toward a correction by 2019-20, which will prove challenging to all major economies. Indeed, many Americans oppose President Trump’s policies and the word “impeachment” is getting louder in the Capitol Hill. Meanwhile, a bipartisan group of senators -Rob Portman (R-Ohio), Doug Jones (D-Ala.) and Joni Ernst (R-Iowa) - seeks to claw back trade power from Trump with legislation. They hope to “better align” Section 232 of the Trade Expansion Act of 1962 with its “original intent,” which was to respond “to genuine threats to national security.” Foreign cars and car parts are not exactly a typical geopolitical threat. In his speech, Xi also emphasized the role of the Chinese Communist Party in the reforms. Historically, when China has thrived, it has

been attributed to “Westernization” in the West, and when China has ailed, it has been attributed to Chinese communism. The West has not yet come to terms with the inconvenient truth that China’s economic miracle has been possible because of the Party’s leadership, not despite it. Unlike the West where middle classes continue to shrink at the expense of the ultrawealthy, China is expanding middle classes, fighting corruption and fostering sustainability. Irrespective of Washington’s trade actions, U.S. trade wars will not change the course of Chinese reforms which will continue to broaden and deepen. China will “stay the course,” as Xi put it, while stressing that “no one is in a position to dictate to the Chinese people what should or should not be done.” Like Liu He, Xi’s economic adviser, Chinese reformers are determined to complete by the late 2020s the rebalancing of their economy, which is rapidly moving toward consumption and world-class innovation. • The original commentary was published by China Daily on December 18, 2018

Send reactions to: comment@businessdayonline.com

BUSINESS DAY

C002D5556

Editorial Publisher/CEO

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

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

Bashir Ibrahim Hassan

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

Thursday 03 January 2019

Innovation holds the key to 2019

ll the portents for 2019 point to a difficult year for the Nigerian economy and therefore for businesses. President Muhammadu Buhari announced to Governors early in December that the economy is in very bad health. The provisions of Budget 2019 submitted to the National Assembly appear unrealistic daily in the face of global oil prices and production levels. What should Corporate Nigeria and businesses, big and small, do in the light of these facts? There is a song of lamentation out there with many speaking of the expected difficulties of 2019. The song of lamentation would not do and should not be the primary recourse. We submit that this is the Year of Innovation for Nigerian business. Innovate for better outcomes should be the clarion call in 2019. The background is sobering. The Nigerian economy struggles at less than two percent annual growth versus the seven percent average of Rwanda and Ethiopia. Nigeria still walks with an unclear definition of policy direction. The Federal Government prefers statism while the global front runners push for open markets. The market demonstrably enables fast growth. Strong policies and implementa-

tion of same make these possible. As the difference between the provisions of Budget 2019 and the market show, crude oil is not only threatened but would soon cease to play a crucial role in the world economy. Nigeria’s budget and economic development plans, however, hinge on a healthy global oil market and continued relevance of fossil fuels. There are other developments globally with consequences for the economy. Trade tensions between America and China, primarily, but among major world players could pose severe downside risks in collapse of oil prices, already threatened by developments in the pursuit of alternative energy sources. Developed markets continue to drive growth. There is also the projection by economists everywhere that interest rates would rise in developed markets. In addition to this, new regulations in the financial markets and the continued growth of fintech would have consequences for our financial markets and the Stock Exchange. Volatile global currencies will affect exchange rates. Management of the key rates would be a significant challenge in 2019. Exchange rate volatility would impact interest rates and hence the inflation rate. It means customers will be even more cautious while cost of doing business will inch upwards.

2019 being an election year will see an infusion of funds into the economy before and immediately after the General Elections with consequences for money supply and inflation. Unfortunately, there would be no such infusion where it really matters in infrastructure development. Investments in infrastructure drive economic growth. However, Nigeria will spend $6.2billion or 1.6% of GDP on building infrastructure against an average global spend of 25% of GDP. Uncompetitive. Tardiness in policy articulation and even more so in execution would become even more of a challenge in the light of elections. Many tariffs, such as those on fully built up vehicles (FBU) versus completely knocked down components require review to enhance competitiveness. Who would do the work? The foregoing confirms that 2019 is the “year of trepidation”, according to one of Nigeria’s foremost economic analysts. BusinessDayconsiders 2019 an inflection point for Nigeria and its highly regarded business community filled with executives trained in the best traditions in global and Nigerian institutions. 2019 is the year that would enable these executives either earn their pips as among the best in the world or spectacularly fail as the political types have done serially. Nigerian business must be

more entrepreneurial than ever before. It must lead in innovation, finding new ways of doing things, new uses and new products manufactured to global standards using available materials and resources. These times call on our managers to think hard and deep. Nigerian business has done this before. Many of today’s businesses responded admirably to economic privations in the past, including those of the Shehu Shagari government through the Structural Adjustment Programme of the 1980s. During and through SAP, Nigerian firms did well in backward integration, in linking farmgate to factory gate and in finding new uses, and new ways such as economic pack sizes and new routes to market. Nigerian engineers and technologists even acquired global patents such as that for cereal conversion process. Many relaxed after SAP and some even stopped the innovative new products they had developed such as in the beer sector and other FMCGS. Here is a chance to innovate for better outcomes and to do so sustainably. New methods, new focus, new values, new processes and structures should deliver innovation and transformation. It is the challenge of the moment for Nigerian business. Innovate and deliver a better Nigerian economy. Let’s go there. Happy New Year.

EDITORIAL ADVISORY BOARD Dick Kramer - Chairman Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Keith Richards Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo

Enquiries NEWS ROOM 08023165438 08169609331 Lagos 08033160837 Abuja

}

ADVERTISING 01-2799108 08034743892 08033225506 SUBSCRIPTIONS 01-2799101 07032496069 07054563299 DIGITAL SERVICES 08026011296 www.businessdayonline.com The Brook, 6 Point Road, GRA, Apapa, Lagos, Nigeria. 01-2799100 Legal Advisers The Law Union

Mission Statement To be a diversified provider of superior business, financial and management intelligence across platforms accessible to our customers anywhere in the world.

OUR Core Values

BusinessDay avidly thrives on the mainstay of our core values of being The Fourth Estate, Credible, Independent, Entrepreneurial and Purpose-Driven. • The Fourth Estate: We take pride in being guarantors of liberal economic thought • Credible: We believe in the principle of being objective, fair and fact-based • Independent: Our quest for liberal economic thought means that we are independent of private and public interests. • Entrepreneurial: We constantly search for new opportunities, maintaining the highest ethical standards in all we do • Purpose-Driven: We are committed to assembling a team of highly talented and motivated people that share our vision, while treating them with respect and fairness. www.businessdayonline.com

Thursday 03 January 2019

www.

BUSINESS DAY

CITYFile NGO distributes sanitation kits to IDPs in Borno

Fun seekers besiege the Johnson Jakande Tinubu (JJT) Park, Alausa in celebration of the New Year on Tuesday in Lagos.

nongovernmental organisation (NGO), Smile Mission Healthcare Project, has distributed hygiene and sanitation kits to 1,600 displaced households and host communities at Lawaram ward in Maiduguri, Borno. Saleh Abba, the project coordinator, gave the number at the distribution of the items at Lawaram in Maiduguri. Abba said hygiene kits such as disinfectant and insect repellent were distributed to each of the deserving families in the exercise. According to him, the organisation also conducted drains clearance and sensitised communities to the need to keep a clean environment, to promote good environmental hygiene in the society. The coordinator said that the exercise was designed to control diseases associated with unhygienic environment such as diarrhea, malaria and water borne diseases. Abba added that the exercise was part of rheir campaign to change the narratives of the Boko Haram insurgency by encouraging community participation in hygiene, sanitation and environmental management activities. According to him, the exercise is conducted in collaboration with Gongoni Nigeria Limited and Lawaram Community Development Association.

Akeredolu advises community on development

2019 holds greater prospects W for Lagos – Ambode … assures completion of ongoing projects JOSHUA BASSEY

overnor Akinwunmi Ambode is optimistic that the new year (2019) holds greater promises and prospects for Lagos just as he assures of administration’s commitment to completing and handing over ongoing major projects in different parts of the state. Ambode spoke at the grand finale of the 2018 One Lagos Fiesta (OLF) held at the Eko Atlantic City, in Victoria Island, saying though 2018 was a great year, the new year holds even greater hope for the state and its citizens. He said: “I want to thank God for giving

us this new year. I also thank the residents of Lagos for being peaceful and for cooperating with our government in delivering services in 2018. We’re ready to take state to the next level.” The governor stated that notwithstanding the 2019 being an election year, Lagos was sure to witness more prosperity, as the enabling environment had been firmly established to enable the economy to thrive. “I want you to know that 2019 has a lot in stock for us. I believe the Gross Domestic Product (GDP) of Lagos will grow and I believe irrespective of what is happening, Lagos remains the most prosperous state in Nigeria and it can only

Lagos Assembly passes 11 bills into law

he Lagos State House of Assembly passed 11 bills into law in 2018, while others remained at various legislative stages in the house. It would be recalled that the house passed 7 and 12 bills into law in 2016 and 2017 respectively. The 11 bills passed by the lawmakers in 2018 resulted in the Lagos State Electric Sector Reform Law, 2018; the controversial Land Use Charge Law, 2018 and the 2018 Appropriation Law. Others are the Lagos State Transport Sector Reform Law, 2018; Lagos State House of Assembly Service Commission (amendment) Law, 2018 and Lagos State Teaching Service Commission Law, 2018. Also passed were the Lagos State Pension Reform (Amendment) Law, 2018; Lagos State Awards Scheme Law, 2018

and Lagos State Health Scheme (Amendment) Law, 2018. The rest are the Lagos State Mental Health Service Law, 2018 and the Lagos State Tourism Promotion Agency Law, 2018. As the year 2018 drew to a close, the Lagos State Local Government Service Commission (repeal and re-enact) bill, 2018 was awaiting third reading. Seven bills were on second reading stage, and no fewer than eight at committee stage, while the House was awaiting laying of report for the Lagos State Land Use Charge (amendment) Bill, 2018. In its bid to make some laws meet present realities, the house, in 2018, moved to review 10 of its laws, many of which were at committee stages as the year ended.

get better,” he said. Ambode assured he would leave no stone unturned in ensuring that ongoing capital projects are completed before the expiration of his tenure in May 2019, just as he appreciated the role of the security agencies in maintaining peace. “Let me also assure the residents that we are committed to their well-being, security and safety. We also want to assure that we are committed to completing all on-going projects before the end of May,” he said. The 2018 OLF with the theme, ‘A December to remember’, held simultaneously in five locations including Agege, Badagry, Ikorodu, Lagos Island and Epe with thousands in attendance.

ife of the governor of Ondo State, Betty Anyanwu-Akeredolu has identified communal effort as a catalyst for community development in Nigeria. Akeredolu, made the assertion during end-of-year town hall meeting at her community, Emeabiam in Owerri West local government area of Imo State. The town hall meeting was organised by Betty Anyanwu-Akeredolu Foundation in conjunction with Ada Emeabiam Foundation. Akeredolu stated that gone are the days when communities like blessed with a lot of natural resources, human resources and with huge economic potentials, would fold their hands and wait for government alone to bring development in the area. She regretted that Emeabiam has remained one of the most marginalised and undeveloped communities in Imo in spite of her natural endowment and contribution to the state economy, and blamed it on the successive governments in the area. She therefore charged the people of the community to take the bull by the horn and chart the course of a new Emeabiam of their dreams.

Police nab 4 kidnap suspects in Borno

he police in Borno have arrested four suspected kidnappers and rescued one victim at Tuga village in Damboa local government area of the state. The Commissioner of Police (CP), Danian Chukwu disclosed this at a news conference in Maiduguri on January 1, 2019. Chukwu said that the suspects had on December 13, 2018, kidnapped one Hassan Muhammad and requested for N21 million ransom from his family. He explained that one of the suspects, Usman Abdul, 18, was arrested at the victim’s house when he went to collect the money. Chukwu said that Abdul escorted a team of the police and members of the Civilian Joint Task Force (CJTF) to their hideout where three other members of the gang were apprehended. The suspects were Adamu Dan-Rani, 20; Usman Musa, 40; and Musa Haruna, 74.

Thepolice,hesaidrecoveredoneAK-47riffle, a pistol, dane gun and 32 pieces of ammunition; adding that some family members of the victim sustained injuries in the rescue mission. According to the CP, the suspects, upon interrogation, admitted the crimes, saying it was to enable them get money to restock their herds rustled in the area. Chukwu added that the suspects claimed that 47 cows and 83 sheep were stolen from their herd. He further disclosed that the police arrested one Bilal Babayola, in possession of a stolen Honda car with registration number Abuja AE 238 MDS. He said the command had so far established the owner of the car and it would be released sequel to the presentation of proof of ownership certificate. Meanwhile, the police also destroyed 4,960 parcels of Indian hemp seized by the command in Maiduguri.

BUSINESS DAY

www.businessday.

www.facebook.com/business-

@businessDayNG

@Businessdayng

Thursday 03 January 2019

BUSINESSTRAVEL

Aviation stakeholders hail new NAHCO GMD as a perfect fit Stories by IFEOMA OKEKE

ew women in the Nigeria could boast of the heavy CV of Olatokunbo Adenike Fagbemi, the newly – appointed group managing director/chief executive officer of the Nigerian Aviation Handling Company PLC (nahco aviance). Since her appointment was announced through a statement by the Company, reactions had been very positive. In the statement announcing the appointment, Tayo Ajakaye, the Company’s spokesman, said Fagbemi is a well – travelled globally recognised aviation consultant who had consulted for governments and regulators in Nigeria, Gambia and Sierra Leone. According to Ajakaye, Fagbemi has had unquantifiable success working and training in various aspects of airport management, passenger handling, ramp handling and cargo handling at Dubai International Airport, Changi Airport, Singapore, Murtala Muhammed International Airport, Ikeja, Hartsfield Jackson Airport, Atlanta and Dallas Fort Worth Airport amongst others. Fagbemi had a Masters’ degree in Business Administration from IESE (“Instituto de Estudios Superiores de la Empresa”) University of Nevara, Spain and a Bachelor’s Degree in Pharmacy from the University of Ibadan. Fagbemi was chosen by the Board of the Company to drive the new Group it recently approved. As opposed to the earlier structure where the subsidiary companies including Nahco Free Zone, Mainland Cargo Options and Nahco Energy Power & Infrastructure report to their own boards, the new General Managers of these companies will now report to the GMD. Her assignment is quite a straightforward one: to implement the new strategic plan of the Company, operationalise a seamless and harmonised group structure which will transform NAHCO into one of the best companies in the world. The new GMD will also

Olatokunbo Adenike Fagbemi

focus on improving customer experience, drive stakeholder value, enhance shareholders’ investment in the Company, integrate and closely monitoring of the activities of the subsidiaries to create synergies and better returns on capital. Fagbemi will also “coordinate and drive the new audacious, bold and challenging initiatives that will establish NAHCO Plc as the leading ground handling company in West and Central Africa in the shortest possible time.” The new GMD comes to the job with enough experience and qualifications including being a highly sought-after adviser to operators and regulatory agencies in Nigeria and across Africa. Her appointment had been receiving positive reviews. In one of such comments, Olu Ohunayo, industry analyst and Executive Director, Zenith Travels, said the appointment was highly commendable. He pointed out that the company made the right choice

noting that Fagbemi is an experienced industry hand with the International Civil Aviation Organisation (ICAO) certification and well – known Airport Council International (ACI) facilitator. “She is a thorough-bred professional. Most importantly is her knowledge of the tripod in the industry which are unions, government and pressure groups. Her appointment should finally cement the leadership juggling that has characterised the organisation after an internal petition led to the visitation by the Economic and Financial Crimes Commission (EFCC). “The major task before her is settling the staff rumblings; stop the financial bleeding orchestrated by investments in non-allied business whose bearing is tangential to corporate core competence. Also she would be saddled with getting funds to improve facilities and processes that will attract and return some of their clients. Sahcol, the

other licenced competitor needs to brace up for the unavoidable impact, I must confess,” Ohunayo said. Also commenting on the appointment, Shehu Mallam Mikail, the coordinator of Constance Shareholders, a well-recognised group with shares in NAHCO Plc, said the appointment of Fagbemi signals a new and glorious dawn for the Company. He said with the appointment, shareholders look forward to a better performance by the Company. According to him, it was wrong and illogical for the former board of the Company to have appointed a former banker as the MD/CEO in the first instance. Questioning the rationale behind the appointment of the immediate past MD/CEO, Mikail asked, “Can you appoint an electrical engineer as the head of a hospital? Or can you appoint a pharmacist as the CERO of a bank?” He explained that appointments should be made in a way that put round pegs in round holes and that no matter how good a carpenter is, he could not sow a good pair of trousers. Mikail hailed the appointment of Fagbemi, insisting that it is a well thought – out move and that the Board of the Company led by Seinde Fadeni Oladapo deserved accolades for making such a bold move. He said it was better for the company to cut short the strange experiment it embarked upon with the appointment of the immediate past MD/CEO than to allow the man to manage a Company he knew nothing about. Speaking in similar vein, Taiwo Oderinde, the National Coordinator of Proactive Shareholders Association and well – established Capital Market voice, while appreciating the Board of the Company for being proactive said the appointment of Fagbemi is a welcome development. Oderinde said, “It is a welcome development. Going through her profile, she is a square peg in a square hole. When you look at her working life, she had work in Asia, Europe, United States and Africa and all these in aviation sector. She

is well read and is going to deliver on the job. I am a stakeholder in NAHCO and I have no doubt that she will make us proud. I urge other stakeholders, unions, staff, regulators, etc. to cooperate with her in this onerous task of taking NHACO to the next level. I wish her all the best.” Authoritative industry sources who preferred not to be named told BusinessDay that Fagbemi’s appointment is being seen by majority of the over 2000 – strong staff as a major saving grace for the company, pointing out that a major problem with the company was its inability to appoint a competent MD/CEO since the departure of Norbert Bielderman. Bielderman was chief of operations in the company for about four years before he was appointed MD/CEO in October 2014. His exit August 2017 led to the appointment of Folasade Ode as Acting MD on August 7, 2017. Ode, a trained lawyer who for a long time was the company secretary had no experience whatsoever as regards the internal running of the company and was never considered by the Board as a long – term replacement for Bielderman. The appointment of Idris Yakubu in November 20, 2017, as the MD/CEO however caught the industry by surprise. This was because his name did not ring any bell in the industry. His profile also did not match any that industry writers and analysts were conversant with. It was no surprise therefore that his efforts at improving the fortunes of the company were largely unsuccessful. He had too much to learn in such a specialised industry as aviation, and could not really make any positive impact. Industry watchers and staff agree that Fagbemi already had her job cut out for her which includes gaining back clients lost to competition, boosting staff confidence, ensuring service efficiency and increasing customer experience. Analysts believed that her vast experience in the industry coupled with her good relationship with clients, FAAN and regulators would aid her success on the job.

Group lauds Dana Air’s efficiency, 0n-time performance

he Uyo chapter of the Royal Circle of Friends International has endorsed Dana Air’s efficiency and on-time performance at its Cultural and Award day held recently in Uyo. Registered with the Corporate Affairs Commission, the Royals is a social –cultural, Multilingual, and non-partisan group with membership across the country and vocations. Royal Uduak Okokon, the President of the organization, while presenting the certificate and award to Dana Air said, “as part of our yearly rituals of always

meeting to review our score card and return the thanks and praises to God for his goodness towards us as individuals and as a group, we wish to also recognize and appreciate individuals and companies that have contributed to the development of our state and have also impacted us positively with their services and activities. “Let me on behalf The Royals present you this certificate and award as the Best Airline of the Year 2018. This is in recognition of your efficient customer service, good customer relations, passenger handling, and timely day–to-day flight opera-

tions which has been observed over time to be in strict compliance with the International Civil Aviation Organization (ICAO) and International Air Transport Association (IATA).’’ Speaking after receiving the award on behalf of Dana Air, Anthonia Aneke, the Uyo Station Manager, said ‘Dana Air will continue to do its best to offer excellent services and safe flight operations in accordance with standard and recommended practices. “The people of Akwa Ibom are time-conscious and despite the upsurge in traffic across our destinations at the moment, we have main-

tained our operational efficiency with an excellent on-time performance and amazing customer and in-flight service. This has endeared us to the good people of Akwa Ibom state making us their choice for air travel.’’ Commenting further, Aneke said “Uyo is home to Dana Air considering the number of years we have been flying to the state and our longstanding relationship with the government and good people of Akwa Ibom state speaks volumes. “As the official airline of Akwa United and having been the pre-

ferred airline of one of the biggest Christmas Carols in the world- The Akwa Ibom Christmas Carol festival, we are committed to only offering the best and we promise not to disappoint. We thank the good people of the state particularly, the Royal Circle of Friends for this recognition’’ Only recently, Dana Air extended its multi-million naira sponsorship deal for the state owned club –Akwa united FC. The airline in July, bagged a global recognition for its standards in ground handling and also won an award as the Best Domestic Airline for passenger facilitation at the Nigerian Aviation Awards 2018.

Thursday 03 January 2019

www.businessday.ng

https://www.facebook.com/businessdayng

Research & INSIGHT

@Businessdayng

BUSINESS DAY

In association with

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

briu@businessday.ng

08098710024

Appraising the viability and productivity of Nigeria’s regional economies at half year 2018 TELIAT SULE

amount of resources a state can generate internally. This was computed as the ratio of IGR expressed as a percentage of the total revenue generated by a state or region. At half year 2018, the 36 states of the federation received N1.375 trillion as revenue from the Federation Account Allocation Committed (FAAC). This comprised

N1.19 trillion as net FAAC revenue and N180.79 billion expended on debt repayment. In other words, 13 percent of the total FAAC to all the 36 states from January to June 2018 went in the way of debt repayment, where other statutory obligations were met with 87 percent. When measured by the amount of resources that each

debt servicing, representing 29 percent while the south west paid N35.4 billion to account for 20 percent of the overall amount paid in servicing debt between January and June 2018. The 36 states also generated N544.18 billion revenue through the internally generated revenue (IGR) mechanism. Thus the national viability index, a metric that shows how much a state can generate internally out of the total resources it needs for efficient operations stood at 28 percent. Seven states outperformed the national viability index. Lagos State topped the national viability index by scoring 72 percent, indicating that it could generate N72 out of every N100 it required for smooth operations during the first half of 2018. Ogun State scored 62 percent; Rivers, 40 percent; Enugu, 32 percent; Kaduna, 31 percent ; Kano and Kwara states, 30 percent each, while Oyo State scored 28 percent. The worst performing states were Ebonyi, Taraba, Zamfara, Gombe, 9 percent each; Bayelsa and Kebbi, 7 percent each; and Yobe 6 percent. By regional viability index, Lagos State scored 72 percent; North Central, 18 percent ; North East, 10 percent; North West, 19 percent; South East, 21 percent; South-South, 22 percent and South West, 34 percent. This shows that Lagos State is the only region which has the capability to generate more than half of the resources it needs for efficient functioning internally. With 82.3 million as the country’s labour force, and assuming that an average employee worked for 8 hours in 125 days in the first half of

2018, the national IGR per hour stood at N6.61. Six states outperformed this metric. They are Lagos, Rivers, Ogun, Delta, Edo and Kwara in that order. Lagos State employees generated IGR worth N27.97 per hour in the first half of 2018. River State workers collected N14.35 per hour in the same period. Ogun State workers also collected N14.31 per hour in the first half of 2018. Delta State workers generated N10.28 per hour while workers in Edo and Kwara State generated N7.06 and N6.73 per hour respectively. The worst states on the scale of the IGR per hour are Zamfara, Ebonyi, Ekiti, Yobe, Kebbi, Borno and Taraba. Each of these states generated less than N2 per hour within the reference period. Based on the regional economic performance, Lagos State retains its IGR per hour at N27.97. Workers in the north central region generated N3.27 per hour during this period. In the north east, it was N1.83 per hour that employees in that region generated as IGR per hour at half year 2018. The north west generated N3.71 IGR per hour while workers in the south east generated N3.07 per hour. The south-south geopolitical zone generated N8.64 IGR per hour and their counterparts in the south west generated N5.43 per IGR per hour. Only Lagos and southsouth generated above the national IGR per hour within the reference period. The major implication of our findings is that the call by the Nigerian Labour Force that all the 36 states of the federation should pay same amount as the minimum wage may be driven mainly by populism as against economic indices. 12734BDN

ome assumptions were made in the computation of the metrics that formed the basis of this article. As against the six geopolitical zones in the country, Lagos State, which is generally part of the south west geopolitical zone was made to stand alone. That increased the number of the regions to seven which are Lagos, South West (SW), South-South (SS), South East (SE), North West (NW), North Central (NC) and North East (NE). Apart from Abuja which is not a state and was not part of the analysis, all the 36 states were considered in this write-up. The treatment of Lagos State as a region on its own follows its emergence as the fifth biggest economy in Africa. Also, its IGR figure usually distorts analysis and as such prevents researchers from having a clear understanding of the true performance of the other five states in the SW region. Gross monthly federal account allocation committee (FAAC) which comprises the net allocations to states and debt payments was referred to as FAAC throughout the article. Additionally, FAAC figures considered therein excluded allocations to local government areas in each state and all the figures were sourced from the National Bureau of Statistics (NBS) and BusinessDay Research and Intelligence Unit (BRIU). Some of the metrics adopted to evaluate the productivity of the seven geopolitical zones include the viability index and IGR collection per hour. The viability index measures the

region received, Lagos State got N76.56 billion as gross FAAC, representing 5.6 percent of the gross FAAC shared among the seven regional economies in the federation. The north central region got N164.72 billion, representing 12 percent; while the north east region received N265.93 billion, which also amounted to 12 percent of the gross FAAC from January to June 2018. The north west geopolitical zone got N224 billion representing 16 percent of the total FAAC shared within the period. The south east received N137.6 billion which translated to 10 percent of the total revenue shared among the sub national governments during this period. With N465.24 billion, the south-south received 34 percent of the gross FAAC while with N141.47 billion; south west received 10 percent of the gross FAAC shared during the period. Debt repayment or servicing comprises the repayment of the external debt, domestic loans and other obligations. The seven regional economies paid N180.79 billion for debt servicing between January and June 2018. Lagos State paid N17.04 billion, representing 9.4 percent of the total debt repayment. The north central region paid N21.4 billion to account for 12 percent while the north east, with N18.3 billion accounted for 10 percent of the amount all the regions paid out for debt servicing. The north west geopolitical zone paid N24.3 billion representing 13 percent of the amount paid for servicing debt; south east paid N12.7 billion to account for 7 percent of the debt repayment fee, and that was the least among the geopolitical zones. South –south paid N51.7 billion for

WIDE OPEN MINDED RMB Nigeria. Solutionist Thinking.

Rand Merchant Bank Nigeria Limited is an Authorised Financial Services Provider

We believe in stretching ourselves. In broadening our horizons and embracing the unconventional to consider every possibility. Solutionist Thinking means deliberating together and collaborating with our clients to unlock exceptional prospects for the future. It’s the magic that inspires everything we do.

www.rmb.com.ng

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

COMPANIES & MARKETS

@Businessdayng

Thursday 03 January 2019

Legacy Pension Managers Ltd now FCMB Pensions

Pg. 17

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

ECONOMICS

Morgan Stanley tips Nigerian economy to expand 2.9% in 2019 LOLADE AKINMURELE

organ Stanl e y h a s

t i p p e d t h e Ni g e r i a n economy to expand s o m e 2 . 9 p e rc e nt i n 2019. The World Bank and International Mo n e t a r y ( I M F ) a re not as optimistic with growth projections of 2.2 percent. The American multinational investment bank, Morgan Stanley, captured its growth forecast for a nu mb e r o f e c o n o mies, including Nigeria, in an investment outlook report for 2019. Though it did not state the expected dr ivers of grow th in A f r i c a’s l a r g e s t o i l producer, the bank’s strategists expect Brent crude to trade at US$$77.5 per barrel for the most part of 2019 until the third quarter. That’s a 44 percent premium over the $53 per barrel oil price

a s o f Ja n u a r y 1 , a c cording to Bloomberg data. “The oil market should remain balanced rather than tight next year as potential oversupp ly s h ou l d b e o f f s e t by Saudi Arabia and OPEC cuts,” a team of Morgan Stanley strate g i s t s l e d b y Ja m e s Lord said. “ H o w e v e r, s u p p l y risks remain tilted to the dow nside (e.g., potential non-compliance with production cuts, a slower decline in Iran’s exports, etc.), implying that another oil price rally similar to the one we saw in 2018 is less likely, particularly given slightly more muted demand dynamics.” The movement in global oil prices and local production has p laye d a ke y ro l e i n the Nigerian econo my f o r d e ca d e s, a s successive administrations struggle to achieve muchneeded diversification. When oil prices tumbled in 2016, the

economy slipped into its first recession in a quarter of a centur y. As oil prices recovered, so did the economy in the second quarter of 2017. In the first nine months

of 2018, economic growth averaged 1.7 percent. Growth of 2.9 perc e nt i n 2 0 1 9 m e a n s av e ra g e i n c o m e s i n Nigeria will contract for the fourth

straight year, as population growth has consistently eclipsed economic growth, according to data compiled by Business Day. The IMF expects the trend to last an-

other four years. While the country’s population rate has averaged 3 percent in the past decade, economic growth has b e e n b e l ow 2 . 5 p e rcent since 2015.

MARKETS

Naira liquidity to rise as N583bn in OMO, Tbill maturities due for payment HOPE MOSES-ASHIKE

he financial market opened for business Wednesday after the New Year holiday with Open Market Operation (OMO) maturity worth N424.5 billion and TBills maturity worth N159.3 billion expected to hit the system thereby boosting naira liquidity.

OMO is the buying and selling of government security, which enables a central bank to control the supply of money in the banking system. Analysts at Afrinvest Securities limited advice investors to take advantage of the high yields on OMO bills as well as selected T-bills trading in the secondary market. In its customary

bid to mop up excess system liquidity (N200.0bn long as at Monday), the Central Bank of Nigeria (CBN) conducted OMO auctions on two of the three trading sessions last week – Monday and Thursday. On Monday, a total of N300.0 billion was offered across the 94, 192 and 311day tenors, this had a total subscription of N40.4 billion (a

bid-to-cover ratio of 0.1x). However, following the OMO maturity, more investors bid at the Thursday auction with a total subscription of N380.0 billion across the short (N200.0bn offered vs. N26.0bn subscription), medium (N300.0bn offered vs N91.0bn subscription) and long-term (N500.0bn offered vs N262.3bn subscription) ma-

turities denoting a bid-to-cover ratio of 0.4x. There was also a “Special OMO Auction” sale worth N645.6 billion by the Apex bank to commercial banks on Thursday. OMO remained the major instrument for liquidity management in the first half of 2018, and was used to moderate excess liquidity, boost tradable securities, and deepen second-

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

ary market activities. CBN Bills at the open market amounted to N13.97 trillion in the first half of 2018 compared with N3.70 trillion, in 2017. In the same period, a total of N11.65 trillion was subscribed to while N9.74 trillion was sold respectively as against N4.59 trillion and N3.87 trillion, in the corresponding period of 2017.

Thursday 03 January 2019

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

BUSINESS DAY

COMPANIES & MARKETS COMPANY RELEASE

Legacy Pension Managers Ltd now FCMB Pensions

s part of the s t rat e g y t o harmonise its global brand and identity, FCMB Group Plc has announced a change of name in the pension management arm of its business. Formerly known as Legacy Pension Managers Limited, the leading financial services holding company’s fund managers firm will now be known as FCMB Pensions Limited. In a statement released in Abuja, the Federal Capital Territory, the Group said, following the acquisition of majority shareholding in the company by FCMB Group Plc and the approval of the Board of Directors at its meeting of October 17, 2018, the change of name will positively enhance the company’s marketing and distribution activities. Reacting to Media inquiries, the Managing Director of FCMB Pensions Limited, (formerly Legacy Pension), Misbahu Yola, notifying shareholders said, “what has happened is expected and an important alignment of our marketing

message. There has been a comprehensive integration of the pensions business into FCMB Group, which is known for its culture of excellence, resilience and customer focus. It is another way of welcoming it to a group that has endured and enjoyed stability and sustainable growth in the last 41years”. FCMB Group Plc is a leading financial services group with businesses in commercial and retail banking, investment banking and wealth management, across seven subsidiaries that was founded in 1977 and became a public listed company in 2005.FCMB increased its stake in its pensions business between 2017 and 2018 from 28.3% to 91.6% currently. The acquisition is expected to engender sustainable and diversified low-risk growth momentum. The pension firm will also leverage on FCMB’s extensive distribution network, alternate channels, digital innovation, investment research, and rapidly expanding customer base. Chairman of the Board of FCMB Pensions Limited

L-R: Tobechukwu Okigbo, corporate relations executive, MTN Nigeria; Adekunle Adebiyi, sales and distribution executive, MTN Nigeria; Esther Akinnukawe, human resource executive, MTN Nigeria; Mazen Mroue, COO MTN Nigeria, and Lynda Saint-Nwafor, chief enterprise business officer, MTN Nigeria, at the maiden edition of MTN Partner Summit in Lagos recently…

and the Group Chief Executive of FCMB Group Plc, Ladi Balogun said, “the change of the company’s name will entrench a single brand identity across our pensions and

retail banking businesses. Having distinguished ourselves in consumer finance over the years and gaining greater market share in retail payments solutions

and savings accounts, a comprehensive suite of asset and wealth management propositions is a natural addition to our growing base of 5 million customers.

The brand harmonisation will enable us create greater marketing synergies and, along with other initiatives, accelerate the growth of our pensions business”.

TECHNOLOGY

MARKETS

USPF organizes hackathon, incubation event for tech enthusiasts

New year, same story as stocks shed 1.15 percent

JUMOKE AKIYODE-LAWANSON

he Universal Service Provision Fund (USPF), an arm of the Nigerian Communications Commission (NCC) is organizing the ‘Change maker challenge’, a hackathon and incubation event where people with technology background and business vision come together, form teams around a problem or idea, and collaboratively code a unique solution from scratch. The competition which is scheduled to hold from January 25th to 27th, 2019 will have bright, creative minds between the ages of 18 to 45 years old competing to win over N3.5 million for creating an innovative solution, usually in the form of websites, mobile apps, IOT and robotics. Interested persons below the age of 18 would require their parents/guardians to fill out a permission slip and accompany their ward to the event. According to the event organizers, the innovative ICT solution and entrepreneurship development project

would provide an avenue for self-expression and creativity among technology start-ups, through the use of modern technologies. The theme for the third edition of the Changemaker challenge is “The Future is here: Disrupting legacy ecosystem with technology”, USPF said in a statement, while encouraging Nigerians with relevant solutions that could address specific challenges, to apply at www. uspfchangemaker18.ng and stand a chance to develop their idea. “The USPF Changemaker challenge event is the perfect place to network and connect with brilliant, software developers, UX designers, data scientists, ICT experts, budding entrepreneurs, strategists, angel investors, idea funders, public policy experts, incubation experts and technology enthusiasts. It will be a weekend of freedom to create a new product, learn new techniques for your future development, and be part of a community of new ideas and ventures thus ideas festival, investors delight,” the organizers said in a statement.

SEGUN ADAMS

he excitement of the New Year might have become dampened for many investors as the opening trading session for the year closed on a bearish note following continued selloffs in market bellwethers on Tuesday. Dangote Cement was down by 1.95 percent while Nestle lost 0.67 percent in the day’s trade. The NSE All share index which opened for the year January 3, 2019 at 31430.5 points dropped 1.15 percent to close at 31430.5 points as investors lost N134.41 billion in the day’s trade. Diamond Bank, Sovereign Trust Insurance and Access Bank were the most traded stocks for the day. “I think what we would see mixed performance in the market over the short term.

On the part of the bulls we would be looking at early positioning in fundamental stocks ahead of full year 2018 dividend declaration while the bears would be looking at continued profit-taking owing to the political risks in the economy.’’ Gbolahun Ologunro, a Lagos based analyst at CSL Capital explained. “A rally is expected after the election period which would coincide with release of full year report by firms and their dividend declaration. We expect the rally at the end of Q1, around April provided oil prices remain above at least $50 per barrel’’ he added. Advancers for the day were led by Julius Berger which gained 9.95 percent to close at N22.10. Vitafoam which declared its first profit in two years for 2018 maintained its price rally as its share

price appreciated by 9.55 percent to close at N4.82 per share. Royal exchange followed closely as it share price gained 9.09 percent to close at 24k per share while Union Diagnostics and Custodian insurance gained 8 percent and 7.96 percent each to close at 27k and N6.10 per share respectively. The laggards for the day were Equity Assurance, down by 9.09 percent to close at 20k per share, Nigerian Breweries which shed 8.42 percent to close at N78.30, Law Union which lost 8.33 percent to close at 55k per share while Honeywell flourmill and Champion Breweries each lost 7.81 and 7.54 percent to close at N1.18 and N1.84 per share respectively. Across sectors the performance was bearish as four out of five sectors covered closed in the reds. Banking sector gained 0.08

percent while Insurance (-1.31%), oil and Gas (-0.66%), Consumer Goods (-2.30%) and Industrial (-1.20%) performed below par to exert downward pressure on the All share index. The equities market in 2018 fell 18 percent as investors fear priced into the market. Political uncertainties associated with the coming elections and growth in the US economy saw a reversal of 2017 strong bullish run which earned the local bourse a place in the top three equities market globally and the best performing bourse in Africa for the year. The 2018 market which initially rose by more than 17 percent around mid-January where it peaked, entered correction in April and the sell-off persisted as the All share index plunged further into the year, with investors losing 1.89 trillion at the end of the year.

BUSINESS DAY

C002D5556

Thursday 03 January 2019

C002D5556

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

Corporate Social Impact

Stories by Onuwa Lucky Joseph

born but with Lebanese ancestry, and also a French citizen. It just goes to show that the higher the climb,

Thursday 03 January 2019

Onuwa Lucky Joseph (08023314782) Editor.

The trials of Carlos Ghosn ntil very recently, Carlos Ghosn was the man with the Midas touch who could do no wrong. He was CEO and Chairman of both Renault the French automaker as well as CEO OF Nissan the Japanese automaker and Chairman of Mitsubishi, another Japanese automaker. Prior to this he had been CEO of Michelin North America, amongst other high profile jobs. His story has for some time been a staple for business school case studies. But things have gone awry lately. Mr Ghosn has been detained by the Japanese Police for the past six weeks on account of some transactions dating back to 2008 at the height of the global financial crisis. He is alleged to have lifted some personal losses (about $16.6m) to a Nissan subsidiary. Other charges have been dropping in since then and the Japanese authorities are making sure he stays in jail without bail for quite a while more. It is yet an unfolding story, but this is not how it was supposed to end for such a fabled and mercurial figure who is originally Brazilian

@Businessdayng

the more dizzying the fall. Corporate governance issues are no small matter.

Essence of alumni associations (From the wall of Senator Shehu Sani on Facebook)

he practice of College Old Boys or Old Girls Associations recognizing, honoring and celebrating only those who attain political, professional or material status in life is selective and discriminatory. We should be human and spiritual, to equally appreciate those among us whom were once our childhood colleagues, but unable to rise to the material heights of life. We should recognize and honor as well as help those who ‘couldn’t make it in life’. They are not failures in life, they are those not privileged by fate to acquire or assume the vanities or the ephemerality’s of life. Old Boys and Old Girls Association should be a reunion of souls, to recount the good old days of brotherly or sisterly unconditional love and celebrate the wrinkles, baldness and the grey hairs that marked our mileage. It should be a place to recall history with jokes and smiles and prayers for those who departed earlier than us. The prevailing situations in most old Boys and Girls meeting is that in which the ‘rich old boys or girls’ comes to show off and the ‘poor old boys or girls are intimidated’. This must change. Yes, fingers are not equal and life has been good to some, but

let not those attainments kill that comradely spirit we shared in our classrooms and hostels, as young people unaware of what life has for us in the future we now live. Memories and particularly Childhood memories are the priceless treasures of all alma mater. School life was our raw and innocent stage in life before we became processed and possessed. On the final note, life will always be busy and packaged with its challenges, but try and spare a moment to visit the orphans and widow(er)s left behind by your once good school friend. You may not have anything to give, but your presence matters most to his spirit and they will see him in you. Let’s be human once again. Let’s keep the spirit.

President Magufuli against the west

egime change is something the West is quite adept at. They’ve been at it forever and they do it exceptionally well. While the United States is the head honcho, it is not alone. Britain and France, notably, are also deeply involved in ensuring that those who emerge leaders of their former colonies are ones loyal to their former colonial masters. In the case of America, there’ve been at least 7 documented cases and more when currently classified documents are declassified: IRAN In 1953, the Iranian Prime Minister Mohammed Mossadegh was taken out after the CIA infiltrated his support base and orchestrated a process of popular street revolts against his government. He was subsequently arrested and placed under house arrest. What was his problem? He had the guts to nationalize the Iranian oil industry which hitherto was run by the British. GUATEMALA In 1954, President Jacobo Arbenz was taken out in a coup d’état after he had stayed the course with regards to land reforms which he instituted to ensure the people of Guatemala got a better deal for what was theirs. Why was America so keen on getting him out? The land reforms were not favourable to the interest of the United Fruits Company, an American company. Though this happened in 1954, America’s

involvement did not become public knowledge until 1999. CONGO Western complicity in the unending Congo conflict started from well before Independence. Patrice Lumumba, first indigenous Prime Minister was determined to stop the plundering by Belgium and other Western powers, a ruinous exercise which reached its apogee under King Leopold II in the 19th century. It’s been estimated that about five million Congolese lost their lives to the harsh brutality of the Belgian government. After Lumumba was toppled and replaced by Joseph Kasavubu, he maintained an armed opposition to counter the Belgian military that was

operating freely in Congo. Eventually, through the help of the CIA, acting in concert with the Belgians, the government was alerted to Lumumba’s whereabouts; whereupon he was captured and subsequently executed in 1961. His body was subsequently hacked and dissolved in sulphuric acid. Lumumba was apparently bad for Belgian and Western business interests so he had to be taken out and that without mercy. Witness how the American CIA has been deeply implicated in matters that are Western rather than strictly American. DOMINICAN REPUBLIC Rafael Trujillo was a bad man. His end was bad, and CIA-aided. Before he

was ambushed by political dissidents in 1960, he had slaughtered thousands of Haitians (his Black neighbours) in an ethnic cleansing exercise. It was eventually determined that the dissidents were ‘materially supported’ by the CIA. Did the CIA help the world in this particular instance? Or should the principle of noninterference have been strictly adhered to? SOUTH VIETNAM Ngo Dinh Diem the South Vietnamese leader until November 1, 1963, was variously described as nepotistic, autocratic and a serial ballot box stuffer for the sake of winning rigged elections. He was also very pro Roman Catholic and anti-Buddhism. Dissident Buddhist monks didn’t let up on their campaign to get him out. Eventually, some generals in the Army, again with the support of the CIA, eventually had him ousted and assassinated alongside his brother Ngo Dinh Nhu. BRAZIL America didn’t like the politics of Brazilian President, Joao Belchior Marques Goulart whose left leaning sympathies made the US and its allies uncomfortable. Red China was bad enough but at least it was continents away. To have another China next door was too much for the West. So, they had him ousted using Humberto Castello Branco who was the country’s Chief of Army Staff. President Lyndon Baines Johnson, the man who succeeded John Kennedy, was very involved

in the coup. It might yet come to light in the future that Luis Ignacio Lula da Silva’s ousting as president was also orchestrated by the West. He was the other socialist President to happen along in Brazil. CHILE Salvador Allende ran unsuccessfully for President of Chile in 1952, 1958 and 1964. When he won in 1964, it was via a run-off, not by a popular majority. Why was this? Maybe because he was an avowed Marxist in a liberal democracy. By all accounts, Allende was a president who sought to improve the lives of his people by infusing the polity with policies that democratized health, education, welfare, etc. These were in large part socialist in conception and execution and so not acceptable to the United States. Worse of all, he nationalized the Chilean copper industry and restored diplomatic relations with Cuba. General Agusto Pinochet was subsequently empowered by the CIA to help overthrow Salvador Allende who vowed he would not resign, but who in true machismo fashion eventually committed suicide with an AK-47 assault rifle rather than be taken in. Many more cases will come to light eventually, even though there are indications even now that the West has been implicated in many more than the seven

Continues on page 21

www.businessday.ng

Thursday 03 January 2019

https://www.facebook.com/businessdayng

@Businessdayng

BUSINESS DAY

Corporate Social Impact

President Magufuli against... leader would and should do.

here listed. What is not in doubt is that the West meddles. The only way the West has managed to stay on top of the world’s economy is by meddling in other countries’ affairs to ensure that they get for cheap what they resell expensively to other nations not as strong. THE MAGUFULI SITUATION And why did we do all this rigmarole before getting to the real story of Tanzanian President John Magufuli? It’s because of late there’s been a raft of reports showing the West’s disinclination to steps he is taking to get his people stronger economically and otherwise. The West’s discomfort has more to do with Magufuli’s values than with his performance. While this writer clearly does not share Magufuli’s baiting of the LGBT community as well as his aversion for family planning, it must be understood that these are traditional values widely shared by most of his countrymen. Again, that does not legitimize the stigmatization. But for the West to start a process whose endpoint is clear does not make any sense for Tanzania, for Africa, and for the underdeveloped world. First, let’s take a look at Magufuli’s successes as President of Tanzania, the country of the beloved Nwalimu Julius Nyerere which for decades now has been punching well below its weight in every respect. Seems despite all the UN and World Bank talk about progress, the West was actually happy that Tanzania was underperforming. Then along comes Mr Magufuli with his anti-corruption and infrastructure development projects. One of the first things he did as president was to start cutting waste from the system. To quote extensively from Wikipedia, “After taking office, Magufuli immediately began to impose measures to curb government spending, such as barring unnecessary foreign travel by government officials, using cheaper vehicles and board rooms for transport and meetings respectively, shrinking the delegation for a tour of the Commonwealth from 50 people to 4, dropping its sponsorship of a World AIDS Day exhibition in favour of purchasing AIDS medication, and discouraging lavish events and parties by public institutions (such as cutting the budget of a state dinner inaugurating the new parliament session). Magufuli reduced his own salary from US$15,000 to US$4,000

THE HUMAN RIGHTS ALLEGATIONS President Magufuli is far from perfect. Like most 3rd world leaders, and in fact, like US President Donald Trump, he gets prickly when contradicted. So in the same way that Trump is going after CNN and other media houses, Magufuli has been accused of interfering with the media’s prerogative to report freely. It is unacceptable, but no different from what other leaders do without the ‘international community’ breathing down their necks.

per-month.” “Most notably, Magufuli also suspended the country’s Independence Day festivities for 2015, in favour of a national cleanup campaign to help reduce the spread of cholera. Magufuli personally participated in the cleanup efforts, having stated that it was “so shameful that we are spending huge amounts of money to celebrate 54 years of independence when our people are dying of cholera”. The cost savings were to be invested towards improving hospitals and sanitation in the country” TAKING A STAND FOR TANZANIA PRODUCE President Magufuli clearly wants Tanzania cut off from the apron strings of dependency that has bedeviled African nations from since before Independence. Being primarily producers of cheap raw materials, the West and other parts of the world, now especially China, would want things to remain that way so they can exploit for cheap resources while determining the exorbitant prices Africa must pay for finished goods. One way Magufuli has tried to address the issue was the banning in 2017, of the exportation of unprocessed ores. This was done to help shore up local capacity for smelting. Only recently he got into a spat with the ‘international community’

when buyers of Tanzanian cashew would not pay more than what the farmers considered a pittance for the crop. While the farmers thought Sh3,300 per kilogramme was a fair price, the buyers, acting like a cartel, refused to pay more than Sh3000. Following several rounds of negotiations that had no headway, the president ordered the Army to buy up the crops and find a way to process it in Tanzania rather than sell it for cheap, which would end up further impoverishing the farmers and the economy of Tanzania. The government has since come out to say that more than 15 cashew nuts processing firms had agreed to sign a contract which would enable them process locally. If that goes as planned, it would be one point for Tanzania. Hopefully from there on, processing capacity would be further enhanced and in the era of the African Continental Free trade Agreement (AfCTA), the country can be counted on for supplies to African countries. The people of Tanzania call the man ‘Bulldozer’ taking into account his determination to ensure his country does not lack the infrastructure required by a modern country. In doing this, however, he is ruthlessly ensuring that costs are not inflated and that standard work is done for the money disbursed. That sounds to us like what a good

THE ATTACKS The US recently issued a travel advisory on Tanzania asking its citizens planning to visit to “Exercise increased caution in Tanzania due to crime, terrorism, and targeting of LGBTI persons”. The note went on to say that “Terrorist groups continue plotting possible attacks in Tanzania. Terrorists may attack with little or no warning, targeting embassies, police stations, mosques, and other places frequented by Westerners.” The Tanzanian government dismissed the note offhandedly. But before then, Western nations had started withdrawing aids and issuing threats. The European Union, considered Tanzania’s biggest development partner, said in November this year that it would thoroughly review its financial support of more than $100m per year in view of Dar Es Salaam’s undermining of ‘human rights and the rule of law.’ It said so even as it recalled its ambassador to Tanzania. In synchrony, the World Bank froze a $300 million (265 million euro) loan for girls’ education in protest against a move to expel pregnant girls from school and forbid them to continue their education after giving birth. Denmark also announced more pointedly the withdrawal of $10 million in aid owing to “unacceptable homophobic remarks”. All these are attacking a nation standing up for itself and values it considers important to its well-being as a society. While one does not support repression by government, constructive engagement spearheaded by the international community will go a longer way than an isolation policy which serves no purpose other than to make persecuted leaders and their countries dig in rather than open up space for those being persecuted. Let’s not forget, it is difficult for a society which has not fully incubated

a value to accept it and not become fragmented. Values imposition is a tried and tested disruption mechanism that keeps otherwise united societies at odds with one another, ensuring there’s no cohesion and no accepted sense of direction. On the balance, Magufuli has so far done a great job for his nation and should be judged first and foremost by citizens of Tanzania. His scorecard cannot be based on values his people are yet to fully internalize or buy into. That would be tantamount to bullying. And this is something Africa has experienced through a long stretch of its history. The only difference is that unlike in time past when gunboat diplomacy was the norm, countries are today expected to be more civil even when pushing another nation down the precipice. But even as we say this, it is important that Magufuli not discountenance the criticism, not all of which is self-serving. He should make amends where necessary. While he needs not fraternize with every medium calling itself the press, it is important that he be accommodating of dissenting views. FOREIGN CORPORATES SHOULD LEAVE AFRICA BETTER THAN THEY MET IT In the same vein, businesses operating in Tanzania as in fact all of Sub Saharan Africa must stop seeing Africa as some place purely for exploitation. There should be value addition to society in the same way that government regulatory policies and activist pressure over the years have forced businesses in the West to being more supportive of their host communities. The as yet rather buccaneering approach to business by Western and Chinese businesses leaves poor farmers poorer, and the environment blighted by extractor and other activities. The wealth that leaves Africa ought not leave until it impacts Africans positively. It is a moral issue that needs be obeyed whether African governments insist on it or not. The human capital must partake of the capital generated from within its borders rather than having it wholly flighted to enrich others. And where local governments arise that insist on its people’s welfare, it is not for Western governments to collude to take down those governments. That is what corporate and international civic responsibility is all about.

Meet Yacouba Sawadogo , climate change activist (Courtesy Thomson Reuters Foundation)

acouba Sawadogo from Burkina Faso is implementing an ancient African farming method that is turning barren land fertile and keeping the desert at bay. Zai pits are holes dug in dry, hard soil. Water and compost collect at the bottom, keeping crops alive during drought and making nutrient-free soil productive again. Farmer Sawadogo who pioneered the Zai pits recently won Sweden’s ‘alternative Nobel prize’.

Since the 1980s, Zai pits have restored thousands of hectares of dry land in Niger and Burkina Faso. And now, aid agencies are using it to combat hunger. By 2020, 50 million people could be forced to move because their land is turning to desert. Climate change and over farming are drying out soil, making growing crops impossible. 1million people in Burkina Faso needed food aid in 2017 because of erratic rainfall.

Almost 12 million hectares of arable land turn to desert every year. Sub Saharan Africa is especially vulnerable, as 80% of its economy relies on subsistence farming. This technique could reduce forced migration and restore huge areas of dry land.

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

BUSINESS DAY

www.businessday.ng

www.facebook.com/businessdayng

@businessDayNG

@Businessdayng

Thursday 03 January 2019

In association with Luxury

Malls

Companies

Deals

Spending Trends

What to expect in Nigeria’s Trade Sector in 2019 BUNMI BAILEY

his year is one to look out for as electioneering spending and hike in national minimum wage could have an impact on consumer spending and demand in Nigeria, according to a report by Vetiva Research, a firm that provides in-depth analysis on the Capital Markets, the macro-economic and financial landscape, companies and sectors. The report stated that domestic demand is expected to continue to recuperate at a slow pace in 2019 in the absence of required catalyst. “We note a few wildcards that could support consumer spend in the year. Specially, we expect a sturdy start to the year with economic activity supported by expected rampup will be somewhat marginal and confined to the first quar-

ter of the year, strong indications of a national minimum wage hike could potentially have a stronger multiplier effect on income levels and eventually consumer spending in 2019,” the report stated. The trade sector had been underperforming due to low purchasing power and consumer spending in the economy, prompting a reduction in trade activities. But in the third quarter of 2018 and for the first time, the trade sector recorded a positive growth after recording two negative growth rates, according to a recent GDP report by the National Bureau of Statistics (NBS). From the report, the sector grew by 0.98 percent in Q3 2018 after contracting by -2.14 percent and -2.57 percent in Q2 and Q1 respectively, making it the second positive growth since it existed recession in Q2 2017. Ibrahim Tajudeen, Head

of Research, Chapel Hill Denham said, trade activities which had been on a lockdown have been unlocked due to increased availability of foreign currency for importers to buy import and trade locally. “During the recession in 2016, people could not bring in anything, because there was no dollar to buy or sell them so trade volumes were coming down but now that dollar is available, we are now seeing the impact,” Tajudeen said to BusinessDay in a telephone interview. According to BusinessDay analysis of IMF per capita income data, Nigeria’s per capita income rose from $2,365 in 2010 to $2,582 in 2011 and further rose to $3,268 in 2014. Thereafter, it trended downward to $2,763 in 2015. By 2017, Nigeria’s income per capita fell by 10.7 per cent to $1,994 from $2,207 recorded in 2016.

Johnson Ighomereho, Retired Police Commissioner, Olubode Kayode, Reverend at St. Andrew Anglican Church, Ogudu, Francis Ewherido, MD, Titan Insurance Brokers, Margaret Ohwofa, MD, Magrellos Foods, her mother, Rebecca Ighomereho, Simeon Ohwofa, Chairman, Magrellos Foods and Olufemi Ogunro, Reverend at St. Andrew Anglican Church at the opening of Magrellos Branch, Moloney, Lagos Island

Rice, palm oil, vegetable oil, onions rises marginally in November Faminu Gbemi

he Prices of major consumer food items increased marginally from October to November 2018, partly due to the festive season which incurred some extra cost for consumers. Analysis of consumer food items by BusinessDay with data gotten from the National Bureau of Statistics (NBS) shows that Rice was relatively high by 0.2 percent to N278.5 in

November from N277.9 in October, palm oil prices increased by 0.2 percent from N495.1 in October to N496.2 in November, vegetable oil moved by 0.08 percent from N536.1 percent in October to N536.53 percent in November, onions had a major increase by 23.6 percent moving from N232.8 in October to N287.7 in November. But food items like frozen chicken, beans, white garri and tomatoes reduced within the specified periods. Frozen chicken dropped by 0.5 percent to N1551.2 in

November from N1558.2 in October, Beans reduced by 3.5 percent from N411.05 in October to N396.73 in November, white garri dropped by 2.55 percent having been N188.4 in October but in November became N183.6 and tomatoes had a decline of 3.99 percent from N306.6 in October to N294.4 in November. Pr ice fluctuation of consumer food items was largely influenced by the festive season but there is the possibility of food prices becoming normal after the festive season.

Magrellos expands footprint, rebrands Surulere branch BUNMI BAILEY

agrellos Restaurant, one of Nigeria’s fastest rising Quick Service Restaurant (QSR) brands has expanded its footprints with the opening of an upscale branch at Moloney Street, Lagos Island, Lagos and the reopening of its rebranded Surulere branch. Margaret Ohwofa, the managing Director of Magrellos Foods, speaking recently at the reopening of the rebranded Surulere branch, said that the move by the QSR brand was in furtherance of Magrellos quest to be the foremost modern Quick Service Restaurant offering the best of local, continental and oriental dishes in the best of environments. While promising its cli-

ents in Lagos, especially clients in Surulere and Lagos Island a delightful experience during this festive period, Ohwofa said beyond the end of year festivities, Magrellos is providing residents and working class people in Moloney a decent and hygienic environment where they can eat quality food at an affordable price, and a place where workers can come and relax after close of work while waiting for the traffic to thaw. She assured Magrellos clientele in Surulere and Moloney and their environs of the same premium services that the brand has come to be known for. She disclosed that beyond the presence of the QSR brand in Lagos, the brand will soon spread to other parts of Nigeria to delight discerning customers with its delicious meals and excellent services. “We have

plans to make the Magrellos brand go beyond Nigeria to Africa; we will make it an international brand.” This development is in line with the with the restaurant’s positioning as a trendy and up market food business for all, as it will be recalled that earlier in the year at the unveiling of the eatery’s ultramodern head office at Ogudu GRA in, Lagos, that the managing director said that the brand is positioned for the younger generation as well as families and the working class, who have always found the brand appealing. Magrellos is a fully Nigerian private owned food company established in 2006 with office based at 169, Ogudu road, Ikeja. The business offers wide variety of meals, pastries and confectionery, varieties of bread and ice cream production units.

Thursday 03 January 2019

www.businessday.ng

www.facebook.com/businessdayng

@businessDayNG

Harmattan: Health expert recommends 100% fruit juice By our reporters

isi Abiola, a health and wellness advocate, has urged Nigerians to embrace consumption of 100% fruit juice in order to reduce dehydration in this harmattan season. Abiola, during the December edition of Chivita -sponsored health and wellness dialogue, also warned against indulging in excess sugar consumption during the yuletide. She advised individuals to take pure fruit juice instead, as it is healthy and highly nutritious. According to the health and fitness expert, the dustiness and coarseness that is associated with harmattan in most parts of the country, calls for increased intake of pure fruit juice as an essential survival strategy for both adults and children. She noted: “Quite often, we talk about celebration without considering the fact that you can only have fun when you are healthy. What is your nutritional objective as Christmas and the New Year approaches? Of course, this is a season of indulgence, but as a health-conscious individual, you must select your meals and drinks with

your overall nutritional goal in mind. And I think pure fruit juice is definitely the way to go.” Abiola also urged individuals to adopt a healthy lifestyle to help reduce the risks of cardiovascular diseases such as high blood pressure, high cholesterol, diabetes, obesity and heart diseases. She said that balancing one’s diet with pure fruit juice consumption could reduce the severity in the case of individuals who are suffering from such challenges. “The available evidence relating to 100 percent fruit juice consumption indicates modest benefits for blood

pressure, while there is also an emerging trend revealing inverse associations between 100% fruit juice consumption and risk of stroke. Overall, this suggests that 100% fruit juice is an appropriate choice of beverage for a heart healthy diet,” she stressed. Abiola said that orange juice contains both vitamin C and flavonoids, which are powerful antioxidants, and that drinking could “neutralise the inflammatory stress generated by the unhealthy meal and help prevent blood vessel damage.” She continued: “One eight-ounce glass of orange juice gives you at least 100%

of the recommended daily value for vitamin C. Vitamin C is an important antioxidant. It can help to neutralise free radicals formed as part of the body’s natural oxidation processes. “Consuming a variety of fruits and vegetables is a recognised way to maximise the ingestion of vitamins, minerals and beneficial plant nutrients. For one, the different flavours of Chivita 100% have become important sources of vitamins and minerals and are readily accessible all year round. “Also, Clinical studies reveal several mechanisms relating to vascular health, inflammation, lipid oxidation and platelet aggregation that could explain a benefit for 100% fruit juices in lowering CVD risk. Polyphenol compounds and potassium in fruit juices are most likely responsible for these effects. In fact, more than a decade’s worth of research suggests that 100% fruit juice can help support a healthy heart.” The monthly review is part of Chi Limited’s ‘no-added sugar’ campaign, which is aimed at demystifying the myths about sugar intake and providing verifiable information about the benefits of 100% fruit juice. The campaign started earlier in the year.

@Businessdayng

BUSINESS DAY

Global retail update

etail developments around the globe are inspiring, as Swedish fashion tries out a new style, and Carrefour enhances its presence in the Middle East. Also, in a much anticipated move, Ikea confirms it will finally be setting up shop in New Zealand. Meanwhile, British Budweiser is getting some time in the sun. Below are the retail updates Big tech ethics The security of Amazon’s data is once again being questioned. A German customer recently received over 1000 voice recordings from another user because of ‘human error’ by the global giant. Google is being pro-active and has launched a ‘responsible innovation team’ to review the ethics of its artificial intelligence. Going green Consumer goods giant Unilever is set to buy The Vegetarian Butcher, a Dutch producer of meat substitutes such as vegetarian hamburgers and imitation meatballs. Meanwhile, the European Union have agreed to a ban on plastic straws, cutlery and cups that is likely come into effect by 2021. Nestlé promises The Swiss food giant is supportive of the German government’s plans to cut sugar, with a commitment to reduce the sweetener in its products by another 5% by 2020. In

Mexico, the foodie is investing USD 154 million in a new coffee processing plant. Magic boxes Dutch grocer Albert Heijn is the latest supermarket to combat food waste, partnering with Too Good To Go, an app that allows the company to offer boxes of left-over fresh food at a reduced rate. Branching out Tobacco major Altria has signalled a shift away from its roots with the investment of USD 12.8 billion in e-cigarette start-up Juul. Meanwhile, Juul employees have received a memo banning vaping and Juul products in the office, to comply with a 2016 state law. Beating expectations Nike is celebrating better-than-predicted quarterly results with footwear and apparel enjoying double digit growth globally. The athletic-wear company’s shares jumped a massive 7% following the news. Partnership and profit Walgreen Boots Alliance is teaming up with tech company Verily to improve health outcomes and reduce care costs. The drug store chain has also reported a rise of 36.8% in quarterly profits, which saw its net income jump to USD 1.12 billion. Label laws Consumers in the United States will see mandatory labels on food products that contain genetically modified ingredients as soon as 2020.

Living under poverty line How Nigerians are struggling to survive

If you want to contact the writer of this story call: +234(0) 803 889 1567, +234(0) 8155184838 chinwe.agbeze@businessdayonline.com

Trader in dire need of funds for dialysis, surgery Name: Mrs Ugbede Kehinde Oluwatoyin State of Origin: Ogun Age: 35 Dependents: Mother and three siblings Occupation: Trader I deal in eggs and foodstuffs at App market, Abuja. Before I ventured into this business, I worked in the bank having graduated from University of Abuja where I studied Economics. In 2008, I was employed at Oceanic Bank (now Ecobank) where I worked as a teller before I was moved to the customer service desk. I served in different branches of the bank before I was relieved my job. From App market, I moved to Kubuwa where I was trading until I was diagnosed of kidney failure in 2018. How did it start? It started in August, 2017

but like malaria and typhoid. I had the same experience every two weeks. By November, 2017, we were treating ulcer but unknown to us, what I had was bigger than ulcer. I was short of blood and was given two pints of blood. Before I got married in December, 2017, I was referred to Maitama Hospital for endoscopic but my fiancé did not allow me to go because of the cost. Two months after the wedding, my condition deteriorated and that was why I was diagnosed of kidney failure. The situation got worse in January, 2018 when I started bleeding through the nose and vomiting two or thrice a week. Second week in January, I was at Kubwa General Hospital. I asked the doctor the result of the general tests carried out

on me and she said they were all good. But, I wasn’t getting any better. The bleeding and vomiting still persist. I also lost appetite, had sleepless nights and coughed profusely. I was given antibiotic, malaria drugs and cough syrup. With the

medication, it even got worse. On February 23, 2018, I was diagnosed of Chronic Kidney Disease (CKD) at Kubwa General Hospital. I was referred to Gwagwalada Teaching Hospital for further treatment and dialysis.

Analyst: Chinwe Agbeze, Graphics: Fifen Eyemisanre Famous

I spent six weeks at the hospital before I moved to Zenith Medical and kidney centre in Abuja, where I have been receiving treatment till date. What is the cost implication? I was told the best treatment option for my condition is kidney transplantation and it would cost about N13.3m. This sickness is really capital intensive. My husband and I cannot bear the cost. I do dialysis twice a week and the treatment drugs cost N110,000 per week. On every dialysis, I take injection for blood because I’m anaemic and infusion because I lack vitamins and glucose. How have you coped so far? We get assistance from family, friends and good spirited individuals. This sickness is really capital intensive.

A plea for help My husband work is a mathematics teacher at ElisAngel model school. From the time I was diagnosed of this sickness till now, it has not been easy for him. My husband’s salar y couldn’t take care of the sessions of dialysis in a week. Since I was diagnosed of this disease, I couldn’t do any work to support my husband and the family. On monthly basis, I spend N1m dialysis, drugs and admission. The doctor said the lasting solution is the kidney transplant. N10m is required for the transplant but I sincerely do not know where or how to get that kind of money. I am calling on Nigerians to come to my aid and help me raise the funds for my kidney transplant.

Innovation

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

24 BUSINESS DAY

Broadband Infrastructure C002D5556

Bank IT Security

Thursday 03 January 2019

Techpoint set to spur collaboration with African diaspora tech community FRANK ELEANYA

ollowing the success of its first African tech talent meetup in Europe in November 2018, Techpoint Afr ica has announced plans to make the quarterly meetup a platform that brings together the best of the technology community within Africa and their brothers living beyond the continent. The quarterly meetup will also serve as meeting point where tech talents from different European countries can hangout and basically have a sense of community as well as discuss ways in which they can contribute to the growth of

tech in Africa, by building up upcoming talents in the continent.

The 2018 edition was organised in partnership with American seed accel-

Ericsson partners Panasonic Avionics to deliver 5G connectivity on flights CALEB OJEWALE

irline passengers on carriers currently using AeroMobile will now be getting 5G service on board, as Ericsson and Panasonic Avionics Corporation have announced that Ericsson’s Core Network as a Service solution is now live, supporting connectivity services across multiple markets.. Ericsson said in a statement, that its Core Network as a Service solution will help Panasonic and its subsidiary AeroMobile, a global GSMA telecoms operator, provide data, voice and messaging services to the millions of airline passengers that use these services in-flight. The collaboration between Ericsson, Panasonic and AeroMobile started in 2016. It is now operational and delivers services to Panasonic customers worldwide. As part of Panasonic’s initiative to bring a superior connected experience onboard commercial aircraft, Panasonic and Ericsson have seamlessly migrated the existing service operat-

ing across a global fleet of aircraft onto the core network, delivered as a service, while maintaining network performance and customer experience. Every passenger whose mobile service provider has a roaming agreement with AeroMobile can use the service, which is supported by mobile operators across the globe and delivered in-flight, on board more than 20 of Panasonic’s global commercial airline customers. The geo-redundant solution is delivered through Ericsson’s ground-breaking Core Network as a Service and includes virtualized network applications such as packet core, unified data management, mediation, and mobile switching delivered on Ericsson Network Functions Virtualization (NFV) Infrastructure. The core network solution is part of Ericsson’s as a Service offering to service providers globally, and is able to support 5G services to the passenger and airline. Kevin Rogers, Chief Executive Officer, AeroMobile, said the partnership with Ericsson, and the technology provided, will allow his

company to “better serve the communications needs of our passenger and airline customers. Furthermore, the solution enables us to grow our footprint and expand into other services offering a richer experience for the passenger and operational efficiencies for our airline customers. We are looking forward to continuing our exciting collaboration with Ericsson”. Marielle Lindgren, Head of Customer Unit UK and Ireland, Ericsson, noted: “Panasonic Avionics is the first customer on Ericsson’s newly introduced Core Network as a Service solution, which aims to bring Ericsson’s leadership and expertise to a wide range of service providers. We’re proud to have initially been chosen as Panasonic Avionics’ supplier for a 5Gready core network, and pleased that the project is now live.” The two companies say they will explore other services to address further market segments and opportunities, while ensuring service continuity and the constant evolution of the live network, including exploring new 5G use cases.

erator, TechStars and was attended by 24 participants. Software engineers working

in Europe – mostly Berlin, Germany – made up 80 per cent of the participants. “One of the major ways that Africa will participate in the 4th industrial revolution is by providing the world with the finest tech talents,” Adewale Yusuf, CEO of Techpoint said in a statement sent to BusinessDay, “Hence, there is a need to create a community for these African talents even in the diaspora He added that the platform would serve as a channel to discuss ideas and cross border initiatives for the growth of tech in Africa, by building up upcoming talents in the continent. The first quarterly meetup in January will precede the TechPoint Build 2019,

one of the largest gatherings of technology startups in Nigeria. The meetup of African tech talents in Europe comes up in Berlin. Subsequent meetups are being planned for different cities across Europe. “The aim is to create a social hub where tech talents from different European countries can hangout and basically share a sense of common objective,” Yusuf noted. Techpoint Build 2019 offers an opportunity for more than 2000 aspiring programmers in West Africa to get the required training as well as give a funding lifeline of $10,000 to an innovative tech startups that wins its Pitch Storm competition.

Kaspersky’s top four cyber security challenges for industrial enterprises in 2019 CALEB OJEWALE

yber attacks are not likely to slow down this year, and as new vulnerabilities continue to give opportunities to attackers, they can still be stopped in their tracks. Kaspersky Lab, an industry leader in cyber security and anti-virus posted a list of four cyber security challenges industrial enterprises need to focus on in 2019. The ever-increasing attack surface The increasing amount of automation systems, the variety of automation tools, number of organizations and individuals with direct or remote access to automation systems, as well as the emergence of communication channels for monitoring and remote control between previously independent objects – all expand the opportunities for criminals to plan and execute their attacks. Growing interest of cybercriminals and special services A decrease in profitability and increase in risks from cyber attacks aimed at traditional victims is pushing criminals to search for new targets, including those with-

in industrial organizations. At the same time, special services in many countries, as well as other organized groups – motivated by internal and external political interests – and financially motivated groups, are actively engaged in the research and development of techniques to implement espionage and terrorist attacks aimed at industrial enterprises. Taking into account the current geopolitical context, the development of industrial enterprises’ automation systems, and the transition to new management processes and models of production and economic activity, this situation will continue to develop in the coming years, negatively affecting industrial organizations. The underestimation of general threat levels A lack of public access to information about information security issues within industrial enterprises, coupled with the relative rarity of targeted attacks on automation systems, an excessive belief in emergency protection systems and the denial of objective reality is having a negative effect on the assessment of threat levels by owners and operators of industrial enterprises and their personnel.

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

The misunderstanding of threat specifics and the suboptimal choice of protection options In the world of industrial cyber security, several high– profile incidents carried out with the help of targeted attacks against a very limited number of victims, created an information landscape that formed fully the idea of a potential threat – both among information security researchers and security developers, and among potential users of these tools. However, the professional reporting of these incidents was often too difficult to understand by the majority of potential users, and was devoid of important OT details. The information field formed in these conditions, including the absence of a daily need to deflect the attacks aimed at automated control systems, gave developers a chance to create products that might protect better from the artificial scenarios thought up by researchers themselves, than from real world day-to-day threats. This could leave the automation systems of industrial enterprises vulnerable to real life attacks, including random ones and targeted attack campaigns organized by cyber criminals.

Thursday 03 January 2019

www.businessday.ng

facebook.com/businessdayng

@Businessdayng

Investor

BUSINESS DAY

@Businessdayng

In association with

Helping you to build wealth & make wise decisions NSE All Share Index

Market capitalisation

NSE Premium Index

The NSE-Main Board

NSE ASeM Index

2,564.13

1,713.69

1,087.32

Week open (14 – 12–18)

38,243.19 30,672.79

N13.609 trillion

N11.204 trillion

2,147.20

1,401.64

793.81

Week close (21 – 12–18)

30,773.64

N11.241 trillion

2,162.11

1,402.01

793.81

Year Open

Percentage change (WoW) Percentage change (YTD)

0.33 -19.53

0.69 -15.68

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

330.69

2,560.39

1,975.59

1,379.74

719.05

279.12

2,164.26

1,228.55

1,160.22

725.65

285.42

2,208.75

1,242.60

1,171.74

NSE Banking Index

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

1,746.68

475.44

139.37

1,382.81 1,385.04

402.76

122.74

393.91

127.01

NSE 30 Index

0.03

0.00

0.16

-18.19

-26.99

-20.70

-2.20 -17.15

976.10

3.48

0.92

-8.87

-25.66

2.26 -13.69

2.06 -13.73

1.14 -37.10

0.99 -15.08

Lafarge Africa: Rights Issue holds value for existing shareholders …price represents over 10% discount HEANYI NWACHUKWU

afarge Africa Plc, a Premium listed company on the Nigerian Stock Exchange (NSE) is currently shopping for N89.2 billion from its existing shareholders by way of a Rights Issue. The Rights Issue which opened on Monday December 17, 2018 will close on Wednesday January 23, 2019. Lafarge Africa will raise the N89.2 billion by way of a Rights Issue of 7,434,367,256 shares at N12 per share, by issuing 6 new shares for every 7 shares held by shareholders as at December 4, 2018 which is the Qualification Date. Lafarge Africa is a producer of building materials and construction solutions with a robust platform wellpositioned for growth. Going by the outlook of the building matrerials/construction industry and the company’s strategic priorities, its existing shareholders should see value in the Rights Issue which Chapel Hill Denham is the Lead Issuing House and Stanbic IBTC Capital is the Joint Issuing House. The rights being offered are tradable on the floor of The Nigeria Exchange for the duration of the offer. Lafarge Africa Plc has outstanding shares of 8,673,428,240 units while its market capitalisation is in excess of N116.223billion. The Rights price represents about 10.45percent discount on Lafarge Africa’s traded closing price of N13.4kobo as at Monday December 3, 2018. The share price closed at N12.55 as at December 31, 2018. In September 2018, the Board of Lafarge Africa Plc approved the refinancing of the shareholder loan to $293million with longer maturity and a Right Issue of up to N90billion. The restructuring is aimed at reducing

Lafarge Africa Plc leverage position as well as strengthen its profitability. Strategic priorities for business operations Lafarge is committed to its priorities to deliver growth and improve performance. For instance, the company wants to achieve its growth initiatives through new routeto-market commercial strategy and product portfolio expansion. The new route-to-market strategy will help the listed company regain lost market share. In its logistics and supply chain, Lafarge Africa Plc is committed to further

improve service delivery to meet clients’ demands and deepen penetration. On production efficiencies, Lafarge Africa Plc is also committed to continuously implement its energy efficiency initiatives to drive down production costs. Lafarge Africa is giving priority to fixed costs reduction and tax savings. Further improvement in profitability is expected due to expected lower fixed cost and tax. Lafarge believes that cost optimisation and potential pioneer tax status will lead expense savings. It is currently awaiting approval for pioneer tax status which is expected to lead to tax

savings in near-term. Its equity capital raise and debt restructuring will deliver improvement in financial flexibility. The company believes that it should restructure existing debt and raise equity capital to optimize shareholders returns. Business outlook for Lafarge Africa The company expects 6.8percent cement consumption volume over the next 5 years. This will be driven by the huge infrastructure deficit in Nigeria. The group hopes to regain its market share and restore margin in South Africa

market. It also looks to ramp-up Ghana operations; grow and sustain market share in Nigeria through continuous implementation of its strategic plans. Lafarge Africa will have a deleveraged balance sheet resulting from the anticipated debt repayment from Rights Issue proceeds. This will also lead to improved working capital management. Among others, the company is positive to sustain stable A+ credit rating; while also hoping that the finalisation of its Pioneer Tax Status will result in tax savings. Third-quarter (Q3) 2018 results Lafarge Africa Plc is a subsidiary of LafargeHolcim, a world leader in building materials. The company has operations in Nigeria - Ewekoro and Sagamu plants in Ogun State, Ashakacem in Gombe State, Mfamosing in Cross Rivers State, Atlas cement in Rivers State and Ready-Mix Nigeria and varied operations in South Africa and Ghana with total group capacity of around 14 million Metric Tonnes. Its third-quarter (Q3) to September 30, 2018 results show the cement maker group revenue increased to N234.3billion, from N223.6billion in Q3’ 2017, representing 4.8percent increase. Its positive performance in Q3’18 was mainly driven by strong volume growth in Nigeria and favourable pricing trends in South Africa. Lafarge Africa Plc said restoring profitability in South Africa remains its priority. For instance, the South Africa business is in second phase of execution of the business turnaround. Earnings before tax, depreciation and amortization (EBITDA) for the third quarter increased significantly as a result of improved performance in South Africa while it was down for the nine-month period due to South Africa’s performance in the first two quarters of 2018.

BUSINESS DAY

www.businessday.ng

facebook.com/businessdayng

@Businessdayng

Thursday 03 January 2019

Investor

Helping you to build wealth & make wise decisions

Cordros Capital Weekly economic and market update:

Overview of markets in the week ended December 31, 2018 Global markets lobal sentiments turned positive with marked gains witnessed across our coverage universe –U.S (DJIA: +1.2%, S&P: +0.9%), Euro Area (FTSE: +0.3%) respectively. Meanwhile, sustained trade protectionism continued to dampen appetite in the Asian region (CSI 300: -0.6%, Nikkei: -0.8%). Furthermore, whilst losses across China (-0.6%) and South Korea (-1.0%) dragged emerging market to the mud (MSCI EM: -0.8%), gains in Nigeria (+0.9%) and Kenya (+1.4%) lifted sentiments in the frontier market (MSCI FM: +0.4%). Nigeria economy Last Thursday, the Nigerian National Petroleum Corporation (NNPC) released its monthly financial and operations report for the month of September, which showed total crude oil production in Nigeria averaged 2.00 mb/d (+7.7% m/m). The agency reported production cutback in QUA IBOE, AGBAMI, BRASS, and OYO terminals citing power and technical c h a l l e n g e s. Me a n w h i l e, the report showed trading surplus of NGN9.85 billion for the period, which is a stark improvement from the N3.90 billion reported in August. Amidst the benign global crude oil prices, improved production should act to give the much-needed boost to oil revenues. Elsewhere, the NNPC recorded a sum of N623.13 billion as under-recovery (subsidy) between January and November 2018 (FY 2017: NGN145 billion) with c. N67 billion also expected to be deducted from November FAAC . According to the b re a k d o w n p rov i d e d , a total of N676.49 billion – comprising of N599.74 billion as under-recovery for DSDP arrangement and N23.43 billion as under-recovery from local refineries – was recorded in the period. Given our expectation of potential uptick in crude oil price next year, we anticipate further rising cost of underrecovery going forward. Equities The impact of the Christmas eve rally largely masked the significant sell-off at the close of the market today, to leave the ASI higher by 0.86% w/w to 31,037.72 points. Thus, the MtD gains moderated to 0.5% and YtD loss expanded to -18.8% respectively. On sectoral breakdown, positive returns across the Consumer Goods (+1.75%), Banking (+0.98%), and Oil & Gas (+2.08%) indices offset losses in the Industrial (-0.99%) and Insurance (-0.83%). Our view continues to favour cautious trading in the equities market amidst brew ing p olitical jitters

ahead 2019 elections, and the absence of a positive market catalyst. However, we believe the positive macroeconomic fundamentals to drive recovery in the long term. Fixed income and money market Money market In line w ith our call, the overnight lending rate dipped 666 basis points (bps) w/w to 18.42%, against last week’s close of 25.08%. Rates remained largely subdued this week, touching a trough of 13.25% on Thursday as inflows from monthly FAAC and maturing bills bolstered system liquidity. The apex bank sustained its intolerance for liquidity surfeit, selling a total of NGN417.98 billion in OMO

over the week. Next week, inflows worth NGN583.80 billion — maturing OMO (NGN424.51 billion) and treasury (NGN159.29 billion) bills — will act support to system liquidity. Hence, a contraction in the overnight lending rate is likely. However, liquidity mop-up and forex intervention by the CBN are likely to exert upward pressure on the overnight lending rate. Treasury bills Amidst sustained liquidity mop up by the CBN, activities in the treasury bills market were bullish, aided by inflows from OMO bills and FAAC (as discussed above). Against the foregoing, yields contracted by 12bps on average weekon-w e ek (w/w) to clos e at 1 5 . 3 8 p e rc e nt. Buy i ng sentiments were evident across the short (-21bps) and the long (-5bps) end of the curve, following a selloff of the 69DTM (-93 bps) bill and 286DTM (-82bps). Meanwhile, there was sell pressure at the mid (+1 bps) segment, with the 174DTM ( + 1 5 bps) bill recording marked yield expansion. We expect the sustained pace of OMO intervention to exert upward pressure on yields. Bond Proceedings in the bond market sustained its bullish

run following paucity of primary market activities. Average yield moderated 18 bps w/w to 15.15%. Yields contracted across all segments – short (-5 bps), mid (-30 bps) and long (-15 bps) segments, following demand for the JUL-2021 (-20 bps), JUL-2030 (-36 bps), and MAR-2036 (-11 bps) bonds, respectively. We reiterate our expectation for modestly higher yields in the medium term, anchored on (1) domestic monetary policy direction, (2) uptick in inflation rate, (3) capital flight amid higher yields in safe haven assets, and (4) political uncertainty stemming from the upcoming general elections. Foreign exchange Niger ia’s F X res er ves sustained its build-up trend

for the fifth week as the CBN recorded another foreign reserve accretion of $152.91 million w/w to $43.29 billion. The apex bank resumed its weekly FX intervention across various windows selling USD210 million distributed a c ro s s w h o l e s a l e ( $ 1 0 0 million), SMEs ($55 million) and invisible ($55 million) windows. Consequently, the naira appreciated by 0.27% to N364 in the parallel market, and by 0.01% to N364.50 in the I&E window. Meanwhile, total turnover at the I&E window, as at Thursday close, had dipped by 80.0% to $143.54 million with 99.95% of trades executed within the N360-369/USD band. At the forwards market, the USD/NGN appreciated across the different contracts– 1-month (+0.08% to NGN368.24), 3-months (+0.11% to NGN374.17), 6-months (+0.03% to N384.95), and 1-year (+0.05% to N414.46) respectively. In the short to medium term, we expect the naira to remain range-bound, as higher oil revenues (despite the recent plunge in oil price) continue to help shore up the reserves, thereby supporting the CBN’s continue d inter vention. The $2.86 billion Eurobond proceed, is also expected to provide additional legroom, further supporting our views.

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

NEM, Continental Re, Diamond removed from NSE Corporate Governance Index

he Nigerian Stock E xchange (NSE) has removed three (3) companies namely: NEM Insurance Plc, Continental Reinsurance Plc and Diamond Bank Plc from the NSE Corporate Governance (CG) Index with effect from January 1, 2019. The NSE CG Index tracks the performance of Corporate Governance Rating System (CGRS) rated companies using their market capitalisation, free float and corporate governance rating scores. The Index Governance Committee of the Exchange (the Index Committee) resolved to remove NEM Insurance

from the NSE CG Index following the suspension of the CGRS rating of the company by the Steering B o a rd o f t h e C G R S o n Mo n d a y Nov e m b e r 1 9 , 2018. Additionally, in view of the recent governance issues with Diamond Bank, the Index Committee has decided to remove the Bank from the NSE CG Index. The Index Committee also decided to remove Continental Reinsurance Plc from the NSE CG Index following the company’s application to The Exchange to delist from the Daily Official List of The Exchange. This development follows the launch of the C o r p o ra t e G ov e r n a n c e

Index of the Nigerian Stock Exchange (NSE CG Index) during the inaugural C o r p o rat e G ov e r na n c e Rating System (CGRS) c e r t i f i cat i o n c e re m o ny last year. The NSE CG Index is reviewed on a biannual basis at which point other companies that have b e co m e CG R S rate d i n the interim may be added to the Index or companies that have had their ratings suspended or withdrawn may be removed. The Index is expected to be an important tool for investors keen on investing in well governed companies as well a s c o r p o rat e s e a g e r t o distinguish themselves on the ground of governance.

Why capital market is embracing technology – Uduk

echnology when properly leveraged will reduce the cost of doing business in the capital market, said Mar y Uduk, acting director general of the Securities and Exchange Commission (SEC). This Uduk said, is one of the reasons why the apex regulator of the Nigerian Capital Market is encouraging the introduction of technology in the market. According to Uduk “We know that technology is driving a lot of things in the financial system at the moment. For instance, in the banking system, technology is driving the payment system. Even with phones people can buy, make payments and even obtain loans among others. We have seen that there is a lot

of innovation and cost reduction in the money market due to technology, and so we also want to do the same in the capital market. “To this end, the Capital Market Committee has set up a Road Map committee to come up with a guide for the capital market to enable us also leverage on technology to do business and reduce cost. The Acting DG disclosed that the Commission already has a Division dedicated to Fintech that will help look at all the technologies that relate to the capital market surrounding ICOs, among others. She said that in the capital market, technology has assisted in improvements of processes like the use of Block chain to enhance settlement,

and the use of technology to drive the platforms through which people are now able to come in to invest. “Innovations in financial technology, has made possible the potential of using digital tools to make financial ser vices available to a wider range of consumers and enterprises, promoting financial inclusion and the affordability of financial ser vices. “A financially inclusive society will provide increased access to finance, especially for women, help support sustainable growth and will create a million more jobs. The gains of having a more inclusive financial system are enormous, as it helps broaden financial markets and make policies more effective” she added.

Thursday 03 January 2019

www.businessday.ng

facebook.com/businessdayng

@Businessdayng

BUSINESS DAY

Investor

Helping you to build wealth & make wise decisions

‘We have no interest in delisting or not delisting’ Femi Oyetunji is the Group Managing Director/Chief Executive Officer of Continental Reinsurance Plc, a company which its shareholders recently voted in favour of all resolutions in its capital restructuring exercise. He spoke to select journalists including Iheanyi Nwachukwu, excerpts Background recapitalisation process

e started some 30 years ago as a local Nigerian company. In 2006, we were able to recapitalise by injecting capital from a private equity called Emerging Capital Partners (ECP) from Washington, USA. Thankfully, 2006/2007 saw the transformation of Continental Re in terms of governance and process thanks to the ECP. I joined the company in 2011 and what I saw then was that we were a multinational company although we were seeing ourselves as a Nigerian local company. However, we took a decision that there was need to close the gap in capital market across the continent and we felt strongly that Continental Re should fill that gap to create a strategy because we have a vision to be a premier insurance company. At the time I joined in 2011, we had a branch office in Duala, Cameroun, which we started in 2003, and a branch of in Nairobi, Kenya, which was started in 2008. However, new things evolved in terms of regulations, practices, etc, while you also need to have good capital. For us, looking at the way regulations were going, we needed to be local in different regions. In Kenya, we moved from being a branch to create a subsidiary in 2013. In 2014, we created a subsidiary in Botswana. We intended to be local in those regions and be subjected to the local regulations and that entitled us to some benefits in terms of access to do business. Though, certainly, we are limited by capital and worth. Therefore, it is most important that for us to achieve a rating, which will give us the opportunity to transact the right kind of business and give us some exposure to better our quality risk, we should embark on capital raising and restructuring. If you follow the rating agencies, the rating is directly or indirectly limited by your domicile head office. I used the word domicile because there a lot of misconception in what we are trying to do. Because of some of the things we have put in place, in 2012, we were upgraded to B+. In Africa, we have one company that is ‘A’, we have two that are B++ and we are B+. In terms of what we could do internally, in terms enterprise risk management and the quality of underwriting process, we have gone two notches above the re-sovereign rating of Nigeria and we cannot go higher. We cannot achieve what we want to do with the capital in Nigeria,

even if we increase our capital to $500 million, it will not get us to where we are going. What we have done, as it also works for international ratings agencies and consultants, is to look for an environment with higher ratings that will assist us to get to where we are going. After a careful selection and in terms of simplicity, we choose to set up a holding company in Mauritius. We have been on this process for over a year. We have to go to NAICOM and the NSE to explain our intentions. However, before we can the transfer the shares from here to there, we have to do our valuations of the company. As a company, we did our internal valuation, our auditors, PWC did their valuation; we brought in Ernst and Young as the Accountants after which we engaged in an independent company, Coronation Merchant Bank to also do their own valuation. It was not that we decided on a number, we went through the process and at every stage, we consulted the board to get the necessary approval. The valuation we came up with from the various consultants range between N1.80 and N2 but Coronation Bank came up with N2.04kobo. We took it to the board and we got the approval, so it was not what we fixed by ourselves. On daily basis,wewerereportingtothestock exchange because of the sensitivity of what we were doing. Everyone involved in the process signed a non-disclosure agreement not to discuss the matter until we got the necessary approval. After we got the approval, we called a meeting of selected shareholders who are opinion leaders to explain to them, about 30-50 of them to explain what we are doing because one may read a document without understanding the spirit behind it. It was not an easy conversation but we tried to explain our intentions. We made them understand that we are as passionate as they are. Invariably, it gets to agitation about the reduced cost as against the cost at which they bought the shares. We explained that the drop in share prices, which affected everyone, affected us all. At the same time, the economy is no longer the same, the market no longer the same and the exchange rates are no longer the same. However, we promised to review the price offered in the scheme and get back to the shareholders. It took a lot to push it to N2.10. We had a meeting with the shareholders leaders and we expect they would have communicated with their members. At the court ordered meeting, everything was done

Femi Oyetunji

by poll, 92.66percent of those eligible to vote, representing, 1, 158, 582, 972 shares voted for and the 7.84percent representing 91,801,465 shares voted against. Everything has been signed and delivered to the stock exchange. The next step and delisting speculations Let me emphasize that from the ongoing Scheme of Arrangement, we have no interest about delisting or not delisting. With the consequence of what we have done and because we could not take everybody or individuals to Mauritius, we now have only two or three shareholders and one of the shareholders being the nominee vehicle. Generally, the number of our shareholders should not be different if they elect to stay in the nominee vehicle. However, in terms of individual entities, the advisers would follow up with the Stock Exchange on that. The next step is for us to submit the document and the result of the Court Ordered meeting to Security and Exchange Commission (SEC) and once we get SEC’s final approval, we will go back to court to register it. Choice of Mauritius and Capital Mobilisation The name of the company is CRe African Mauritius Investment, which is a holding company. It is a company

incorporated in the Republic of Mauritius as a private company limited by shares and duly registered and licensed by the Financial Services Commission, which holds 65.20 per cent of the issues. If you look at the prospectus, you will see the final structure we intend to operate. The subsidiary companies will each have a license and be registered locally. CRe Nigeria, which is the license we have now we will continue to operate in Nigeria, pays taxes in Nigeria, employs staff in Nigeria and does business in Nigeria. It is not about tax incentives. The capital we require is not a fixed amount. What is done globally now is that the regulators use risk-based capital supervision and that means if I am writing just motor insurance, I do not need the same capital with somebody writing aviation. Therefore, what we are supposed to do is to look at the volatility of your portfolio and what capital you need to ensure that say a one in two-hundred event happens, in consideration for your ability to meet your liability in terms of an occurrence. Reinsurance companies do not wait for regulators to determine the amount of capital they need. You need to be continuously building up your capital. The more the companies write, the more successful they

are, and the more capital they need. Our capital requirement can be from $50million to $100million based on the kind of business you want to do. That is one of the problems that we have here in Nigeria. Most of our premiums from oil and gas are exported because we do not have enough capacity to retain them within the continent. At Continental Re, our mantra is that you must retain African premiums within Africa because those are the things we use to develop our roads, hospitals and build schools. For us, that is the reason for which we need to build capital to have competitive advantage. Our choice of Mauritius is not because the country is a tax haven. No. When you are looking at our (insurance) industry, there are two main places where multinational insurance and re-insurance companies park their capital: it is in either Mauritius or Bermuda. We thoroughly considered both options. However, we are not yet at the level where we could take on the requirement in Bermuda. Hence, our choice of Mauritius is because that is an environment that the rating agencies understand, with a sovereign rating that is higher than Nigeria. It will assist us in getting to our aim, so it has nothing to do with tax advantage or capital flight. I must also say that in terms of business, we are already writing businesses in Mauritius. We have businesses in 50 countries in Africa, including Mauritius so we are not going there as a new company. The only thing that is new is that the registered holding company would be in Mauritius and it is because it is a sophisticated financial centre. So far, we have not seen any negative signal from Mauritius. Maybe I should just reemphasize (to cater for the concerns and assumptions) that this decision is not about the people. We will continue to work from here; we are building our head office in Victoria Island, Lagos, so we are not physically moving to Mauritius. Hence, there will not be any loss of staff or loss of capital. Prospects and Challenges for the insurance sector in Nigeria Insurance sector in Nigeria is faced with the same issues like most other countries. We need well and highly capitalised companies. Personally, this is the same sentiment I expressed in 2005 and 2006. We must merge and build big institutions else, the insurance companies outside Nigeria will be picking up our businesses. Generally, it is a tough environment for us in Nigeria in the insurance

and reinsurance business. As you know, the economic environment has been a bit down for the last couple of years and when there’s economic downturn insurance is the first to suffer. Therefore, it is tough for our environment. Continuous engagement of shareholders on the scheme We have until the 4th of Januar y, 2019 for the shareholders to decide if they want cash or wish to remain as part of the nominee company. As it is, the engagement continues. For us, it is to explain and we are available 24/7 for any explanation that is required. As I mentioned, before we had the court ordered meeting few days ago, we had a twothree hours engagement with the shareholders at City Hall. However, if there is any question that still requires answers, we are available to explain. Final words on stay in Nigeria Let me repeat again, we have a strategy plan until 2020 which remains unchanged. What this arrangement gives us is ability to attract more capital into this company. We cannot carve out the assets of the company because we need to build more assets and capacity for us to be relevant going forward. Things are changing rapidly. I have heard some people say that we do not need the rating. I always implore people to check what happened to Kenya Re. Kenya Re has been downgraded and we know what businesses they are doing now. Tunis Re was downgraded but now the rating has been removed entirely. For Tunis Re, the future is left to be imagined. Rating is the cornerstone of our business. Without having the relevant rating, we would not be relevant in the future. For the management team and the board, it is important for us to do things that would get us that rating. Such effort means bringing and retaining more capital, writing profitable business to be able to retain more capital. So there is no way capital or asset is going out of this company. For the stock market, it depends on what the rules of the SEC dictates in terms of number of shares. Nigeria is 40% of our business across Africa, it is the most significant, it is the second largest insurance market in Africa, and our focus is strictly Africa. Our interest in Africa is a permanent interest and not a long interest. Nigeria continues and will always be the largest element. Our focus and amount of capital to be dedicated to Nigeria will only continue to increase. We are not exiting, because we want to write more businesses in Nigeria.

28 BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Leadership

Thursday 03 January 2019

Shaping people into a team

Giving after disasters WHEN CORPORATE AID HAS THE MOST IMPACT. t’s become all too clear in recent years: Catastrophic acts of nature — hurricanes, tsunamis, earthquakes, wildfires — are happening more frequently and causing more destruction. The annual inflation-adjusted global cost of natural disasters has increased sharply, with the average from 2011 to 2015 reaching four times the average from 1980 to 1985. The number of people affected is rising too, often exceeding 300 million in recent years. But traditional sources of funding for disaster recovery, from governments, nonprofits, and NGOs, have not kept pace. Corporations have stepped in to take up the slack. In 2000 fewer than one third of the world’s 3,000 largest companies donated anything to disaster relief, but by 2015 the share had surpassed 90%, with the average donation having increased tenfold. Among the 500 largest U.S. companies, the share contributing to disaster relief increased from less than 20% in 1990 to more than 95% in 2014. Seeing this trend, researchers focused on two obvious questions: Does it matter whether the companies furnishing aid have local ties and expertise? And if businesses are spending more in this area, are they and their shareholders benefiting? In a pair of studies, researchers led by Luis Ballesteros, of George Washington University, utilized a newly created database listing every reported corporate donation made in response to a natural disaster from 2003 to 2013. (They focused on sudden-onset disasters, excluding slow-developing crises such as famines and heat waves.) Drawing on insurance data and other sources, they tracked the human and economic toll of each incident, the speed at which aid arrived, and how quickly and well regions recovered. In the first study, which exam-

ined how disaster-affected societies were helped by corporate aid, the researchers hypothesized that firms with “feet on the ground” and expertise in the region respond more quickly than others after a disaster, and that longterm recovery is greater when such companies account for a large share of aid. This hunch didn’t relate only to those companies’ expertise; such firms have a vested interest in getting infrastructure rebuilt and society functioning smoothly so that they can resume doing business. The researchers also hypothesized that firms leveraging resources specific to their day-to-day operations (say, a mining company that lends earthmoving equipment, or a delivery company that offers logistical support) have a faster and greater effect than firms that simply write a check. To test their hypotheses, the researchers identified pairs of countries with similar attributes that experienced disasters of comparable magnitude but received different levels and kinds of assistance — aid furnished primarily from locally active firms

versus aid from distant companies; aid consisting largely of in-kind help versus monetary donations. They examined the size of each country’s economy, the level of hardship caused by the event (defined as people killed or adversely affected in other ways), and the volume of news coverage — factors known to influence how quickly aid arrives. As a proxy for recovery levels, they looked at each country’s annual growth rate as measured by the UN’s Human Development Index. The results showed that countries with a large share of aid from locally active companies received help more quickly than their counterparts did. Countries where more than 44% of donations came from locally active companies had a 10-year recovery level that was 145% higher, on average, than that of comparison countries. And countries receiving more help related to firms’ core activities got the aid more quickly and had fuller recoveries than their counterparts. In the second study the researchers explored what companies received in return for their

donations. They began by observing that the first company to donate has a sizable influence on the behavior of subsequent donors: In 89% of the cases studied, the initial donation was almost exactly matched by later givers regardless of differences in market value, market share and financial performance. Hours after the 2010 earthquake in Chile, for example, the multinational mining company Anglo American pledged $10 million, and within days three major competitors contributed the same amount. “There’s so much uncertainty when a disaster hits, and firms scramble to figure out how to respond,” says Tyler Wry, a University of Pennsylvania professor who served on the research team, explaining this follow-theleader behavior. To analyze the business impact of donations, the researchers looked at how a firm’s reported revenue in an affected region differed from what could have been expected without the disaster. They found that the impact varied according to firm reputation, as measured by media coverage a year before and a year after the di-

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

saster — and here, too, the initial donor exerted a strong effect on subsequent givers. “Regardless of donation size, benefits accrue to well-regarded first movers as well as to firms that mimic their gifts,” they write. “In comparison, poorly regarded first movers are punished when offering aid, as are followers who make similar donations.” The study also showed that neither the size of the need nor a firm’s capacity to give had much effect on how a donation was received. “Regardless of the amount donated, some first movers and their followers are rewarded for their largesse, while others are punished,” the researchers write. “In fact, after pledging aid, over half the firms in our data experienced a dip in local revenue that cannot be explained by the impact of the disaster alone.” They add that companies following an illregarded first donor may benefit from offering aid that differs from that donor’s contribution. The practical implications for companies are clear. Firms with good reputations can benefit from being the first to step up after a disaster; others stand to gain only if they jump in after a company with a solid reputation and give in a similar way. And local ties are of paramount importance. “The more favorable impact seems to be in settings where companies have their feet on the ground and already have local capacity,” says Michael Useem, a University of Pennsylvania researcher and one of the studies’ co-authors. There’s also an important implication for society at large. Disasters in underdeveloped economies, where few deep-pocketed businesses are present, are unlikely to attract significant corporate donations. So governments, NGOs, nonprofits, and individuals should be prepared to shoulder much of the burden when disaster strikes those regions.

www.businessday.ng

Thursday 03 January 2019

www.facebook.com/businessdayng

@businessDayNG

@Businessdayng

BUSINESS DAY

GARDEN CITY BUSINESS DIGEST 68-year-old Eleme-born professor of Economics, Walter Ollor, pens down his ‘heart’ in memoirs ...says wash your wife’s feet to discover new route to her heart IGNATIUS CHUKWU

professor of Economics and community development activist, Walter Ollor, who is now a monarch in his Eleme town, has unveiled a book that tried to avoid too much Economics but rather dug into his heart and found treasures. Instead, according to the former vice chancellor of the University of Port Harcourt, Joseph Ajienka, who reviewed it, the book is a chronicle of Ollor’s eventful experiences thus far in this earth life. Speaking at the launch event last week at the Hotel Presidential in Port Harcourt, Ajienka said: “The author has had a very active and eventful life. When we strive to make our mark in society all earthly titles fall away and we are simply known by our names, by the legacies we leave behind. Walter Ollor has been active in academics, in the banking industry, in politics and public life, in the church and in community service. “Hearts and Treasures: Memoirs is a book on leadership and social change. It is a book on nuggets of wisdom and values that served as moral compass that guided the Author in his education, work and family. HRH Professor Walter Ollor is a committed fighter for justice for his Akpajo Community in the Eleme Kingdom. He tried to encourage his people

to derive maximum benefit from their entitlements and compensations from the privatized Eleme Petrochemicals Company but of course the dynamics of divisive community politics took a great toll on him. “The book also documented efforts at ensuring peace between the Eleme Community and their neighbouring Okrika Community. He was an active member of a committee that offered suggestions on how to build lasting peace and harmony among the neighbours. “Professor Walter Ollor has had his fair share of travails, adversities, conflicts and crisis. As a firm believer in the Rule of Law, he always resorted to the Judiciary to seek justice in his several challenges in the community, church and work. Interestingly, in all of the decided cases he was victorious and vindicated.” He said: “We Africans are more of story-telling people and so are not fascinated by books. But that should change. We are in the new knowledge society and books are central and cardinal in the new age of knowledge and the consequent new knowledge economy. In Africa, when an elder, a custodian of history and rich experiences dies with his knowledge, it is as if a whole library goes up in flames.” He added: “As I read the book Hearts and Treasures, Memoirs of Walter Ollor, I

Port Harcourt by Boat With

IGNATIUS CHUKWU

wo previous years before now, there was practically nothing to celebrate in the Niger Delta. Their first-ever son to be president just became the first civilian president to lose an election as incumbent. Recession caught up with everyone, and loss of revenue and jobs followed. Year ends were mourning moments in the region. To add to this agony, kidnapping rose to a new height, and violence took over as new religion.

Walter Ollor

was inclined to caption my review - Experiencing. Because that is what I felt it is. More than account of his life, the book presents nuggets of wisdom garnered in the process of this experiencing. As we know, experience is the best teacher. Through experiencing we understand our environment and fellow human beings better; through experiencing we build our personality and mature.” He went on: “Before he reached the peak of his academic career, he had a foray

In all of this Belemaoil seemed to take up the task of showing that life was not all lost. The company began to employ in hundreds, began to offer scholarships to community scholars, and began to open up supplies to businessmen. Execution of community projects began in earnest, yet, this was a company with only one oil field. The notion that arose was, if one oil field could fetch so much boost and thrust of happiness and optimism, could it be that oil was no more a curse? Several bad boys became good boys overnight. One spot off Peter Odili Road near a river behind the dreaded Okujagu community where bad boys usually ran to (after committing) transformed to a modern jetty. Most of the bad boys were said to have become workers there. The place is still growing with construction and facilities on a daily basis. What with a modern bridge with lighting that tears along the side of the upcoming jetty. Bleak began to turn to boom. This must be why many youths clamour for the takeover of all other oil fields in their areas by Belemaoil but experts insist it is not done that way. Belema

in the private sector and politics. He was appointed Chairman, Board of Directors of two international banks and was elected to represent Bori II Federal Constituency in the Constituent Assembly where he served as Chairman, Federal Accounts Committee. He also served as Member, National Constitutional Conference and Member, National Committee on Vision 2010 as well as serving on very important Committees in the development of Rivers State. He also

contested and lost primaries for a senatorial seat. After these detours, he returned to academics like a prodigal son when he recognized that his throne lies in academics. And fortunately, he made it to the peak of his academic career.” “Our people say a dog that does not go out will not be pregnant. Having travelled widely, Professor Walter Ollor was pregnant with ideas particularly on sustainable development of community and country. “In fact, he published a book on Sustainable Development in honour of the second Vice-Chancellor of the University of Port Harcourt Professor Sylvanus J. S Cookey. His desire to ensure sustainable development of communities made him to become an active player in his community. In recognition of his contributions to community service, he and his beloved wife Helen were honoured with chieftaincy titles. “ Hi s Roya l Hig h n e s s (HRH) Prof Walter Ollor is presently the Chairman, Walter Ollor Foundation which is focused on Education for Sustainable Development (ESD). I am aware of his efforts to establish a higher education institution on ESD.” A panel of presenters tore through the book and the author’s life, even as his wife, Helen, sat calmly and laughed once in a while. The chief presenter, the retired

chief justice of Rivers State, Iche Ndu, said the book was written in simple and great style. OCJ Okocha (SAN); said: “It’s a lesson in selfmotivation and emotional influence. This is a family man indeed with tribute to Helen his wife and a long letter to his son. Chronicling the lives of great men helps young ones to choose better.” T.C. Osanakpo said the book teaches humility; and humility buys everything, it pays. “Humility is not timidity. The book is an appreciation of unsung heroes. Knowledge can make someone human capital”. In his remarks, the author thrilled the audience with extra-crackers: “My father wanted me to be a lawyer and my sister who mentored me wanted me to be a doctor. I failed both of them.” He however said he had always stood for the environment up to representing Ogoni at the 1994 summit just after the Ogoni killings. His children are going ahead to fulfil some of those career aspirations, he revealed. “My life was always threatened. Walter Ollor University will start soon. The governing council has been established. We have refused to use Elano money to build that university just to show character. The money will come from the outside. He threw a bombshell in romance when he revealed that the new way to burrow into the innermost part of your wife’s heart is to wash her feet. “Wash your wife’s feet. It’s a new love and emotion”, he stated. He gave illustrations as someone who has been doing it and revealed his findings.The son and executive director of Walter Ollor Foundation, Atoaan Ollor, commended the dignitaries that found space to devote to the event in the hectic December ending period.

Belema signposts new tone as year ends

Belema Model

says it is rather prospecting for its own discoveries, whether takeover of oil fields materialised or not. Gas and refineries seem to be much in

their vision. So, as 2018 crept to an end, many corporations crawled out of their injured cocoons to host events to mark the year. Belemaoil was not left out as its workers staged one, and it turned out to be one of the most memorable ones. The entire grounds at L.A. Kings on Stadium Road moved with steam and heat, with fun and fare inside. Most young fellows who lost faith in the hydrocarbon industry and in fact wished the industry death turned to happy hosts beaming with smiles. Signs of what good income can do on a young graduate were written all over them. Each time a to manager walked in, happy departmental workers would march him in like a wedding event. Workers looked truly happy doing this to their bosses, a sign that Nigerians can live in peace with their seniors or their betters, if the system is allowed to run with justice. It seemed there is personnel justice in that company. An engineer, Mufaa Welsh, head of engineering and production, who

stood in for the Founder/President, Jack-Rich Tein Jr, spoke loud and clear, saying Belema was the only one of its kind, founded by an Ijaw son from an oil community. He said the Founder had worked for decades in the hydrocarbon industry and may have known exactly what was missing and what was needed. He applied it to great magic. The Founder, he said, carried a niche as a prosperous producer with robust community engagement approach called Belema Model. This has given rise roads, dredging, power supply, water supply scholarships in hundreds, and many more. He said Belema has developed a security model with zero conflict that has been copied by other companies to operate in the oil region. Experts have hailed this feat. Belema, he said, has engaged teaming youths. He said hope has returned to the youths. Joy truly enveloped the centre and followed many home. This seemed the Belema way. Many wondered if this would be sustained in the region.

BUSINESS DAY

www.businessday.

www.facebook.com/business-

@businessDayNG

Thursday 03 January 2019

@Businessdayng

Investing in Rivers State

How Rivers plans to finance the N480bn 2019 budget and where to spend it • As Economy gets a look in this time Ignatius Chukwu

he Rivers State government plans to spend N480.112Bn in 2019 but the economy of the state especially job creation has got a huge mention this time around. The governor, Nyesom Wike, said on December 24, 2018, while presenting the budget to the Rivers State House of Assembly, that Agriculture and empowerment would get giant allocations. This seems to have addressed major concerns of critics in the past few years who demanded for clear blue print and attention to grassroots economy. The governor had argued over the years that boosting construction works was the best way to create jobs and keep the youths occupied. Differs in budget assumptions with the centre The major observation in the budget is the clear disagreement with the FG on the assumptions that gave rise to the figures. Whereas the FG thinks that oil would settle at $60 per barrel, Rivers thinks it would be at $55. Also, whereas the FG thinks it can pump an average of 2.3m bpd, Rivers which is closer to the troubled oil region thinks its rather 2m bpd. Finally, whereas the FG thinks inflation would come lower to 9.9 per cent, Rivers planners think it would it would never get so good but would remain at 10.9 per cent. These show higher levels of pessimism on the ability of the Nigerian economy to get better, a sign of carrying the opposition tone to the budget in line with the state’s role as the leading opposition state in the country after the demise of the Ayo Fayose administration in Ekiti. Policy thrusts Before reeling out the sources

Governor Nyesom Wike

of funds, the administration unveiled its strategic thrust for the 2019 budget, saying it is to promote economic growth and diversification, create jobs and reduce unemployment; “take as many of our people out of poverty and improve the standard of living of Rivers State. To this end, we shall be doing the following specific things: Prioritize investments in agriculture and encourage, train and support our youths to go into commercial farming; Support small and medium businesses to invest in the State and create jobs; Continue to prioritize and invest in human capital development and guarantee robust access to basic social services such as, education, healthcare, social housing, water and sanitation; Continue to keep Rivers State peaceful, safe and secure; And to continue to prioritized

investments in the provision and expansion of transport infrastructure, including roads, bridges and jetties.” Against this background, the governor stated, the 2019 Budget is aptly christened: “Budget of Sustainable Growth and Development.” Financing the 2019 budget G ov Wike mentioned the sources as: Internally Generated Revenue; N120.49Bn; Statutory Allocation N73.16Bn; 13% oil minerals fund N145Bn; Value Added Tax N26.37Bn; Refunds N27.33Bn; Local Credits N45Bn; International Credits N30Bn; Capital receipts N300m; Exchange gain N8Bn; Prior year Balance N4.66Bn. Total N480.411Bn. “At about 28.39 per cent of total revenue, Oil Mineral funds is the largest contributor to the budget

and what is proposed in the 2019 budget represents a significant increase from that of 2018 as we expect the Federal Government to implement the recent judgment on the upward review of our entitlements under the relevant Production Sharing Agreements. “The IGR is the second highest contributor to the budget as the sum proposed represents about 25 per cent of the total budget.” This means that the hope of the state to get IGR to 50 per cent of total is still half way away. IGR: Wike in cautious optimism but crackdown coming He went on: “We decided to be as realistic as possible with our IGR projections because over the years we have been unable to match our revenue potential with actuality. Nevertheless, we are encouraged by the constant improvements we have recorded year in, year out to continue with our drive to generate more revenue from alternative internal sources to fund substantial parts of our budget. “While we may not introduce new taxes and levies in 2019, I have directed the State’s Internal Revenue Service to plug all existing tax loopholes, crack down on tax defaulters and ensure full implementation of our revenue laws to shore up our IGR collections. “Furthermore, in addition to balancing the fairness of the tax system to enhance compliance, we will also continue with our efforts to increase the efficiency of revenue collection from both existing and other potential sources. “The third most viable contributor to our budget is statutory allocation. Here, our projection is over 28 billion more than that of 2018 based on the assumptions of the Federal Government. However, we are mindful of the fact that this is a revenue item we have no control whatsoever over what can accrue

to the State. Loans no “Finally, we have substantially reduced our intention to fund the 2019 budget with borrowed funds in line with our policy of balancing our budget and reducing deficits to sustain the impetus towards fiscal responsibility.” Proposed expenditure The proposed revenue for 2019 fiscal year will be spent as follows: (1) Recurrent Expenditure N157.12Bn (2) Capital Expenditure N323.28Bn Recurrent expenditure The Recurrent Expenditure will be spent as follows: Personnel Emolument ; N79.5Bn; Overhead: N17Bn; Pension: N33Bn; Others; N27.5Bn “A substantial part of the recurrent budget proposed for 2019 is for the payment of staff salaries and overheads to ministries, departments and agencies to enable them effectively discharge their responsibilities to the people. “The personnel cost of N79, 585,058,808.60 alone constitutes about 50 per cent of the entire recurrent expenditure. The increase in the figure for 2019 is as a result of the need to provide for the anticipated increase in the minimum wage for civil servants. “With this, the State Government will be in a position to pay the minimum wage whenever the National Assembly approves it. We also made provisions for staff promotion arrears and new recruitments into the State’s civil service. “The sum of 33,000,000,000.00 is proposed for the settlement of pension liabilities. The challenge about the plight of pensioners has lingered for too long and we are determined to tackle it this time around. Certainly, our senior citizens deserve better treatment than what they are presently getting.”

Bayelsa community people not in vote-selling mood, but for projects

ome communities in Bayelsa state have declared that rather than selling their votes to highest bidding politicians during the 2019 general elections, they would use the votes wisely to attract developments to their areas. The declaration was made at a gender based civic and voters education forum organised recently in Southern Ijaw local government Council, Oruma in Ogbia and Yenagoa, all in Bayelsa state by Centre for Environment, Human Rights and Development, CEHRD with support from the Dutch Embassy in Nigeria. The community members comprising mainly of women from different

communities in the three senatorial districts of the state said they have learnt their lessons from experience when they exchanged their votes with money but got nothing else from the politicians later in different political offices. A woman who simply introduced herself as Madam Peace lamented that there was no government presence in her community, saying that the only time political leaders remembered them is at election period when they would come begging for votes. However, David Vareba, Queen Agba and Marsha Nwanne, CEHRD’s project officers who facilitated the capacity-building forum explained

that the training was undertaken to fill the gap created by the failure of the government to carry out voters’ education even before organizing elections. They noted that civic and voters’ education is very important for any democracy to thrive. “The aim of this capacity building forum is to educate citizens such that they are actively involved in political governance. This involvement by the citizenry must be based on information, critical reasoning and the understanding and acceptance of their rights and responsibilities”, explained David Vareba. He added that how voters vote has significant impact on political outcomes, and can help

determine matters of peace and war, life and death, prosperity and poverty. It was noted that wrong choices during elections have resulted to bad governance, conflicts, deprivation, hardship and underdevelopment among other vices. At the end of the trainings, participants expressed gratitude to CEHRD and her partners for what they described as an eye opening educative and informative training. They promised to mobilise other community members towards effective participation in the 2019 election processes. They cautioned politicians to desist from trying to entice voters with money as that tactics would not help them during

the 2019 elections. “we will vote for only those who would work for us”, they resolved. Observers however wondered how the voters knew that votes were for money since nobody educated them. Elections have also been going on since 1999 with political parties mounting vigorous campaigns and National Orientation Agency (NOA) always appealing to voters to vote their consciences not tribe, religion or for money. Most community people have been voting in their community elections, town elections and chuch elections without doing so for money. A commentator said; ‘Voting for cash is a choice, not a result of ignorance’.

Thursday 03 January 2019

www.

BUSINESS DAY

2023: When politicians adopt partisanship as campaign slogan OWEDE AGBAJILEKE, Abuja

here appears to be no limit to the amount of campaign promises political parties will put in their mani-

festos. In an attempt to hoodwink the electorate and extract additional votes from specific areas or interest groups, political parties and their candidates go the extra mile to hire consultants to suggest as many bogus promises as possible, which are made according to what the people want to hear, not according to what can be achieved from a practical point of view. This explains why the PDP presidential candidate, Atiku Abubakar, would emphasise on restructuring in the south but be silent on the matter in the north. Reason? There is more clamour for restructuring in the south

than in the north. Recently, the former Vice President also took advantage of the crisis in Zamfara State by assuring that he would end security challenges in the north west state within three months. On the other hand, this explains the drama currently playing out in the Presidency as Nigeria prepares for her sixth quadrennial elections in the Fourth Republic. The Muhammadu Buhari-led administration, in its desperation to win the 2019 presidential election is dangling the Aso Rock carrot before the South-East and South-West geopolitical zones simultaneously. In one breadth, Secretary to the G overnment of the Federation, Boss Mustapha - the engine of the Presidency - promised the South-East 2023 presidency, should they vote en-masse for President Muhammadu Buhari in the forthcoming elections. In another breadth, Vice President Yemi Osinbajo, makes a counter claim to his kith and kin in the South-West. Similarly, appointees of the President like the Minister of Power, Works and Housing, Babatunde Fashola and Chairman, Niger Delta Development Commission (NDDC), Victor Ndoma-Egba, have expressed

POLITICAL COMMENTARY divergent views on the same matter. That supposed intellectuals like Osinbajo, Mustapha, Fashola and Ndoma-Egba would resort to ethnic sentiments rather than tell Nigerians their principal’s achievements in the last three and a half years, shows clearly that like a leopard’s spots, Nigerian politicians will never change. Although some analysts have made a case for severe punishment of politicians who make fake promises during campaigns, I don’t share in this school-of-thought. Since elections are referendums of some sort, I think the best option is to vote out any government that fails to keep its campaign promises. By doing this, our politicians will realise that they can’t take us for granted any longer. Also, I strongly believe Osinbajo’s statement finally confirmed the assertion of Senate President Bukola Saraki some time ago, when he accused APC National Leader, Bola Tinubu, of plotting to succeed Buhari in 2023. In an open letter in August 2018, the nation’s Number Three

Citizen had said: “... while I expressed my worry that there was nothing on the ground to assure me that the administrative style and attitude would change in the next four years in a manner that would enable us to deliver the positive changes we promised to our people, he (Tinubu) expressed a strong opinion that he would rather ‘support a Buhari on the hospital stretcher’ to get a second term because in 2023, power will shift to the South-West”. In the buildup to the 2015 general elections, the APC promised to give Nigerians steady power within six months, sell petrol for N40 per litre, make $1 equal N1, pay unemployed graduates a N5,000 monthly stipend, create three million jobs yearly, crush Boko Haram, end fuel subsidy, and went as far as saying that Nigerians should throw stones at them if they failed to deliver after two years. Three and a half years later, the APC is still acting like an opposition party, attributing its failure on the 16 years rot left by the PDP. This is not the first time Nigerian politicians would speak from both sides of the mouth. Recall that Rivers State Governor, Nyesom Wike and immediate past governor of Ekiti

State, Ayo Fayose, had accused ex-PDP National Chairman and now APC chieftain, Ali Modu Sheriff of promising them the vice presidential ticket should they support his presidential ambition during the 14-month old crisis that rocked the party. The discordant tunes emanating from the Presidency on the matter show desperation and a deliberate attempt to set an ethnic agenda and further polarise the country along ethnic and religious lines. Unlike in the 2015 election where religion played a dominant role, the governing APC has suddenly realised that that tactic would not fly in the forthcoming election because the two major candidates, Buhari and Atiku are both Muslims from the North. Nigerian-born Canadian professor, Pius Adesanmi, captures it succinctly when he likens the double-speak of the Presidency to land grabbers popularly known in the South West as ‘Omo-Oniles’. Although their stock in trade is to sell one plot of land to two people, Adesanmi believes they (OmoOniles) are more refined in their activities than the show of shame being displayed by the Presidency and APC just to stay in power at all cost. I couldn’t agree more.

NEWS

Wage: FG moves to avert labour strike

... fixes conciliatory meeting for Friday, governors adamant JOSHUA BASSEY & KEHINDE AKINTOLA, Abuja

n a move aimed at averting the nationwide strike proposed by the organised labour from January 8, the Federal Government has called for a crucial meeting with the leadership of the labour movement tomorrow (Friday) to reach a common ground. Labour is demanding for the implementation of the N30,000 new minimum wage recommended by Ama Pepple-led national minimum wage committee, and had put workers on notice for a prolonged strike. Those expected at the meeting at the instance of Chris Ngige, minister of labour and employment, include Ayuba Wabba, president, Nigeria Labour Congress (NLC); Peter Ozo-Eson, NLC general secretary; Boiboi Kaigama, president,

Trade Union Congress (TUC); Joe Ajaero, president, United Labour Congress (ULC), and leaders of key affiliate unions of the three labour centres. A notice issued on Wednesday by the Federal Ministry of Labour and Employment and signed by Samuel Olowookere, the director of press in the ministry, read: “Towards nipping in the bud threat of national industrial action by the Nigerian Labour Congress (NLC) over the transmission of the New National Minimum Wage to the National Assembly.” The Organised Private Sector (OPS) had warned on the implication of the proposed strike, saying it would hurt the economy if allowed. Meanwhile, the Nigeria Governors Forum (NGF) through its spokesman, Abdulrazaque Bello-Barkindo had on Monday, argued that the state governors

cannot afford to pay the proposed N30,000 new minimum wage. Bello-Barkindo said the governors had offered workers a token increment of N22,500 from the current N18,000, after the submission of the report of the tripartite committee on October 6, 2018. He added that the N22,500 was arrived at after extensive deliberations among all 36 Governors. Bello-Barkindo maintained that the Governors also arrived at the decision after outlining their financial capacities and liquidity, considering the economic situation of the country and the states’ other obligations. In his new year message, the NLC President argued that the nationwide strike scheduled for 8th January, 2019 became inevitable. Wabba, who described year 2018 as most traumatic for Nigerian workers, especially given

the failure of government to enact and implement the new national minimum wage of N30,000, urged Federal Government to take necessary steps to avert another industrial action. “It is unfortunate that the Federal Government is yet to transmit to the National Assembly an Executive bill for the enactment of N30,000 as the new national minimum wage. Government’s dilly-dallying on the issue has strained Government -Labour relations with a potential for a major national strike, which could just be days away. “Accordingly, we would use this opportunity to appeal to the Government to do the needful by urgently transmitting the bill on the new national minimum wage to the National Assembly. “We also would like to use this same opportunity to urge workers to fully mobilise for a prolonged national strike and

enforce their right. This strike action becomes the inevitable last option for us and we crave the understanding and support of all Nigerians and businesses. “We would want to assure workers that their labour, patience and diligence will not be in vain and that this leadership remains committed to giving all that it takes to ensure that they get just and fair wages due to them in a decent work environment appropriate to their well-being. “This leadership is similarly committed to ensuring there is social protection for workers. The new year presents great opportunities for workers, pensioners, civil society allies and their friends and families to put their numbers to good use by voting out not on the basis of tribe or religion but purely policy any candidate who cannot serve their interest.”

BUSINESS DAY

www.businessday.ng

www.facebook.com/businessdayng

@businessDayNG

@Businessdayng

Thursday 03 January 2019

Ezekwesili vows to make Nigeria’s economy most innovative nomic development and structural transformation. “The goal is to kick-start the process of becoming Africa’s number one innovation and knowledge economy. “The STI fund will support the building of a robust national innovation system, carry out reforms and re-organisation of existing institutions, and fund the scale-up of Small and Medium-scale Enterprises and start-ups in the technology space, research and development, knowledge transfer, among others. The fund will function as a partnership between the government and the private sector.” She also stressed that policies that would ensure increase of technology start-ups in the country by at least 500 percent in the next four years would be designed and implemented. “We will set up an Information and Communications Technology programme with a focus on ensuring Nigerians are growing in the

Inibong Iwok

biageli Ezekwesili, the presidential candidate of the Allied Congress of Nigeria (ACPN), Obiageli Ezekwesili, has stated that part of her plans were to make Nigeria’s economy the most innovative in the entire Africa if she emerges president of the country. In a statement to journalists, Wednesday, she added that if wellmanaged, the nation’s economy would prosper more those of its contemporaries in Africa. The ACPN presidential candidate stated that the target was achievable through the creation of a special fund for science and technology and reformation of key financial institutions. According to her, “We will be creating a $1bn Science, Technology and Innovation fund to ensure that science, technology and innovation become the enabler for socio-eco-

Ezekwesili

Atiku to Buhari: Jobs losses, 90m Nigerians living in extreme poverty are your only achievements Innocent Odoh, Abuja

ormer Vice President and Presidential candidate of the main opposition People’s Democratic Party (PDP) has again castigated President Muhammadu Buhari, stressing that the President and his party have started giving Nigerians another round of false promises in his campaign to seek re-election as President of the country in 2019. This was contained in a statement by his media aide, Paul Ibe, which is in reaction to Buhari’s claim during the flag off of his campaign on Friday December 28, 2018, in Uyo, Akwa Ibom State that he had fulfilled his campaign promises. Atiku said that ironically, a day before the President made that statement, it was revealed that the number of Nigerians living in extreme poverty had increased from 87 million to 90 million in just four months. He added that based on the sharp rate of increase, the whole country will be in extreme poverty if Nigerians make the mistake of re-electing

Buhari. “Except the President made a vow to impoverish Nigerians, it is hard to see how he could have fulfilled his promises with such pervasive poverty and hunger in the land. This is even as the Nigerian Bureau of Statistics revealed a week to the President’s unfortunate statement that unemployment had doubled from the 14percent he met it in May 2015 to 23.1percent in December of 2018,” Atiku said. The Wazirin Adamawa, further described the president assertion that the administration had defeated Boko

Atiku

Haram as a blatant insult to Nigerians. According to him, “It was most insensitive of the President to have said such on a day that foreign and domestic media reported the entrapment of our gallant troops by Boko Haram/ISWAP in Baga, with as much as 700 hundred reported missing. “Even more indicting is the statement from the US based International Strategic Studies Association, which revealed that the Boko Haram insurgency was lingering due to the massive corruption around President Muhammadu Buhari. “How would those soldiers feel, how would their families feel, how would their colleagues in the barracks feel when they are facing a life and death situation and their commander-in-chief is impervious to reality? “Faced with such delusions and obvious denial of reality by President Buhari, it has become expedient to revisit the demand by the Coalition of United Political Parties for all Presidential candidates to submit themselves for a mental health test because clearly someone has badly lost touch with happenings around him,” Atiku said.

Agbaje task INEC, Lagosians in New Year message Iniobong Iwok

imi Agbaje, the Lagos State governorship candidate of the People’s Democratic Party (PDP), has charged the Independent National Electoral Commission (INEC) to conduct a general election in 2019 that would win worldwide commendation as the freest and fairest in the history of the country. In a New Year message to Nige-

rians, signed by the Director Media and Publicity of his gubernatorial campaign organisation, Felix Oboagwina, Agbaje wished Nigerians would be proud to own the 2019 polls as the truest reflection of their will. “We pray for peaceful polls in 2019, but peaceful elections can only happen when the majority believe that the conduct and results of the electoral process accurately reflect their collective will as expressed through the ballots,” he said.

According to him, the whole world had its focus on Nigeria’s 2019 elections as they would determine whether 2015’s smooth and seamless transition was a fluke or the confirmation of the country’s truly democratic credentials. “INEC must deliver credible and commendable elections and this means that the commission must assert its independence and resist all attempts by unscrupulous individuals and interests to falsify results and rig elections,” Agbaje said.

remote working and outsourcing global market. The plan will be to create centres of ICT advancement in all states with a focus on an average of 10,000 developers in each state,” the presidential candidate said. “Simultaneously, a group of technology ambassadors will be engaging global sourcing centres, providing them with comparative advantage of opening or expanding current operations in Nigeria. “The ICT programme will partner the private sector in investing in real estate that allows remote tech workers involved in tech development, data science, Artificial Intelligence and emerging technologies to comfortably work.” According to her, 360,000 persons will be impacted directly through this programme; N1.5m Nigerians will be indirect beneficiaries. “This plan is costed at N100bn, which will be financed by the STI Fund, which is in turn financed from the oil subsidy savings,” she said.

Benue, Taraba border communities celebrate festival with federal lawmaker Benjamin Agesan, Makurdi.

he Ucha People comprising Tsaav, Lumbur, in Ukum and Wukari Local Government both in Benue and Taraba States today celebrated a well attended festival with the representative of Katsina-ala, Ukum, Logo federal constituency, Emmanuel Undende. The maiden Annual festival which was aimed at fostering peace, unity and progress towards sustainable development in the constituency was celebrated at the Afia car park in Afia of Ukum local government area of Benue state. Addressing the celebrants, the Federal Lawmaker representing Katsina Ala, Ukum and Logo Federal Constituency, Emmanuel Udende expressed gratitude to the organisers of the festival and promised to always assist the initiators to improve in subsequent editions. “I appreciate Ucha people for always standing by me in

all the elections I have contested, I urge you all to extend such to other people”, he stated. “Ucha people have never disapointed me in the past, today I want to introduce to you my bossom friend Benjamin Ashaver, who has always been with me. Let’s support him to represent Ukum at the Benue State House of Assembly. We must avoid political godfathers who sponsor weak candidates that will be answerable to their selfish interest. We must collectively reject their evil plans against us,” Udende admonished. Speaking, the initiator of the festival and immediate past Special Adviser to the Governor on Labour matters, Boga Abuul said they have put the event together to always meet once in a year, not just to celebrate, but to think together as a people and collectively address critical issues affecting the unity, progress and development of Ucha, Ukum and Sankera in general.

Kwara APC candidate berates PDP-led government SIKIRAT SHEHU, Ilorin

bdulrahman Abdulrazaq, the governorship candidate of All Progressives Congress (APC) in Kwara State, has berated People Democratic Party (PDP) led government in the state for lack of quality deliverances of dividends of democracy to the good people of the state. AbdulRahaman stated this in his New year Message to kwarans and made available to the journalists in Ilorin, “wishes the wonderful and ever progressive people of our State a very Happy New Year 2019. “Looking at the quality and quantum of human, natural, and financial resources with which the Almighty God has blessed us, Kwara State has no reason to be as poor and underde-

veloped as it presently is. “Across the three Senatorial Districts, our people have been forced to endure enormous infrastructure deficit and decay; it is a case of needless suffering in the midst of plenty. I believe the New Year 2019 is an appropriate time for us to say ‘Enough is Enough’ (O to gee) and put an end to such anomalies using the progressive platform of our great party, APC.” “That, in a nutshell, is part of the reasons I am seeking your full support and looking forward to the privilege of serving you as the next Governor of our State,” he said. “2019 is the appointed year for the total liberation of Kwara State and the enthronement of Participatory Governance where the people and their government will plan, work and achieve the central goal of a better society together.

Thursday 03 January 2019

www.businessday.ng

www.facebook.com/businessdayng

@businessDayNG

@Businessdayng

BUSINESS DAY

Why 2019 elections must not be compromised ODINAKA ANUDU

he 2019 presidential and National Assembly elections will take place on 16th February, while the governorship and state assembly/Federal Capital Territory (FCT) council elections have been scheduled for 2nd March. Like in 2015, there is so much apprehension as many do not believe that the elections, especially the presidential leg of it, will be thoroughly free and fair. This is understandable, given that the sitting President Muhammadu Buhari is an interested party, being the candidate of the ruling All Progressives Congress (APC). Buhari is campaigning on the platform of sustainability and taking Nigeria to the next level. But his main challenger Atiku Abubakar of the People’s Democratic Party (PDP) says he wants to get Nigeria working again. Obiageli Ezekwesili, former World Bank vice president and human rights crusader, anchors her manifesto on ‘hope’. Omoyele Sowore of the African Action Congress wants to take back Nigeria from the people he mostly describes as ‘old and analogue politicians’. Kingsley Moghalu, former deputy governor of the Central Bank of Nigeria and candidate of Young Progressive Party, believes that Nigeria needs a new vision, worldview and leader with 21st century knowledge-base. Fela Durotoye of Alliance for New Nigeria (ANN) is targeting a new Nigeria if elected president. All other candidates have different visions and manifestoes that reflect their worldviews, experiences and missions. But beyond manifestoes and visions, all eyes are on the Independent National Electoral Commission (INEC) to deliver free, fair and acceptable elections that will pass local and international observers’ tests. The reasons are very clear. “Being an election year, performance of the economy in 2019 would to a large extent depend on the transparency and credibility of the election,” the Manufacturers Association of Nigeria (MAN) says. Ben Afudego, partner and advisory leader for West Africa, Ernst& Young (EY), told BusinessDay that credible elections are necessary in 2019 in order not to erode the confidence of investors. “Let us not create uncertainty in the system. We need to pay enough attention to governance in Nigeria and rest of Africa,” he added. The INEC, on its part, has assured Nigerians that the elections would be free, fair and transpar-

Mahmood-Yakubu

ent. At his keynote address at the 6th Convocation Lecture of Oduduwa University (OUI) in Ipetumodu in November 2018, Mahmood Yakubu, INEC chairman, said the commission would conduct free, fair, and credible general elections in 2019. “As we are approaching the general elections, the commission is more than prepared to conduct election that will be acceptable to all and sundry and the international community. “In all fairness, the commission has drastically leapt up from where it was when democratic was resurrected in 1999,” he said. But sceptics believe that INEC’s conduct of Ekiti and Osun elections left much to be desired, claiming that the body was partisan and oversaw massive rigging in these elections. Even the opposition PDP recently argued that INEC is partisan and is under pressure to do the bidding of the ruling APC in the coming elections. But a spokesman of the electoral body had reacted to partisan allegations of PDP in September, dismissing that as balderdash. Political watchers believe there are many reasons why the elections at all levels should never be compromised. First is the fact that Nigeria’s unity is currently fragile. The country is completely divided on ethnic and religious lines. This is because many parts of the country believe that the present government is pro-

Ibrahim Idris

Hausa/Fulani in its appointments and body language. Others worry that almost all security agencies are headed by Muslims in a country where the population of Christians and Muslims are theoretically equal. This has increased the level of agitations and reservations in many parts of the country. Also, the issue of Fulani herdsmen has not been handled properly, says Atuma Ngere, a political analyst and lawyer. “The President’s excuse that the farmers-herdsmen clashes had lasted for centuries before his coming makes no sense. The Biafra issue caused Nigeria civil war, yet the President rushed to quell the Indigenous People of Biafra (IPOB) agitations and even classified them as a terrorist group when they began,” he said. “But for him, Fulani herdsmen, who are killing people every day, is not a terrorist group and do not need force. Why has nobody been arrested and prosecuted since January 2018 when the Benue State government lamented that the federal government security officials abandoned him when he called them for protection?” he asked. While APC is gaining traction in South-South and South-East, the peoples of the region still nurse the belief that the current government is pro-north. This is palpable in South-East where there are still reservations about Buhari. Many parts of the North, especially Kaduna, are still deeply divided and may be volatile should there be any suspicion of election

rigging. The opposition party currently feels that Buhari’s refusal to sign the Electoral Act into law means he wants to sidestep the use of card readers. This concern is important given the volatile nature of the polity at the moment. All stakeholders in the forthcoming elections must learn lessons from other countries. Part of the reasons why the English-speaking Southern Cameroon is boiling today is that they believe that seven different elections that kept bringing President Paul Biya back to power side-lined them. Biya won a seventh term in office in polls marred by low turnout and voter intimidation in October 2018. The 85-year-old Biya had 71.3 percent of the votes, according to official results. Before the election result, Biya had deployed riot police to the major cities of Yaoundé and Douala in case of opposition protested. Across the country, only half of Cameroon’s voting-age population took part in the polls, BBC reportred, while tens of thousands of people were unable to cast their votes. Two days before results were announced, Africa’s longest-serving President Teodoro Obiang Nguema of neighbouring Equatorial Guinea had congratulated Biya on his win, BBC said. Today, Southern Cameroon is burning, with scores of people who feel disenchanted killed. Poorly-conducted elections

have led to wars in Cote D’Ivoire, Sierra Leone and Liberia. “Elections are about sentiments and no one should tamper with such,” Chukwudi Ikedife, a Nigerian civil society activist, said. Political historians believe that one of the remote causes of January 15 1966 military coup d’état was the 1964 election crisis. Also, the 1983 elections were marred with irregularities and rigging, resulting in military coup d’état that brought the then Major Buhari to power, thereby ending Nigeria’s Second Republic. It is also important to note that Ibrahim Badamosi Babangida’s refusal to recognise Moshood Abiola as the winner of 1993 presidential election eventually brought in one of Africa’s worst dictators Sani Abacha. Nigeria also does not need partisan security agencies. Many citizens are sceptical about the Operation Python Dance which will take place in all the states during elections. They do not trust the military and the police, which, according to them, showed partisanship in Ekiti and Osun elections. Political observers warn that all stakeholders—INEC, political parties, security agencies, civil societies, human right activists, election observers and the media—must maintain decorum as next month’s election can make or mar the country. They ask INEC and security agencies to place Nigeria on the front burner before any political party.

34 BUSINESS DAY NEWS

www.businessday.ng

www.facebook.com/businessdayng

@businessDayNG

Egina field to reach 200,000bpd in three years

... one out of 44 subsea wells producing connected to FPSO at 1,600 meters water depth OLUSOLA BELLO

gina deep-water oil field produced its first oil on December 29, 2018, the CEO of state-run Nigerian National Petroleum Corporation (NNPC) has confirmed. The $16-billion field began streaming oil at 11.20pm on December 29, according to Maikanti Baru, group managing director of NNPC. Egina has capacity to produce 200,000 barrels of crude oil per day at its peak. Baru did not say how much was produced on the first day. Total Upstream Nigeria Limited confirmed the position of NNPC but did not also state the initial production level of the field. Charles Ebereonwu, its external relations officer, told BusinessDay that the field, which has a lifespan of 35 years, would achieve its peak of 200,000 barrels per day in three years. Oil and gas industry

sources told BusinessDay that the production is starting with one well which has capacity for 13,000 barrels and the current production is yet to get to this level. They said the ramp up would be gradual until eventually the whole wells are able to come on stream. The Floating, Production, Storage and Offloading unit is connected to 44 subsea wells at 1,600 meters water depth However in statement confirming the production, Arnaud Breuillac, President Exploration & Production stated: “Total is proud to deliver a project of this size under the initial budget and to contribute to the development of Nigeria’s oil and gas sector by generating employment as well as building industrial capability.” Breuillac added, “Egina will significantly boost the group’s production and cash flow from 2019 onwards, and benefit from our strong cost reduction efforts in Nigeria where we have reduced our

operating costs by 40% over the last four years.” He said some upside potential nearby remained to be developed and that the company was studying “in particular Preowei discovery tie-back to the Egina FPSO.” Initially discovered in 2003, the Egina field is the second development in production on the Oil Mining Lease (OML)130 following the Akpo field, which started up in 2009. The Preowei field is another large discovery made on this prolific block for which an investment decision is scheduled for 2019. Total Upstream Nigeria Limited operates OML 130 with a 24% interest in partnership with Nigerian National Petroleum Corporation (NNPC), South Atlantic Petroleum – SAPETRO Ltd. (15%), CNOOC E&P Nigeria Limited, a wholly owned subsidiary of CNOOC Limited (45%) and Petrobras Oil and Gas BV (16%). The Floating Production Storage and Offloading

Truck pushers experience no work after the New Year’s holiday in Lagos, yesterday.

(FPSO) unit used to develop the Egina field is the largest one Total has ever built. This project has also involved a record level of local contractors. Six of the eighteen modules on the FPSO were built and integrated locally, and 77% of hours spent on the project were worked locally. Start-up has been achieved close to 10% below the initial budget, which represents more than 1 billion dollars of CAPEX savings, due in particular to excellent drilling performance where the drilling time per well has been reduced by 30%. The Egina field is located at water depths of between 1,400 and 1,700 meters, 200 kilometres offshore from Port Harcourt. The project is based on a subsea production system connected to a FPSO designed to hold 2.3 million barrels of oil. It weighs close to 220,000 metric tons and measuring 330 meters long by 60 meters wide.

Pic by David Apara.

Edo moves against induced darkness with Ossiomo-CCETC 55mw power project ... phase 1 to be commissioned in April

n a bold move to free Edo people and residents from the endless cycle of darkness foisted on electricity consumers in the state, Governor Godwin Obaseki on Wednesday, visited the 55 megawatts CCETC-Ossiomo Power plant as the facility prepares to commence operation. Addressing journalists after inspecting facilities and progress of work at the CCETC Clean Power/Ossiomo Power Plant, in Ologbo, near Benin City, Obaseki said the first phase of the project will be commissioned in April and would make more electricity available for distribution in the state.

He said the construction of transmission lines to deliver the power from the site to the city centre would soon commence, as the first set of equipment for the project would arrive from China in the first quarter of this year. According to him, “We believe that before the end of the first quarter of the year, the first 5mw would be delivered to light up government offices and streets within the Sapele Road corridor of Benin City.” He explained, “To ease distribution of the power, a substation would be set up around Kings Square, which would power streets in the city.”

The governor added: “We are concluding transaction to light up 200 Kilometres of our streets across the city. When the plant is completed, it will free up some electricity for the state. We believe that if the megawatts produced increase, the distribution company will have more power to distribute to other cities in the state. “The ordinary Edo people will benefit from this power arrangement because there is an arrangement to drop power in certain processing centres where artisans can move into and do their businesses with the assurance of steady power supply.”

Director, CCETC Clean Energy/Ossiomo Power Plant, Dr. Uwa Igiehon, said the power plant is a joint venture between a Chinese Company, CCETC Clean Energy and Ossiomo Power to build a 55Megawatts plant in the state. He said the power plant started in August 2018 and would be delivered in the next four to five months. “We will be using natural gas from a 50-metre gas pipeline close to the site. The project will be in phases with the first phase of 5 megawatts to be delivered to the state government.” The governor was also at the 1800-housing unit Emotan Gardens on Upper Sokponba Road, to see the extent of work at the estate.

@Businessdayng

Thursday 03 January 2019

UBA thanks customers for choosing it

t is another year, and a new year always brings new opportunities for us to show how much we appreciate you for being a part of the UBA family, according to a release from Kennedy Uzoka, group managing director/CEO, UBA, yesterday. “On behalf of the Executive Management and over 15,000 staff of the United Bank for Africa Group (UBA) in all our 23 Countries of operations, I’d like to thank you for giving us the opportunity to serve you throughout the years and 2018 in particular. Your patronage and support have been the reason for our Bank’s progress and success. We are honoured that you have selected us to be

your financial partner over the period. “It is our desire to always meet your needs with our services and products which are developed from your standpoint as a valued customer, indeed, Our Employer. We promise to continually strive to make our products available to you, 24/7 and to seek innovative ways to enhance our service delivery in a manner that will always surpass your expectations. “We look forward to our continued partnership in 2019 and beyond, as we position ourselves to serve you even better. We wish you a happy and prosperous 2019,” the release read.

Akwa Ibom holds solemn assembly, announces plans to set up new airline ANIEFIOK UDONQUAK, Uyo

kkwa Ibom State has held a solemn assembly to usher in the New Year with plans to launch an airline as part of its determination to ensure maximum utilisation of its modern airport and the support facilities. To be known as Ibom Air, the state government says the new airline will bring joy to the people, as Akwa Ibom will soon blaze the trail as the only state in the country to have a wholly owned and run airline. According to Governor Udom Emmanuel, other investments in the area of agriculture, education and youth empowerment have all added values to the economy, maintaining that the state government has fulfilled its promise of industrialisation. “We promised you improved electricity and you all witnessed to this undeniable fact that our electricity has improved significantly. We promised our youths, our women and our elders, trad-

ers empowerment, we have done just that,’’ he said. Governor Emmanuel, who spoke at the assembly, noted that since assumption of office more than three years ago, he had not disappointed the people, and explained why Akwa Ibom was attracting investors and enjoying peace and progress while Uyo, the state capital, had become one of the fastest growing cities in the country. “That is the reason we are able to embark on numerous capital projects when others can’t even pay the salaries of their workers, the reason why we are expanding and consolidating our infrastructure amenities such as the construction and commissioning or ongoing works on over 1,700 kilometres of roads,’’ the governor said. He also said the state government had remodelled health facilities in Etinan, Ikot Okoro, Ituk Mbang, Iquita, Ikono, Emmanuel Hospital, Eket, adding that he came as a governor to serve the people.

Delta spends N1.25bn monthly on pensions - Okowa FRANCIS SADHERE, Warri

elta State governor, Ifeanyi Okowa, on Wednesday said the state spent about N1.25 billion monthly on pensions alone, saying in the last two months the state had released more than N1.2 billion for pensions. Okowa said this in Asaba when the Delta State College of Permanent Secretaries led by the Head of Service, Reginald Bayoko, paid him a felicitation visit. He said, “In the last two months we have released more than N1.2 Billion for pensions, we are paying for old pensions, we are paying for the new scheme and paying for past services which amounts to N1.25 billion monthly on pensions alone.”

While describing the civil service as great contributor to the success story of his administration, Governor Okowa said though the state government was still having some challenges in the area of pensions, it was doing a lot in that area. “There is no doubt that whatever we do in government, it will not be successful without your (civil servants) commitment, without the bureaucracy, governance will not be easy. “There is no doubt that we have gone through tough times and the situation is getting better; we have been trying to get out of the monoeconomy but, the economy of Nigeria is still dependent on oil. I appreciate the cooperation I am getting from the civil service,” he said.

Thursday 03 January 2019

www.

BUSINESS DAY

NEWS These ten CEOs delivered most value to... Continued from page 1

capital of N242.31 billion.

The turning point came after the bank sold N400billion of bad loans to Frontier Capital Alternative Asset Ltd which helped clean up its balance sheet. The sale led to a significant drop initsnon-performingloansratiotonear zero from almost 50 percent in 2016. Sterling Bank Plc’s, Abubakar Suleiman, ranked third after the lender recorded a 75.93 percent surge in market value under his watch. The stock appreciated from an opening price of N1.08 per share to N1.90 per share at the last trading day of the year. Its market capitalisation rose by N23.61 billion to hit N54.7 billion at the end of 2018. Tope Smart, CEO of Nem Insurance, ranked fourth. The insurer posted a 62.65 percent gain in 2018, pushing the market cap higherbyN5.49billiontoN14.26billion. The stock had opened the year at N1.66 per share, but at the close of business on Friday, December 28, 2018, the

share price hit N2.70 per share. Salisu Hassan, MD and CEO of Learn Africa, rounds up the top five. The stock of the educational publisher gained 54.55 percent to emerge the fifth-best performer at the NSE in 2018. The company’s market capitalisation rose by N370 million to reach N1.05 billion. Olabode Makanjuola, the CEO of Caverton Offshore Support Group came sixth. Caverton Offshore Support Group, provider of marine and aviation services to the oil and gas industry, garnered 48.84 percent. In seventh place is Taiwo Adeniyi,

1 2 3 4 5 6 7 8 9 10

CEO's Name Yusuf Haliru Binji Oluwatomi Somefun

Abubakar Suleiman Tope Smart Alhaji Salisu Bala Hassan Olabode Makanjuola Taiwo Adeniyi Uzoma Dozie Olu Wole Oshin Andrew Otike-‐Odibi

CEO of Vitafoam. The foam manufacturer’s stock climbed 46.67 percent in 2018. Market capitalisation which had opened the year at N3.13 billion rose to N4.59 billion on the last trading session of 2018. Vitafoam shares gained 10 percent to N4.40 per share to close for the year after the consumer goods firm, which had consistently recorded losses in last two years, declared a profit of N601.93 million. Uzoma Dozie of Diamond bank is in seventh place. Tier two lender, Diamond Bank, jumped 45.33 percent in the review year, making market value to gain N15.75 billion to N50.49 billion. The bank recently announced a

Stock

% Change

Gain (N)

CCNN UNITYBNK STERLNBANK NEM LEARNAFRICA CAVERTON VITAFOAM DIAMONDBNK CUSTODIAN CILEASING

104.21% 101.89% 75.93% 62.65% 54.55% 48.84% 46.67% 45.33% 45.24% 37.98%

130,120,659,563.40 6,312,242,488.68 23,608,142,863.32 5,491,723,029.52 370,296,000.00 2,110,821,142.50 1,459,318,074.20 15,749,064,498.24 10,352,080,983.20 922,581,266.88

planned merger with Access Bank, which is expected to produce Nigeria’s and Africa’s largest retail bank by customers. In a cash and share deal worth N72 billion, Access valued Diamond bank shares at N3.13 each and the bank is quickly turned the corner after sliding to a year low of 65 kobo. Access’ valuation of Diamond sparked a rally, as the stock more than doubled from its year low in the space of one week. Custodian Insurance’s Oluwole Oshin, who has now managed the company for three years since assuming the role in 2015, led the insurer to ninth spot. The stock appreciated 45.24 percent, increasing market capitalisation by N10.35 billion to N33.23 billion in the review year.

Andrew Otike-Odibi, the MD of C & I Leasing rounds up the top ten companies to deliver the most value for shareholders. The stock of C & I Leasing Plc, a leasing and business service conglomerate, gained 37.98 percent, as market capitalisation increased by N922.58 million to N3.35 billion. As part of the company’s resolve to invest in the growth and expansion of its business, the firm July 12, 2018 notified its shareholders of the buyout of 27.5 percent minority stake in C & I Petrotech Marine Limited after it recorded a successful N7 billion Bond issue, the first series in a N20 billion debt issuance programme. The issuance is aimed at expanding the company’s business and restructuring its debts over a period of five years.

OPEC supply cap dampens Egina first oil... Continued from page 2

tion in 2016 based on the sabotage of its oil and gas infrastructure by militants who blew out the Forcados terminal, the country’s biggest export line, thereby cutting a third of output. Dwindling oil prices further pushed the economy into a recession. The argument for an exemption would be harder to make this time considering that the country has almost recovered previously lost capacity as well as most of its market share. OPEC cuts are designed to shore up oil prices and countries granted exemptions have often had significant shocks to their economy. Venezuela is suffering its worst recession, Iran is facing the prospect of a US sanction which could shut-in 1million bpd to its production and Libya, has been in crises mode since the ouster of its former leader Muammar Gaddafi. Raji also avers that an OPEC without as much influence may be unwilling to quickly sanction defaulters “Bear in mind OPEC is not likely to be aggressive with its members so soon after Qatar left the cartel,” Raji said.

However, Saad Sherida al-Kaabi, Qatar’s minister of state for energy affairs and president and CEO of Qatar Petroleum, said Qatar’s exit from OPEC “is not political, it was purely a business decision for Qatar’s future strategy towards the energy sector.” Qatar with only 2 percent of OPEC production but with the world’s biggest LNG production saw a future linked with gas, rather than an oil market where even OPEC needs non-member’s input to counter the threat of US shale production. Meanwhile oil prices fell on Wednesday, under pressure from rising output in major OPEC and non-OPEC producers and due to concerns about an economic slowdown that could weaken demand. Brent crude fell 74 cents, or 1.4 percent, to $53.06 a barrel at 8:16 a.m. ET (1316 GMT). U.S. crude slipped 71 cents, or 1.6 percent, to $44.70. Russian production hit a post-Soviet record in 2018, figures showed on Wednesday. Other data showed U.S. outputreachedarecordinOctoberand Iraq boosted oil exports in December.

Despite fight, corruption still thrives in... Continued from page 2 Godwin Obaseki (2nd r), governor, Edo State; Johnson Kukomo (2nd l), immediate past commissioner of police, Edo State; Hakeem Odumosun (r), new commissioner of police, and Isaac Ehiozuwa, head of service, Edo State, during a courtesy visit by the new commissioner to the governor, at Government House, in Benin City, Edo State.

NCAA hits Medview, Police Airwing, Skybird... Continued from page 1

Operator Certificate [AOC] sus-

pended for 180 days. Recall that NCAA earlier this week said it has sanctioned four erring operators for various degrees of violations, all of which were scheduled and non-scheduled operators. However the authority’s refusal to disclose the identity of the airlines sanctioned had made stakeholders lose confidence in the authority, saying it was lax in its duties to expose erring operators. John Ojikutu, member of aviation industry think tank group, Aviation Round Table (ART) and chief executive of Centurion Securities, told BusinessDay that not releasing the names of the four airlines is not only a cover up, but a way of bringing the whole sector of the Nigerian air transportation to disrepute and ridicule in global assessment. In particular, it discredits the enforcement and oversight capacity of the NCAA over the airlines, according to Ojikutu. “Why would the NCAA release such critical information to the public and expect the public to have confidence in its safety oversight? What is the secrecy in the names of the erring airlines that makes their violations of the regulations different from the violations of others like the cases involving Medview and First

nation early in the year? “In the case of First nation, NCAA had released statement to the effect that the airline had made one of its pilots to carry out two operational flights even when his medical license has expired. The airline and the pilot were separately fined and the sanctions were released on the media; so what makes the one of the four airlines separate or why the cover up? NCAA should come out boldly to defend this act that could put its credibility to enforce regulations to question,” Ojikutu queried. Meanwhile BusinessDay has also gathered that Green Airways is not yet on the list of prospective operators seeking Air Operator’s Certificate (AOC) as reported late last year. Sam Adurogboye, general manager, Public Affairs, the Nigerian Civil Aviation Authority (NCAA), told BusinessDay that from the AOC status listed by NCAA in its books, Green Airways is not part of them. “You don’t have to have an AOC to buy planes. Some people can buy planes to be leasing out. AOCs are for people that want to go into operations. From the list, the airline currently being assessed for AOC is ‘Great Eagle Airways.’ It is possible that the company plans on becoming a leasing company to Nigerian airlines,”Adurogboye further disclosed.

Nigeria’s Green Africa Airways was reported to be committed to order up to 100 Boeing 737 MAX 8 aircraft, from U.S based Boeing Company, a deal which will cost up to $11.7 billion and shake up Nigeria’s struggling airline industry. The deal is the largest aircraft agreement from Africa, and will be reflected on Boeing’s orders and deliveries website, once finalized Boeing said on 21st of December, 2018. Green Airways announced in June, 2018 that it completed its Series A round of financing with private Equity firm Kuramo Capital, a Pan African investment firm based in New York. The new airline said then that it had received an Air Transport License (ATL) from the Nigerian Government and commenced its Air Operating Certificate (AOC) process, it said then. Babawande Afolabi is the Founder andCEOofGreenAirwaysAfrica,which is headquartered in Lagos, Nigeria. Afolabi said the Nigerian end of the deal was a strong sign of growing African entrepreneurial dynamism and resilience. Boeing saw that deal as a step towards construction of a “solid” Pan-African network, Afolabi said, adding that the Africa aviation sector has “exceptional” potential. Since launching the 737 MAX Boeing said it has received more than 4,800 orders from more than 100 customers worldwide.

delay in prosecuting corrupt officials who are members of his parties,” an analyst who does not want to be mentioned because of the sensitivity of the matter, said. The NBS report said that Adamawa, Edo, Enugu, Rivers, Anambra and Imo states all recorded declines in corrupt cases, while there were no cases recorded in both Jigawa and Yobe states. The report further shows that in terms of percentage distribution of bribes in Nigeria by types of request, direct request from the officials came top at 65.4 percent, while indirect request of payment by officials came next at 19.9 percent. Bribe request where nobody asked for it, that is, a bribe request done willingly to facilitate/accelerate the procedure, was next at 8.2 percent, the report said. The report also said that almost 70 percent of bribes were paid before service was delivered, while 13.5 percent were paid after service was delivered. The percentage of bribes collected at the same time that the service was delivered was 10 percent, while those who paid partly before/ after the service was delivered were 2 percent. Gbolahan Ologunro, an equity research analyst at Lagos-based CSL Stockbrokers said, “tackling corruption will require strengthening of the judicial system in ensuring the speedy resolution of corruption cases; improved computerisation in procedures required in obtaining important documents so as to reduce face-to-face contact between officials and the populace.

“In addition, there is the need for government to implement policies that will enable the people exploit opportunities in the business environment to improve their standard of living which might act as a deterrent to engaging in corrupt practices.” Former Nigerian President Goodluck Jonathan at the launch of his book “My Transition Hour” last year boasted that the country is more corrupt in 2018 than it was when he handed over to the Buhari’s administration in 2015. Technocrats and activists have also raised eyebrows against the incumbent’s fight against corruption, saying it is mainly targeted at the opposition. Shehu Sani, senator representing Kaduna Central, captured this feeling when he said, “When it comes to fighting corruption in the National Assembly, the Judiciary and in the nation at large, the President uses insecticide, but when it comes to fighting corruption within the Presidency, they use deodorants.” While President Buhari has maintained his stance on the fight against corruption, the opposition People’s Democratic Party (PDP) has contended that “fighting corruption,” is not an economic policy. Its Vice Presidential aspirant, Peter Obi, at the recent debate said: “You cannot lock your shop and start chasing criminals.” Bent on showing how firm the current administration is on the fight against corruption, Nigeria’s Vice President, Yemi Osinbajo responded: “If you allow criminals to steal the inventory in your shop, you’d soon have no shop.”

BUSINESS DAY

C002D5556

Thursday 03 January 2019

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Xi Jinping asserts that Taiwan and China ‘will be unified’

President uses rare speech on issue to ratchet up pressure on US support for Taipei Yuan Yang and Edward White

resident Xi Jinping ratcheted up the pressure on Taiwan’s proself-rule government on Wednesday, asserting China’s right to use military force against “foreign powers” that intervene on the issue of independence for the country. Mr Xi said Taiwan “must be unified, will be unified” with China in a sharp rebuke to President Tsai Ing-wen, who this week said that her people wanted to maintain self-rule and has courted closer ties with the US. “Chinese people do not fight other Chinese,” Mr Xi said, but added that Beijing would take “necessary measures” against foreign interference and “a small number of Taiwanese independence activists and separatist activities”. Mr Xi’s speech is the latest in a series of aggressive signals towards Taiwan and the US over the past year, amid concerns in Beijing about warming relations between Taipei and Washington. Ms Tsai on Tuesday used a new year’s address to call China’s attempts to “interfere in Taiwan’s internal politics” her “greatest challenge”. Her remarks came a

day after US President Donald Trump signed the Asia Reassurance Initiative Act, a new law that promotes US arms sales and high-level visits to Taiwan. Mr Xi’s speech marked 40 years since Beijing ended the military bombardment of Taiwanese-controlled islands off the mainland to instead focus on diplomacy. The two sides have been at loggerheads since the Communist party took power in China nearly 70 years ago and the former ruling Kuomintang party fled to Taiwan. China claims Taiwan is its territory. A senior Taiwanese official said Mr Xi’s warning over foreign interference was clearly “targeting the US” but played down concerns that Washington would weaken its support. “I really do not worry that someday the United States is going to abandon Taiwan,” the official said. Ms Tsai responded to Mr Xi’s comments by saying Taiwan would never accept “ one country, two systems”. “China has to face the fact that the Republic of China [Taiwan] exists,” she said. Analysts say that with the power to rule China for life, Mr Xi could

EU eyes tougher scrutiny of China cyber security risks Brussels wants to strengthen safeguards for companies as 5G auctions loom Michael Peel

he EU is looking to toughen scrutiny of potential security risks with Chinese technology companies in the wake of growing concerns about cyber theft and cyber espionage allegedly linked to Beijing. Brussels wants to step up efforts to map Chinese electronic infrastructure in the bloc, after pressure from Washington and growing unease in capitals from Berlin to Tokyo. “A number of like-minded countries are increasingly concerned about China’s behaviour in this [cyber]sphere,” said one western diplomat, who pointed to the importance of upcoming 5G mobile communications spectrum auctions in Europe. “EU countries, including Spain, Italy and Finland, held 5G auctions in 2018, with a clutch of others scheduled for 2019. The sales can raise billions of euros for government. We are urging everyone to avoid making any hasty moves they might regret later.” The US justice department charged two Chinese nationals late last month with conducting a global hacking campaign, on the heels of accusations that a group linked to the People’s

Liberation Army had infiltrated the EU’s diplomatic communications system — an allegation that Beijing denies. Earlier in December, Meng Wanzhou, Huawei’s chief financial officer and daughter of the telecoms group’s founder, was detained at Vancouver airport after an extradition request by the US over alleged violations of Iran sanctions. Huawei has said it is not aware of any wrongdoing by Ms Meng. EU diplomats say that alarm raised by countries such as the US, Japan and Australia about growing Chinese business involvement in crucial technological infrastructure has dovetailed with rising European fears. Concerns about growing Chinese dominance have been fuelled by corporate takeovers such as the €4.5bn acquisition of Kuka, a German maker of industrial robots, by China’s Midea in 2016. But attempts to co-ordinate EU efforts have been hampered by the desire of governments to be free to manage tenders such as the lucrative auctions of 5G spectrum to mobile phone networks. Huawei is a leading candidate to supply 5G equipment to these networks. Continues on page 38

Chinese President Xi Jinping’s rebuke to Taipei’s approach was said by analysts to reflect a more nationalistic approach © Getty

be considering making the eventual unification of China and Taiwan a hallmark of his presidency with a more nationalist approach. Zhu Feng, head of Nanjing University’s school of international relations, said the promise not to use military power against “Chinese people” to force unification could be seen as “an important development in Taiwan relations” but it still left an opening for military retaliation against perceived

moves towards independence. Since Ms Tsai’s pro-independence Democratic Progressive party (DPP) won Taiwan’s presidency in 2016, Beijing has hardened its stance, conducting livefire naval military exercises in the Taiwan Strait last year for the first time since 2015. In September, China criticised the US for approving a $330m arms sale to Taiwan, the second such weapons agreement with

Taiwan since Donald Trump took office. Beijing has also ramped up pressure on civilian fronts, encouraging international airlines and hotels into referring to Taiwan as part of China. China will “leave no room for any form of Taiwanese independence movement”, Mr Xi said. “The Taiwan problem is a Chinese domestic issue . . . we cannot allow any foreign interference.”

Slowdown fears stalk global stock markets

Wall Street falls as manufacturing contraction in China sets jittery tone to 2019 Michael Hunter, Cat Rutter Pooley and Alice Woodhouse

tock markets across the world started the new year under heavy pressure as deepening concern about a global economic slowdown spooked investors, still shaken by the worst year for equities in a decade in 2018. Wall Street followed European and Asian markets lower after economic data showed a contraction for China’s manufacturing sector for the first time in 19 months. “We believe that the data reflect that not only has the trade war damaged growth in the export sector. It has also hurt export-related supply chain companies and in turn, domestic demand,” said Iris Pang, an economist at ING. “If domestic demand is not supported by fiscal stimulus quickly, then further weakening will pose a risk to job security. That could create a vicious downwards cycle.” The Nasdaq Composite fell 1.7 per cent, with its dominant technology stocks falling at the start of the first session of 2019. The S&P 500 was down 1.5 per cent. As well the weak manufacturing figures in Asia and parts of

Europe, investors have returned from the new year break faced with renewed threat from the trade war between the US and China, the continued US federal government shutdown — now in place for almost two weeks — and the prospect of a disorderly Brexit. Central banks are also tightening monetary policy, ending the era of economic stimulus dating back to the financial crisis and causing further worries over the fate of global markets this year. The combination has meant little respite from the bruising end to last year, with global stocks ending 2018 with their worst December performance since the 1931 depression. In Europe, a broad retreat took the region-wide Stoxx 600 down by as much as 1.7 per cent, setting it back toward the twoyear lows it touched in December. The index pared its losses in afternoon trade, although it remained 0.6 per cent lower for the session. The FTSE 100 was down 0.8 per cent lower. The Hang Seng closed down 2.8 per cent, its biggest single-session fall since October. On the mainland, the CSI 300 slipped 1.4 per cent. Haven assets rose, lifting gold, taking Japan’s yen to its strongest

level in three months and pushing German Bund yields sharply lower. “Evidence of the damage of the trade war is increasing,” said Karen Ward, chief market strategist for Europe, Middle East and Africa at JPMorgan Asset Management. “Investors are still not convinced there are meaningful grounds for compromise between Washington and Beijing. The market now wants to know that there will be a concrete agreement which can stop the downturn in business sentiment before firms start to materially cut back on investment and hiring.” German Bund yields fell sharply as investors moved into the debt, seen as one of the safest assets in Europe. The benchmark 10-year yield fell 9.4 basis points to 0.152 per cent, setting it on course for the biggest single session rally for the paper since September 2016. Haven demand for it increased even as European stocks bounced off their lowest levels of the day. The yen and gold hit their strongest levels in six months. Japan’s currency was 0.5 per cent stronger at ¥109.2 per dollar, while the precious metal added 0.2 per cent at $1,284 an ounce, a price last touched in June.

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

NATIONAL NEWS

EU eyes tougher scrutiny of China cyber security risks...

Denmark shakes up watchdog after Danske Bank scandal

Continued from page 37

“It’s quite a serious strategic problem for the EU and we haven’t properly mapped the exposure,” said one EU diplomat. “The problem is every country is interested in the 5G auction because it’s a massive payday. Once these auctions have happened you need to avoid a situation where you end up with the entire continent being with one [equipment] provider.” The security fears around 5G stem from the possibility that the technology could become deeply embedded in societies through its use for applications ranging from road and rail management to controlling household devices. Diplomats say Brussels could also play a role in vetting and highlighting effective security measures in areas such as equipment supply chain transparency, monitoring and inspections. They stress that taking reasonable precautions need not mean blanket bans on Chinese businesses — though some countries already favour a tough line. Germany last month toughened its rules on foreign investment in sensitive sectors including telecommunications. The western diplomat acknowledged that finding the right way to deal with Huawei and other Chinese companies would be a “complicated matter”. There would not necessarily be a “cut and dried ready-made solution”, given Huawei’s offer of “a reasonably good kit at reasonably good prices”. Andrus Ansip, the top European Commission official on technology policy, has warned that EU countries needed to be worried about Huawei and other Chinese companies, because they could be ordered by intelligence services in Beijing to carry out actions such as building electronic “back doors”. Huawei, whose founder Ren Zhengfei is a former People’s Liberation Army officer, said it was “surprised and disappointed” by the comments. It rejected “any allegation that we might pose a security threat”. Huawei has pledged to invest $2bn to address serious security risks the UK believes exist in its equipment and software. The US, Australia and New Zealand have also restricted the company’s activities on national security grounds. The Chinese foreign ministry said last month that it would be “ridiculous” for foreign authorities to obstruct the “normal operations of businesses” because of “speculations” about security risks. It urged countries to “provide a fair, transparent and unbiased environment for Chinese enterprises seeking investment, operation and co-operation”.

Thursday 03 January 2019

Measures aim to avoid regulator being too close to the banks it supervises Richard Milne

Since WhatsApp began testing its payments feature in India in February last year, it has processed about a million transactions a month © Bloomberg

WhatsApp’s push into mobile payments Messaging app owned by Facebook builds business model on money transfers Madhumita Murgia

or 34-year-old Dipti Vartak, a home baker in Mumbai, WhatsApp is both the quickest way to take orders from her customers and now also the easiest way to take their payments. Since May last year, she has been one of a million Indians testing out a new payments function in the messaging app, which is owned by Facebook. She was already running a lot of her business through the app, exchanging bills, receipts and payment confirmations with customers and suppliers. She saved her bank details, and found she could simply message anybody with the amount to be transferred. WhatsApp Pay, which is facilitated by the Indian government’s secure UPI payments system, transfers funds directly between users’ bank accounts, in real time. “It has really reduced the friction. I just tell people to WhatsApp me, which is easier for them than carrying exact change, too,” she said, adding that about 15 of her customers were paying her through WhatsApp regularly and that she had taken about Rs25,000 ($356) through the platform in six months. For WhatsApp, and Facebook, the payments trial in India is the first step towards tapping a hugely valuable new channel of data: how people are spending their money. Since WhatsApp began testing its payments feature in February last year, it has processed about a million transactions a month, according to

people close to the National Payments Corporation of India (NPCI), the umbrella organisation for all payments and settlements companies. WhatsApp declined to comment on the figure. The company has run into headwinds as it tries to extend the service nationwide, with regulators demanding that its payments data be processed in India, rather than on Facebook’s servers in California. Despite several meetings between Chris Daniels, WhatsApp’s chief executive, and India’s central bank governor since early 2018, the two are in a stalemate that has lasted all year. India is WhatsApp’s biggest market by far, with 210m monthly users, and the company has hired Abhijit Bose from Ezetap, a Bangalore-based payments platform, as its new country chief. It is also advertising for a head of policy to ease relations with the incoming governor of the Indian central bank. During the deadlock, Google has launched its own payments service, and Facebook’s leadership has floated the idea of launching WhatsApp payments in Latin America, particularly in Brazil, the app’s second-largest market. “I think it’s safe to say it’s pretty important for us to launch payments in India,” said one person close to WhatsApp. The economic opportunity for mobile payments in India is huge: there are more than 1bn mobile phone users in the country, and the digital payments market, led by mobile, will grow to $1tn by 2023, according to a report by Credit Suisse. When Prime Minister Narendra

Modi removed 86 per cent of India’s cash from circulation in November 2016, Indian mobile wallet company Paytm was one of the big winners. The company added 20m users in just five weeks after the shock announcement. But just a month later, Mr Modi was urging citizens to use UPI — a groundbreaking payments system that presented a threat to Paytm. Created by the NPCI, a joint venture among Indian banks, the technology dramatically lowered the barriers to entry for payments app developers. It also removed the need for consumers to keep money in a separate virtual wallet, as with Paytm’s main service or with Alipay and WeChat Pay in China. Google was the first big foreign company to jump on the UPI platform, launching its payments app Tez in September 2017. It claims to have amassed 16m users, helping to spur rapid growth in UPI transactions, which reached $2.8bn in February — compared with $534m using Paytm’s virtual wallet and other prepaid instruments. But analysts say WhatsApp will be a bigger threat to Paytm and others entering the payments business. “Based on my knowledge of the payments system in India over the last 10 years, WhatsApp Pay will be viral,” said Ram Rastogi, an architect of the UPI system in India, and former employee of the NPCI. “Indians want something they are used to, in a language they can read and write in. WhatsApp’s willingness to provide services in 13 major languages in India can play a vital role in taking digitisation of payments even to villages.”

ECB appoints administrators to Banca Carige Top management of Italian lender resigns after failure to raise emergency funds Camilla Hodgson

emporary administrators have been appointed to troubled Italian lender Banca Carige after a majority of its board members resigned on Wednesday. The European Central Bank announced the decision to appoint three temporary administrators and a surveillance committee to replace Banca Carige’s board of directors and “take charge” of the lender, after executives quit and the midsized lender missed a deadline to shore up its financial health. Last month the lender failed

to raise an emergency €400m after the Malacalza family, the billionaire shareholders that hold nearly a third of Carige, abstained from a shareholder vote on the turnround plan. The capital call had been an effort to keep the bank afloat after a fraud scandal hit its balance sheet, and the ECB gave it until the end of 2018 to either close a capital hole or find an acquirer. On Wednesday, the ECB said a majority of Carige’s board members — including its chief executive — had resigned. It was necessary to take action to “stabilise its governance and pursue effective solutions for

ensuring sustainable stability and compliance,” the central bank said. The move removes Banca Carige’s independent management and control bodies. The administrators will report back to the ECB “continuously” and take action to ensure it “restores compliance with capital requirements.” Fabio Innocenzi, Pietro Modiano and Raffaele Lener have been appointed as temporary administrators while Gianluca Brancadoro, Andrea Guaccero and Alessandro Zanotti have appointed as members of the surveillance committee.

enmark’s government is to propose measures to avoid its financial regulator being too close to the banks it supervises after concerns of regulatory capture in its response to the giant €200bn money laundering scandal at Danske Bank. Rasmus Jarlov, Denmark’s business minister, told the Financial Times the centre-right government would discuss ways to strengthen the Financial Supervisory Authority at the beginning of the new year. Asked about regulatory capture — the idea that an authority is strongly influenced by the sector it is meant to supervise — and whether Danske was too big to fail for Denmark, Mr Jarlov said: “It’s a fair point and surely it’s something that we are also discussing: how we can ensure that we don’t have ties that are too close between the financial sector and the authorities.” Danske’s money laundering scandal has led to the ousting of its chief executive and chairman as well as criminal investigations in the US, Denmark and Estonia after the bank conceded €200bn of money from Russia and other ex-Soviet states flowed through its tiny Estonian branch in a nineyear period. Howard Wilkinson, the whistleblower and former Danske executive who brought the scandal to light, and others have criticised the Danish FSA’s performance during the scandal, arguing it appeared to try to protect the bank. Attention has also centred on the fact that the FSA’s chairman until May, Henrik Ramlau-Hansen, was Danske’s former finance director. The biggest recent rise in Danske’s share price occurred when Jesper Berg, the current head of the FSA, said that some estimates of the fines the bank was likely to receive were probably inflated. “When you are under heavy scrutiny, to do this smacks of regulatory capture,” said one person involved in the Danske investigation. “We are considering this challenge [of regulatory capture],” said Mr Jarlov. “We have not decided on specific measures. During the beginning of 2019, we will do a lot of work to strengthen the FSA in Denmark, based on the experience of this case and also based on the experience of other countries.” He added: “We have specifically asked for a neighbour check on this challenge: how to have the right balance between getting competent people from the banking sector into the authorities without having [conflicts of interest].” Mr Berg denied there was any regulatory capture at his authority. “I think people who know us just a little bit would know that the integrity in this institution is incredibly high, by any standard,” he told the Financial Times. “We have frankness in our reporting on the bank. You will see there’s a criticism you will rarely find in [our] report [from May] towards the bank, as well as towards our former chairman. We observed all rules in terms of keeping him out of the loop. It was unfortunate for him, it was unfortunate for us, it was unfortunate for the country that he was involved in these events.”

Thursday 03 January 2019

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Pharma finds its feet in fight against climate change As well as reducing emissions, the industry seeks to develop drugs as disease patterns shift Sarah Neville

t Ankleshwar in India, a wind turbine stands against the skyline, generating 30 per cent of the power required to manufacture medicines for French pharmaceutical giant Sanofi. Operated and maintained by Suzlon Energy, it has helped Sanofi reduce its CO2 emissions from the plant by about 3,600 tonnes each year and improved energy security. While EFPIA, the trade body for European pharma, recently noted that the pharmaceutical industry is “generally considered a mediumimpact sector” with regard to carbon emissions, there has been a growing recognition in the past decade that it must do more. Pharma still has a way to go before its performance matches that of some other sectors. CDP, previously known as the Carbon Disclosure Project, which rates companies on their environmental performance to guide investors, included only three pharma companies among the 120 it judged to have the best climate change policies. However, many believe the industry must do more than just address emissions from its manufacturing processes. There is also the vital work to develop medicines that will treat conditions likely to become more common as global warming intensifies. As Ben Norbury, senior environment specialist at AstraZeneca, put it: “It’s absolutely material to our business because climate change threatens to undermine the last halfcentury’s advances in global health.” Chart on the impact of climate change Sandrine Bouttier-Stref, global head of health, safety and environment, said Sanofi was the only healthcare company to sign the Pledge of Paris, supportingthe COP21 international agreement that committed

signatories to work to limit the rise in global temperatures to 2C, a goal that would require zero net greenhouse gas emissions by the end of the century. Between 2010 and 2018, Sanofi has reduced its CO2 emissions by 20 per cent. Among other changes, it has switched from air to sea for the transport of its medicines, saving around 260,000 tonnes of carbon a year, she said. Karen Coyne, global head of environment at Novartis, pointed to the benefits of tackling causes and effects of climate change. “We really need to think about . . . how we can support the kind of environments where we as human beings can thrive. “And then from a financial point of view, improving environmental performance is really a way of creating new shareholder value for our company, through these increased efficiencies and cost savings.” India and China remain challenges for companies seeking to reduce emissions from their manufacturing processes. Jim Goudreau, head of climate at Novartis, suggested companies such as his own could drive demand for renewable energy generation in those regions, acting as “a catalyst for change in the grid”. Dorethe Nielsen, senior director of corporate environmental strategy at Novo Nordisk, the world’s biggest insulin manufacturer, acknowledged that especially in China “they have big challenges in converting their more conventional coal plants to renewables”. For the Danish company’s Chinese facility, “we decided to buy [renewables certificates] from a wind farm in Inner Mongolia . . . and we did that because we do not have a wind farm close to our facilities in Shenzhen”. The lesson, she suggested, is that “you still can go after your target, even though you do not have a wind farm that is close”.

US stock futures point to rough start to 2019 for Wall Street Pan Kwan Yuk

S stock futures tumbled on Wednesday, suggesting that Wall Street is poised for a rough start to 2019 following its worst year in a decade. With about two and a half-hour to go before the opening bell, futures for both the S&P 500 and the Dow Jones Industrial Average were down 1.4 per cent. Those for the Nasdaq 100 dropped 2.1 per cent. Investor sentiment over the past two months has been battered by a range of issues — including US-China trade tensions, rising US interest rates, the partial shutdown of the US government and reports that President Donald Trump had considered trying to remove Federal Reserve chairman Jay Powell. Adding to these worries, data on Wednesday showed that Chinese growth could be slowing, which further fanned fears of a global economic slowdown. A closely watched gauge of Chinese manufacturing contracted for the first time in 19 months amid ongoing trade tensions with America. The disappointing data out of the world’s second-biggest economy triggered an equity sell-off in Asia,

with the Hang Seng closing down 2.8 per cent, its biggest single-session fall since October. “China’s weak PMI is critical for the region,” said analysts at Barclays. “Indeed, China’s NBS PMI weakened to a 34-month low in China, led by weakness in both production and new orders, which in our view signals a weaker growth outlook coming into 2019.” The selling carried through to European bourses. The region-wide Stoxx 600 is down 0.8 per cent after dropping as much as 1.7 per cent earlier in the session and near two-year lows it touched in December. Haven assets were instead in demand. Treasury prices rallied, pulling yields lower. Yield on the benchmark 10-year note fell 4.4 basis points to 2.6451 per cent, the lowest level in 11 months. Gold was trading 0.3 per cent higher at $1,285 per troy ounce while the Japanese yen strengthened as much as 0.9 per cent to hit a seven-month high ¥108.71 per dollar. On the data front, the shortened trading week will see the release of ISM manufacturing data on Thursday followed by the closely watched non-farm payroll jobs report on Friday.

The pharma industry is under pressure to do more to combat its carbon emissions

Crypto funds appeal for patience after market rout Collapse in prices in 2018 shakes faith in the future of digital assets Laurence Fletcher

und managers specialising in cryptocurrencies are appealing for patience from investors, after a year in which huge falls in prices severely dented their performance. Investors poured money into funds trading bitcoin and other cryptocurrencies in 2017, seeking to benefit from a sector-wide boom. But with the price of bitcoin down almost three-quarters last year, mirroring big falls in other digital assets, many investors have tried to head for the exits — prompting funds to urge them to stay the course. In a December letter to investors, San Francisco-based Pantera Capital admitted that 2018 had been “a difficult year for all cryptocurrencies and tokens”. The firm, which was set up by Tiger Management’s former head of macro trading Dan Morehead and which runs more than $500m in assets, has been urging clients to look to the longer-term case for crypto. A year ago the firm predicted the price of bitcoin could reach $50,000 by 2019 — a far cry from its current level around $3,800. “After such a prolonged drawdown in the market, it’s important to reflect and re-evaluate the thesis behind utility tokens,” wrote Mr Morehead and Joey Krug, co-chief investment officer, in the letter. Pantera’s Digital Asset fund is one of the biggest in the sector, gaining almost 150 per cent between

launch in November 2017 and the end of that year. But over the first 10 months of 2018 it was down 77 per cent, according to numbers seen by the Financial Times. A separate fund dedicated to so-called initial coin offerings, a popular method of raising cash for crypto start-ups, fell 75 per cent to October last year, after gaining almost 350 per cent in 2017. “We firmly believe that tokens will achieve real world usage. In fact, it’s already starting to happen in the depths of this bear market,” wrote Mr Morehead and Mr Krug. But they added it could take two to three years for blockchain networks to achieve scale, which would help digital tokens become more widely used. Blockchains are electronic ledgers stored across thousands of computers, protected by cryptography, making them harder to tamper with than traditional stores of information. Pantera did not respond to a request for comment. While crypto-focused funds can in theory bet on both rising and falling prices, most have been reluctant to sell assets short, because of 2017’s sharp price rises or because many managers fundamentally believe in the long-term success of cryptocurrencies. That means many were hit hard by the market crash. Crypto hedge funds on average were down 70 per cent in 2018 to the end of November, according to data group HFR. Galaxy Digital, a crypto and blockchain-focused merchant bank

set up by Mike Novogratz, a former hedge fund trader and Goldman Sachs partner, also found the going tough. Galaxy’s passively-managed Benchmark Crypto Index fund, which charges a 2.5 per cent annual management fee and holds a basket of cryptocurrencies including bitcoin, XRP, ethereum and litecoin, was down 50.6 per cent from launch in May 2018 to the end of October. “The asset class continues to show signs of maturity, as headlines that once would have led to frenzied trading sessions have given way to patient market participants who want to see and react to results, not headlines,” Galaxy wrote in a November letter to investors. Galaxy did not respond to a request for comment. In November Mr Novogratz told the FT that 2018 had been “ challenging” but he has predicted that financial institutions will move from investing in cryptocurrency funds to investing in cryptocurrencies themselves, early this year. “That’s when prices start moving again,” he said. Not all hedge funds have suffered heavy losses. New York-based Systematic Alpha Management’s Cryptocurrency fund, for example, gained 4.3 per cent in the first 11 months of last year. The computer-driven fund trades bitcoin futures and tries to profit from upward or downward trends in prices, meaning it was able to profit during November’s 38 per cent slump in bitcoin against the US dollar.

Faangs under pressure ahead of Wall Street open Pan Kwan Yuk

echnology stocks were among the biggest losers ahead of the opening bell on Wednesday, with the so-called Faang stocks under pressure as investors brace for another day of heavy selling on Wall Street. Futures for the Nasdaq 100 are down 2.2 per cent with about an hour to go before trading begins. Within this, tech stalwarts: • Amazon was trading 2 per cent lower • Apple dropped 1.9 per cent • Facebook shed 2.5 per cent • Google parent Alphabet sank 1.9 per cent • Netflix fell 2.8 per cent

The drops leave each of the five stocks — bar Alphabet — deep in bear market territory, defined as a fall of 20 per cent or more from recent peaks. Having started 2018 as the market’s top performers, notching up successive record highs, the Faangs have suffered a sharp reversal of fortunes in recent months as rising interest rates and the prospect of a global economic slowdown prompted investors to reassess the growth outlook and the valuations for some of America’s biggest tech names. Company-specific problems — ranging from data and privacy scandals at Facebook to iPhone sales concerns at Apple — have also weighed on sentiment.

Underscoring the ferocity of the recent sell-off, Facebook is down about 40 per cent from its July highs. Amazon is off about 26 per cent from its August peak, while Apple and Netflix have both lost at least a third of their values. Alphabet is the relative outperformer, down only about 19 per cent after briefly entering a bear market in December. Chipmakers — which in recent months have also disappointed investors with their outlooks and warnings about demand — were also in the line of fire on Wednesday. Micron Technology was 3.2 per cent lower ahead of the bell. Nvidia and Intel both dropped 2.5 per cent while Advanced Micro Devices shed 2.1 per cent.

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 03 January 2019

ANALYSIS Concerns intensify over food producers’ impact on environment Risks lurk in sector that accounts for a quarter of all global emissions Emiko Terazono

Hydrogen power: China backs fuel cell technology Producers are buying foreign tech but industry must build for future after subsidies Henry Sanderson

tung by the impact of the financial crisis, the hilly city of Yunfu in China’s southern Guangdong province decided in 2009 it was time for a makeover. Known over hundreds of years for producing delicate stones for arts and crafts, the city had few modern industries apart from consumer appliances. So officials decided to lop the top off the surrounding hills and build a 13.4 sq km industrial park focused on fuel cells — a rival technology to internal combustion engines and electric batteries. Attracted by generous government subsidies, a whole suite of companies covering the supply chain have now set up in the park, which is producing hundreds of buses and small trucks using fuel cells that run on hydrogen gas. So successful has it been that local officials now plan to flatten two more hills to create a neighbouring vehicle manufacturing plant and a chemicals facility. “When we moved here it was all barren hills,” says Frank Ma, chairman of Guangdong Nation Synergy Hydrogen Power Technology, walking along a line of bright blue fuel cell buses. “Your first impression [of the area] is that this is not the kind of place to do this kind of manufacturing. [But] this is a special kind of industry in China.” The Yunfu park is the epitome of China’s powerful industrial policy — which is designed to use generous subsidies to develop and dominate emerging industries critical to the “Made in China 2025” shift to highend manufacturing. Beijing has spent an estimated $58.8bn subsidising its electric car industry over the past decade, according to the US-based Center for Strategic and International Studies, creating the world’s largest market for electric cars as well as a dominant position in batteries— surpassing Japan and South Korea. Subsidies have also helped propel Chinese solar makers into the ranks of the world’s largest producers, overtaking competitors in the US and Europe. Now Beijing hopes to do the same for fuel cells — which along with electric vehicles could help decarbonise the entire transportation fleet and reduce China’s vast reliance on imported oil. While fuel cells are

unlikely to compete with batteries for small passenger cars because of the latter’s continued reduction in costs, they could play a role in larger vehicles such as trucks and buses, as well as in ships and trains. “If you look at what China did in solar, in wind and in battery electric vehicles the subsidy tap was opened and it brought a lot of capital and companies to these new markets, which resulted in China being the leader in all three of these segments,” says Randy MacEwen, chief executive of Canada’s Ballard Power, one of the world’s largest fuel cell manufacturers. “We expect to see something similar with the fuel cell industry.” China’s rush into fuel cells could be an expensive gamble, however. The vehicles need to be able to compete without subsidies just as batteries are becoming ever cheaper, quicker to charge and able to hold more energy for the same amount of weight. Tesla chief executive Elon Musk has dismissed fuel cells and hydrogen as “mind-bogglingly stupid”. The drive for volume The power of China’s subsidy machine can be seen in the southern city of Shenzhen, which grew from a fishing village along the Sham Chun river that separates the mainland from Hong Kong into one of its most vibrant cities and home to some of its largest technology companies. Almost the entire taxi fleet uses electric cars made by hometown producer BYD, the world’s largest electric car manufacturer that is backed by Warren Buffett’s Berkshire Hathaway. The buses are also all electric. Almost half of all battery and plug-in hybrid vehicles sold this year will be sold in China. Thanks to government rules that restricted domestic car companies from buying batteries from foreign producers, Chinese battery maker CATL has become the world’s largest producer, overtaking rivals LG Chem and Panasonic. Based in Ningde, in southeastern Fujian province, CATL this year signed deals to sell batteries to BMW and Daimler and announced plans to build a factory in Germany. Just as it was in batteries five years ago, China is a laggard in fuel cells, behind Japan and South Korea as well as the US and Europe. Toyota has consistently bet on the technology and launched its first fuel cell car, the Mirai, in late 2014, It sells for about £65,000. Hyundai’s Nexo fuel cell model goes on sale this year for

a similar price. To overcome that laggard status, Chinese companies last year began a concerted effort to acquire and integrate foreign technology. In May BYD announced it was working with the US Hybrid Corporation on a hydrogen-powered fuel cell bus to run in Honolulu airport. And in November Weichai Power, China’s largest state-owned diesel engine maker, spent $184m on a 20 per cent stake in Ballard. This month Weichai also paid £48m for a 20 per cent stake in UK-based fuel cell maker Ceres Power. Phil Caldwell, Ceres chief executive, says the size of the Chinese market was too big for his company to ignore. The company plans to transfer its technology to Weichai and jointly invest in a manufacturing facility in eastern Shandong province. The fuel cells will initially run on buses using compressed natural gas before the hydrogen infrastructure is built, he says. “While we talk a lot about these technologies in Europe the Chinese government is actually pushing ahead,” Mr Caldwell says. “They can create the market and create the demand and drive these technologies down the cost curve.” Ballard says its joint venture with Weichai will aim to make at least 2,000 fuel cells a year for commercial vehicles by 2021 — the largest planned deployment to date. The company says the total cost for customers to buy and operate a fuel cell bus will be the same as for a batterydriven vehicle by 2020. “If you look at the costs we’re [currently] at a premium [compared] to battery electric vehicles,” says Mr MacEwen. “What hasn’t happened yet in the fuel cell market is the power of volume. China is a market that has proven that with subsidies they will drive production capacity and volume and see significant cost reductions.” Making 2m vehicles Benny Oeyen, a former executive for General Motors in Shanghai, stands next to a fuel cell bus made by Feichi Bus in Yunfu and watches the water come out of the exhaust pipe. “I think this is the answer to the energy challenge of mankind,” says Mr Oeyen, now head of market development for platinum group metals at Anglo American. “It’s no longer pie-in-the-sky PowerPoint presentations.”

he world’s biggest purchaser of beef is watching the plantbased meat market. “Plant-based protein is something we’re keeping an eye on as we start to think about the opportunities there and growth in that space,” Lucy Brady, McDonald’s senior vice-president of corporate strategy, told a women’s conference in California hosted by Fortune magazine in December. It is hardly a surprise that the popularity of meat alternatives has caught the attention of the leading fast food company. An increasing number of large food and agricultural companies have been investing in alternative protein groups — US meat group Tyson Foods has taken a stake in plant based meat company Beyond Meat, leading agricultural trader Cargill has invested in cellular meat start-up Memphis Meats and Unilever bought a Dutch plant-based food company, Vegetarian Butcher. The consumer trend described by food and marketing executives as a “paradigm shift” seems to be driven largely by concerns about health and weight loss, but it comes as worries increase over greenhouse gas emissions from agriculture and food production. Over the past four to five years, the spotlight on agriculture and food industries’ impact on the environ-

unstandardised and unverified,” the network warned in a report. FAIRR, whose members include leading asset managers such as Aviva, Schroders and University of California’s investment assets, also pointed out that most of the sector was putting long-term growth at risk by failing to invest in alternative protein businesses. Only five out of the 60 groups have backed plant-based meat alternatives grown in laboratories as well as dairy alternatives. These include Tyson, Hormel Foods, Canada’s Maple Leaf, China Mengniu Dairy and Vietnam Dairy. The investor network in a separate report said that of the 16 global food companies — both manufacturers and retailers — only six — Marks and Spencer, Tesco, Walmart, General Mills, Nestlé and Unilever — have targets to reduce supply chain emissions from livestock agriculture. Some companies are looking to technology to alleviate the livestock emissions problem. Changes in feed, vaccines and selective breeding are being tested as ways to lower the livestock emissions of methane, a potent greenhouse gas whose comparative impact is more than 25 times greater than carbon dioxide over a 100-year period. Cargill, partnering with natural feed ingredient companies, is testing different feed mixes and their effects on methane gas production in a simulated cattle stomach. Start-ups such as Swiss company Mootral has created a natural feed supplement using garlic

The spotlight on agriculture and food industries’ impact on the environment has intensified in recent year

ment has intensified amid fears over the prospect of population growth and food demand driving crop and livestock cultivation. “You can see there is a path to greatly reduce emissions in energy and transport and all of a sudden agriculture emissions look big. Off the agricultural total, livestock is the big factor,” said Channing Arndt, director of environment at the International Food Policy Research Institute, a developmental think-tank. Food and agricultural production accounts for about a quarter of all global emissions, with two-thirds of that coming from the livestock sector, according to data from the UN Food and Agriculture Organization. Amid that backdrop, leading institutional investors are raising their concerns about the risks of investing in the food and agricultural sectors. Farm Animal Investment Risk and Return (FAIRR), an investor network that advocates sustainable animal farming backed by 180 fund managers with assets of $10.5tn, said 70 per cent of the world’s 60 largest publicly listed meat, dairy and aquaculture producers are failing to manage climate risk. “Across the animal protein sector, reporting and management of greenhouse gas emissions is inadequate,

and citrus extracts while others are turning to seaweed. To combat other causes of agricultural emissions, large seeds and chemicals groups are also turning to innovation and R&D. Companies such as Bayer are launching insecticides that can tackle a range of pests and caterpillars, as well as seeds developed to increase yields and work with crop protection tools. Microbes are among the cuttingedge technologies in agriculture, where companies hope to cut the use of synthetic chemicals such as pesticides and fertilisers to protect plants as well as increased yields. According to scientists, increased fertiliser use over the past 50 years is linked to a dramatic rise in atmospheric nitrous oxide, a leading greenhouse gas contributing to global climate change. Industrial biotechnology group Novozymes and US agritech start-up Indigo are among those with products that coat seeds with microbiomes, while Pivot Bio has launched a microbial product that adheres to the root and delivers nitrogen to the plant. However, analysts point out that many of the companies are reacting to the farmers’ need to cut costs and use less inputs than being driven by a desire to be environmentally friendly.

Thursday 03 January 2019

www.businessday.ng

www.facebook.com/businessdayng

@businessDayNG

@Businessdayng

BUSINESS DAY

42 BUSINESS DAY NEWS

www.businessday.ng

www.facebook.com/businessdayng

@businessDayNG

Foreign investors pessimistic about economic outlook of SSA economies, AT Kearney says ISRAEL ODUBOLA

DI Confidence survey carried out by AT Kearney, an American-based global management consulting firm, discovers that foreign investors have optimism about the global economic outlook of Asia-Pacific, European and American markets, but a large chunk of them have mixed feelings about the economic outlook of Middle East and North African economies, and are expecting the worst possible outcomes in sub-Saharan Africa (SSA). Africa is being pictured as a poor destination for foreign investment given its negligible share in global FDI inflows. BusinessDay analysis of the 2018 World Investment Report found that FDI inflows to African

markets slumped by 21 percent in the last two years. Africa accounted for 2.9 percent of global FDI inflows, the report showed. James Zhan, UNCTAD director, Division on Investment and Enterprise, attributed the drop in FDI inflows to weak oil prices and harmful ongoing macroeconomic effects from commodities bust in most African economies. Since the inception of FDI confidence ranking in 2012, no African economy has broken the jinx to join the league of the world’s most attractive destinations for FDI flows. AT Kearney FDI confidence index tracks how political, economic and regulatory changes will likely affect FDI inflows into countries. The index ranges between 0.00 and 2.50. The top five performers are USA (2.09),

Canada (1.82), Germany (1.81), United Kingdom (1.77) and China (1.76). USA retained its position for the sixth time as the number one attractive destination for FDI flows. As noted by Paul Laudicina, chairman, Global Business Policy Council, foreign investors take pleasure in directing their investment to countries with large domestic market, better economic performance and lower corporate tax rates. About 37 percent of foreign investors are currently maintaining their existing investment in emerging markets, 29 percent have existing investment and are seeking new investment opportunities, and 16 percent have currently invested but seeking to divest. However, their investment decisions are driven majorly by availability of

funds, availability of quality targets, macroeconomic environment and foreign exchange dynamics. Foreign investors’ decisions are also tied to political risks, particularly on governance factors such as corruption, ease of doing business, and security and regulatory quality. These institutional criteria added to the unattractiveness of developing and emerging markets to receive FDI inflows. African countries can take cue from the most attractive nations for FDI such as United States, United Kingdom, Germany, China and Japan, whose strengths emanate from stronger and sustainable economic growth, larger size of domestic economy, lower tax rate, high receptiveness to trade, full integration to global market and functional business environment.

An empty road at the Federal Secretariat as workers resume after the New Year holiday in Abuja, yesterday.

We are not aware of N15.89bn for payment of outstanding salaries - ASUU KEHINDE AKINTOLA, Abuja

resident of Academic Staff Union of Universities (ASUU), Biodun Ogunyemi, has denied knowledge of the N15.89 billion purportedly released by Federal Government for the payment of outstanding salaries of lecturers. Ogunyemi’s position was in reaction to the statement credited to Chris Ngige, minister of labour and employment, during an interview granted in Anambra State at a Christmas/New Year celebration. Ngige was quoted as saying that the money was released on the eve of the New Year (Monday) to the universities. According to the ASUU president, there was no way such money released to the

Union, which is not spending agency of government. He however noted that such fund could have been released to university authorities for onward disbursement to ASUU members. Nonetheless, “Nobody has informed us that the money has been released,” Ogunyemi told BusinessDay via a telephone interview. On the ongoing negotiations to end the nationwide strike, he maintained that no date had been fixed to reconvene the negotiation meeting between Federal Government team and ASUU, despite assurances from the minister to meet with ASUU this New Year. According to Ogunyemi, “No meeting was held after the last meeting where it was reported that we walked out.” When the meeting reconvenes, Federal Government

has the moral burden to justify some of the acclaimed progress made to resolve the impasse, beyond the promises made, he said. Some of the demands of ASUU include: Waiver for the establishment of Nigerian Universities Pension Management Company (NUPEMCO); revitalisation funds for varsities and payment of Earned Academic Allowances (EAA) for lecturers, senior staff and other workers. On the preparation for the 2019 general elections, he confirmed that the chairman of Independent National Electoral Commission (INEC) had proposed to meet with ASUU in respect of the forthcoming general elections and the ongoing industrial action. The meeting is scheduled for January 4, 2019, he said.

@Businessdayng

Thursday 03 January 2019

Akwa Ibom, Plateau have highest HIV patients in Nigeria - NBS BUNMI BAILEY

kwa Ibom and Plateau states had the highest number of Human Immunodeficiency Virus (HIV) patients in 2016, while Ekiti recorded the least, according to a Social Statistics report released January 1, 2019, by the National Bureau of Statistics (NBS). BusinessDay analysis of the NBS report shows that out of a population of 5.4 million in Akwa Ibom that year, there were 227,028 people with HIV, followed by Plateau with 212,600 HIV patients out of a population of 4.2 million. Ojo Sikiru, a medical practitioner based in Lagos, said that the internal crisis and the disputed economics of the two states may have attributed to the states having the highest HIV patients in Nigeria. “The crisis in Akwa Ibom which is usually from internally displaced persons from the Cameroon borders and the Fulani herdsmen crisis usually lead to an increase in diseases like sexually transmitted disease and HIV,” Sikiru said by phone. “Once there is a disruption in an economy it affects the livelihood of people. There will be no access to drugs, awareness and counselling. And it may also force them to look for another source of income, for example, prostitution which will increase the transmission of the virus,” Sikiru further explained. On a national level, the number of HIV patients in Nigeria increased by 3.2 percent to 3.2 million in 2016 from 3.1 million in 2014, according to the re-

port. The rise in HIV infestation could be reduced with proper management of funds budgeted for the purpose, says Doyin Odubanjo, Chairman, Association of Public Health Physicians of Nigeria. “There is a lot of mismanagement of funds and a lot of things that need to be done to control the virus are not taking place. Companies that were given contracts for HIV awareness, counselling and investments are not in existence. So you should not be surprised that the virus is on an increase.” HIV is a virus that targets and alters the immune system, increasing the risk and impact of other infections and diseases. Without treatment, the infection might progress to an advanced disease stage called AIDS. According to the World Health Organisation, the higher a person’s socioeconomic status (SES), the more likely they are to enjoy good health, good education, well-paid job, and afford good healthcare. It is one of the indices that determine productivity of a county’s labour force, which in turn leads to the growth and development of the economy. The main sources of data for the NBS report are Federal Ministry of Health, National Agency for Food and Drug Administration and Control (NAFDAC), Medical and Dental Council of Nigeria, National Agency for the Control of AIDS/HIV, National AIDS and STDs Control Programme, National Malaria Elimination Programme and Nigeria Centre for Disease Control.

Edo awards contract for refurbishment of 230 primary schools

do State governor, Godwin Obaseki, has approved the contract for the refurbishment of 230 primary schools across the state, to provide for conducive learning environment for pupils in the schools. Special adviser to the governor on media and communication strategy, Crusoe Osagie, said this in Benin City, the state capital on Wednesday. The state government is committed to making learning pleasurable for pupils in the state, Osagie said, adding that the review of a list of another 230 primary schools is in progress, after which contracts for their refurbishment will be awarded. According to Osagie,

“The governor has approved the contract for the renovation of 230 primary schools in the state. This is in furtherance of his commitment to ensuring that students in the state learn in a conducive environment. “It is also coming as the State Universal Basic Education Board (SUBEB) is set to roll out the Edo Basic Education Sector Transformation (Edo-BEST) in more schools across the state. “With the award, contractors are expected to be on site working on the schools. As that is ongoing, we are also in the process of compiling another batch of 230 public primary schools for which contracts would be awarded in the first quarter of 2019. This will bring the

number of schools marked for renovation to 460.” An audit of another 800 schools is also ongoing, after which schools found to be in need of renovation would be added to the 460, he said, noting that the state government is not going to leave any school behind in the rollout of the renovation programme. “We are committed to ensuring that the schools in Edo State are in good shape. We have had to take our time to do this because we wanted the School-Based Management Committee (SBMC) to be in place so they can play a critical role in ensuring that the schools are well run and that whatever is provided for the schools are not vandalised,” he said.

Thursday 03 January 2019

www.businessday.ng

www.facebook.com/businessdayng

@businessDayNG

New Year - same story as stocks shed 1.15 % SEGUN ADAMS

he excitement of the New Year may have become dampened for many investors as the opening trading session for the year closed on a bearish note following continued selloff in market bellwethers. Dangote Cement was down by 1.95 percent while Nestle lost 0.67 percent in the day’s trade. The NSE All Share Index, which opened for the year January 2, 2019, at 31430.5 points dropped 1.15 percent to close at 31070.06 points as investors lost N134.41 billion. Diamond Bank, Sovereign Trust Insurance and Access Bank were the most traded stocks for the day. “I think what we would see mixed performance in the market over the short

term. On the part of the bulls we would be looking at early positioning in fundamental stocks ahead of full year 2018 dividend declaration while the bears would be looking at continued profit-taking owing to the political risks in the economy,’’ Gbolahun Ologunro, a Lagos-based analyst at CSL Stockbrokers Limited, explained. “A rally is expected after the election period, which would coincide with release of full year report by firms and their dividend declaration. We expect the rally at the end of Q1, around April provided oil prices remain above at least $50 per barrel,’’ he said. Advancers for the day were led by Julius Berger, which gained 9.95 percent to close at N22.10. Vitafoam, which declared its first profit in two years for 2018 maintained its price rally as its share price appreciated

by 9.55 percent to close at N4.82 per share. Royal exchange followed closely as it share price gained 9.09 percent to close at 24k per share while Union Diagnostics and Custodian insurance gained 8 percent and 7.96 percent each to close at 27k and N6.10 per share, respectively. The laggards for the day were Equity Assurance, down by 9.09 percent to close at 20k per share, Nigerian Breweries which shed 8.42 percent to close at N78.30, Law Union which lost 8.33 percent to close at 55k per share while Honeywell flourmill and Champion Breweries each lost 7.81 and 7.54 percent to close at N1.18 and N1.84 per share, respectively. Across sectors the performance was bearish as four out of five sectors covered closed in the red. Banking sector gained 0.08 percent

while Insurance (-1.31%), oil and Gas (-0.66%), Consumer Goods (-2.30%) and Industrial (-1.20%) performed below par to exert downward pressure on the All share index. The equities market in 2018 fell 18 percent as investors fear priced into the market. Political uncertainties associated with the coming elections and growth in the US economy saw a reversal of 2017 strong bullish run which earned the local bourse a place in the top three equities market globally and the best performing bourse in Africa for the year. The 2018 market, which initially rose by more than 17 percent around mid-January where it peaked, entered correction in April and the sell-off persisted as the All share index plunged further into the year, with investors losing N1.89 trillion at the end of the year.

Ifeanyi Okowa (l), governor, Delta State, receiving a gift from Reginald Bayoko, head of civil service, Delta State, during a courtesy call on the governor by head of service and permanent secretary, in Delta State.

@Businessdayng

43 NEWS

BUSINESS DAY

Real estate investors seen walking tight rope in 2019 CHUKA UROKO

esides macro-economic issues that have kept the Nigerian real estate sector in negative growth territory since the last quarter of 2016, political risk is one significant factor that will make investors in this sector walk a tight rope in 2019. All things being equal, Nigeria will be holding its general elections in February and March this year, and the frenzied preparation for the elections has not only sent governance on holiday, but has also put most business and economic activities on hold. This means that consumers of real estate products and services are also on holiday. Already, the uncertainties and risk factors around these elections have forced investors to adopt watch-and-see attitude to investment, believing that if the electoral process does not go well and there is unrest in the system, the recession in the real estate sector will continue. Expectation is that the slowdown in business activities will lead to a drop in demand for new space, especially for offices or business premises. What this means is that new investments are not advisable while ongoing and completed projects will have increased shelf life, piling pressure on investors who may be exposed to bank credit. Politics and elections have always impacted investments in real estate sector. MKO Balogun, CEO, Global PFI, is of the view that the sector will not record any meaningful activities before June this year, explaining that until a new president is sworn in and government’s policy direction known, no investor, local or foreign, would make any fresh investment.

“It is going to be a tough time for all players in this sector, particularly developers and service providers, because I don’t foresee any meaningful activity happening before the end of the first half of this year,” Balogun said in an interview. Jide Ogunleye, CEO, Denaro Properties, affirms, saying, “as a developer, I have already started getting feedback as regards the forthcoming election. If the election goes on peacefully, and regardless of the political party that wins and there a peaceful transition, it is going to hold well for the real estate sector.” The real estate sector has always responded one way or another to politics and elections in the country and Ogunleye reasons that the 2019 general elections will have much impact on the direction the real estate will take. Since Nigeria slipped into recession in 2016, real estate has been in recession even after the wider economy exited recession in the second quarter of 2017. Though still in the negative growth territory, figures from the National Bureau of Statistics shows that the sector was upbeat in the last two quarters of 2018. This does not, however, give investors enough comfort for fresh investments. Technology is another major factor that investors have to grapple with in this New Year. Already, as seen in the financial sector where fintect (financial technology) is dictating and pointing the way, proptech (property technology) is, increasingly, assuming the new backbone of real estate transactions. What this means is that traditional real estate investors, particularly developers, have the challenge of being both creative and innovative as necessary steps to transiting to the technological way of doing things.

Nigerians lament over missed US visa interviews after embassy closure Obaseki assures new Police commissioner of to their tweeter handle to laThis development is support, charges him on new security architecture IFEOMA OKEKE & INNOCENT ODOH ment that they have missed coming few days after the

igerians who had applied for United States visas and whose interviews fell between December 28, 2018, and January 2, 2019, are lamenting missing their appointments after an earlier announcement by the US consulate that it would be closed. This is as the embassy yesterday disclosed that they would remain open for interviews during the US shutdown. Nigerians who had expressed fears after the earlier news are now expressing some relief after the recent announcement by the consulate. Some people have taken

their visa interviews over the earlier announcement by the US Embassy. “Thousands of people scheduled today for interview have been disenfranchised already with this conflicting news. Money lost, no Visa they are just ripping us off legally,” Akewu stated in his tweeter handle @Akewu2. Another person with a tweeter handle @shamrock80s, tweeted “This is so sad. I got the shutdown news and I had to cancel my trip to Abuja this morning. Now this news just popped up from no way, how do I fly from Akwa Ibom to Abuja to attain my interview scheduled for 7.30am? This is so mean.”

United States embassy in Abuja and its consulate in Lagos said it had shut down with no specific timelines for re-opening. In a Facebook post on 28th of Decemeber, 2018, the embassy said that the development was caused by the government shutdown in the US. The Facebook post read, “Due to the current US government shutdown, the American centres located in the embassy, Abuja and Consulate-General, Lagos are unfortunately closed. They will re-open once the US government shutdown is resolved. Sorry for any inconvenience to our valued patrons.”

do State governor, Godwin Obaseki, has assured the state’s new commissioner of police, Hakeem Olusegun Odumosun, that the Edo State Security Architecture will guarantee well-coordinated policing that will benefit from input from relevant stakeholders, especially local communities in the state. Obaseki gave the assurance during a courtesy visit by the state’s new commissioner of police, at Government House in Benin City, the Edo State capital, on Wednesday. The governor also noted that a permanent emergency response centre, where activities of the new security architecture will be coordinated,

will be ready before the end of the first quarter of 2019. He said, “We are building an emergency response center to be ready in the quarter of this year. For now, we will set up a temporary center to coordinate all the activities of the operatives under the new security architecture recently launched in the state.” The governor commended the outgoing police commissioner, Johnson Kokumo, for his cooperation and support in birthing the security architecture, which has made the state safer for citizens. He said the security trust fund would be managed transparently, urging Edo people and residents in the state to support and contribute to the

fund. “We can’t secure the state alone without the support and cooperation of Edo people. The security information management system, which Kokumo has helped the state to set up is vital. All the information in the database will help in understanding the incidence of criminality in the state as well as assist in policing the state. “The system has been launched. In the next few days, officers that will be coordinating the Security Trust Fund, operationally, will be made public. Also, those that will be in charge of the Public Works Volunteers (PUWOV) will be made known. The formal fundraising of the security trust fund will be done,” he said.

BUSINESS DAY

NEWS YOU CAN TRUST I THURSDAY 03 JANUARY 2019

www.businessday.ng

facebook.com/businessdayng

@Businessdayng

Opinion Years of spreading luck: Everyone needs a little help

n business the role luck plays in success and personal achievement is rarely discussed. If luck is mentioned, it is done with slight condescension, and usually dismissed as a product of hard work, not deserving significant attention. While hard work is paramount – and I have written extensively about the importance of working hard – history and my own experiences show that there is often a large element of success that hard work alone cannot explain. It is simply not true that “you make your own luck.” I started my career as a salesman, a copier salesman to be specific, young, hungry, and hardworking, but the reality was that I was just one of thousands of young Nigerian graduates, all eager to succeed. How did I get from there to where I am now? Of course, hard work, resilience, a long-term vision – but also luck. A year later after earning my Master’s degree in Economics from the University of Lagos, I applied to join a new generation bank, Allstates Trust Bank. The bank’s one-page newspaper advertisement demanded a minimum 2:1-degree, but I applied regardless, submitting a cover letter and filled out application with my 2:2-Economics degree. By a stroke of luck, my application was reviewed by the Chairman/CEO, a painstaking man who carefully read my

cover letter and was drawn to the confidence in my words. “I know I may not have met the qualifying criteria for the advertised roles, but I am intelligent, driven, ambitious and I will make the bank proud. My 2:2 degree does not demonstrate the full extent of my intelligence and ability, and I know I can do so much more.” He read those words and took a chance on me. Though “unqualified”, he decided to throw me a lifeline, an opportunity. I was invited to join the shortlist, followed by a long series of interviews and even more tests. At the end of a very rigorous process, I received good news – I had a place as an entry level analyst. Even now, I wonder: What if the founder had not personally gone through my application? What if my application was rejected at the very beginning? What if I never got the opportunity to work at Allstates Trust Bank? The story continues: within 12 months at the bank, aged 27, I went from analyst to branch manager – the youngest ever bank branch manager at the time. I was hard working, energetic, creative and prioritised getting things done, but it was also good fortune that my bosses Toyin Akin-Johnson and Ebitimi Banigo took notice, and then, believed in me. They took a chance on me by appointing me as branch manager after an incredibly short time in the bank. They

recognised in me the raw materials needed to make a good leader and were prepared to invest in me and my ability. My rise to Branch Manager within a short period is a great story but I know in my heart, I was lucky, as well as deserving. This position of branch manager was a solid platform which launched me into sev-

‘

I made a vow that through the Tony Elumelu Foundation, I would “institutionalise” luck and democratise access to opportunities for young Africans. I promised to leverage the success I have enjoyed, to spread luck and hope, provide opportunities and to empower the next generation of African entrepreneurs to succeed

eral top leadership roles. When we, a small group of hungry, determined, young outsiders, took over struggling Crystal Bank, it was as a direct result of the preparedness and exposure that we received early from our superiors and mentors. Without the intervention and goodwill of these people in my career, I would not have been prepared as I was to take on far greater roles. These learning opportunities laid the pathway to future achievements. Put simply, I was lucky enough to be identified and trusted so early on in my career, and this put me on a unique road to success. I keep this in mind – it is humbling and also drives much of what I do today. When I left UBA as Chief Executive Officer (CEO) in 2010 to pursue other interests, I made a vow that through the Tony Elumelu Foundation, I would “institutionalise” luck and democratise access to opportunities for young Africans. I promised to leverage the success I have enjoyed, to spread luck and hope, provide opportunities and to empower the next generation of African entrepreneurs to succeed. Without luck in my early career, I would not be the man that I am today. I am a leader and philanthropist today because I encountered people who gave me a chance early in my career. It has been a lifetime goal to pay this forward in a transformative and impactful way.

Over the past three decades I have spent as a banker, investor, and turnaround expert, I have had the opportunity to meet thousands of entrepreneurs, like me. Many of them young people, with incredible dreams and business ideas but without the experience or the access to mentoring and support required in order to build successful businesses. But most importantly, they have not yet been exposed to the right opportunity. Our entrepreneurs are hard at work across the continent, identifying gaps in the market for specific products and services, and bridging these gaps with their innovation and ingenuity. Yet, many of these budding entrepreneurs often lack the capital, the networks, the training, the support to take their small business to national or regional scale. All they need is a helping hand, some luck, someone to believe in them and take a chance on them. This is what the Tony Elumelu Foundation offers: a platform that empowers African entrepreneurs– from business management training, to mentoring, to funding to networking – championing their cause and giving them a global voice to actualise their ambitions. This is precisely why I launched the USD$100 million Tony Elumelu Foundation Entrepreneurship Programme to empower the next generation of African entrepreneurs.

Indeed, these may be the next UBAs (United Bank for Africa). So, when I am asked, “Tony, why are you and your family doing this? What is in it for you?” I smile and recount my own story of luck. Luck is real, it is powerful, and I am committed to spreading it as far as I can. I am a beneficiary of luck, and I am passionate about sharing it across the continent, to all 54 countries. I want our young aspiring entrepreneurs to apply. I want you to be a part of this global movement for good. I encourage you to be bold enough to let luck find you. There will be 1260 places open from January 1, 2019. Will you be among the lucky ones this year? Take a chance on yourself. Your future may begin today. Apply now at TEFCONNECT.COM

million as part of a deal to reduce the hefty fine of over $5 billion imposed on MTN by the NCC for contravention of a SIM registration directive. Despite being cleared by the Presidency, MTN got the fine reduced and the issue has long been settled with the Nigerian authorities. So complete is the takeover of the government by this shadowy group that even Buhari’s wife felt completely sidelined and left out of the scheme of things that she was forced to take the unprecedented step of going public with her discontent. She has variously accused a powerful cabal of hijacking her husband’s government. But despite this take-over, no one is effectively and totally in charge of the country meaning constant clashes among and between these shadowy figures has continued to define this administration. The war between the Economic and Financial Crimes Commission, EFCC, and the Directorate of State Security, DSS, then headed by his kinsman, was well known and could never have happened were the president in charge of his administration. Twice the president sent the name of Ibrahim Magu as substantive Chairman of the EFCC to the Senate and twice, on the advice of the DSS, the Senate rejected his nomination. Buhari had tried but failed to mediate in the war

and hasn’t been able to rein them in. Worse is that now, virtually every appointee of the president (or technically appointee of the powers behind the president) now exploit the obvious weakness and incapacity of the president to pursue selfish personal agenda. As the case of the IGP show, they openly disrespect, disregard, disobey the president and the president appears incapable of calling them to order. How much worse can it get for a country? The bigger picture however, is the threat posed to Nigeria’s democracy by the constant hijack of power by an unelected and shadowy cabal who, though wields great powers, are not accountable for the powers they wield. As a political economist and public commentator asserted sometime ago, “nothing undermines democracy and good governance more than shadowy people who wield so much power but are unaccountable.” In saner climes, parliament, who constitutionally performs oversight functions on the executive, will publicly name and quiz such individuals and protect the Presidency from being hijacked. But how do we expect Nigeria’s two-chamber parliament to perform such functions when even the heads of these chambers are more engrossed in political and party fights to retain their offices?

TONY O. ELUMELU Elumelu is the chairman of Heirs Holdings, United Bank for Africa, Transcorp and founder of The Tony Elumelu Foundation.

The authority vacuum in Nigeria

CHRISTOPHER AKOR Chris Akor, a First Class graduate of Political Science, holds an MSc in African Studies from the University of Oxford and is BusinessDay’s Op-Ed Editor christopher.akor@businessdayonline.com

arlier in the year as herdsmen ran over communities in Benue state, killing men, women and children with reckless abandon, president Buhari reluctantly directed the Inspector General of Police to relocate to Benue state to stop the killings by herdsmen in the state. The IG disobeyed the president’s orders. He went there but stayed only 24 hours in Benue and left. Whereas that information was public knowledge, it took the president two whole months to discover that the IG disobeyed him and he only got to find out when he eventually visited Benue state. “It is only now that I am hearing this. But I know that I sent him here, Buhari retorted in shock to General Atom Kpera (rtd) who pointedly challenged him that the IG did “not do the work you sent him. He stayed for

less than 24 hours in Benue and relocated to Nasarawa, and then said what he saw was a mere communal clash...” For me that was the final piece of evidence I needed to conclude that either Buhari is perniciously deceptive or he is not in charge of the country, completely walled off from Nigerians, as it were, and only knows what those who caged him wants him to know. If it is the latter, then Nigeria is clearly an acephalous state with shadowy and divergent figures exercising different aspects of presidential powers. But I was ready to give him the benefit of the doubt if he could discipline the IG. But nothing of that sort happened. In fact, while the President’s media team were trying to impress the public that disciplinary actions were being taken against the IG, the IG issued a statement rubbishing that claim. Till date, nothing has been heard of the matter and the IG retains his position and has even been given the green light to continue even when his retirement is due. In the run-up to the presidential election in 2015, my main worry was not about Buhari but the shadowy person(s) behind Buhari who will wield real power and authority in the country. I was not deceived. Those fronting Buhari were aware of his shocking lack of knowledge and incapacity to govern a complex and diverse country

like Nigeria. But they found his near mystical reputation indispensable to capturing power and they rode on it to get to power. They didn’t disappoint. Right from the beginning and despite public assumption that Buhari was in charge, those figures took over, exploiting the President’s ignorance, lack of understanding of economics and most complex issues of governance, as well as vulnerability due to old age, to completely take over governance and policy decisions in the country. What makes the takeover by this shadowy group more complete is the tendency of the President, a highly provincial man himself, to over-trust and over-delegate authority to his close aides and associates – appointed or not – who are mostly his relatives and or people from his part of the country. Stories abound of these powerful individuals determining by fiat key appointments. It is an open secret in the country that what is needed for a job, a connection or contract with the government is to get to meet a member of this powerful group. President Buhari empowered this group early in his administration to be the clearing house and policy centre of his government. If there was any doubt as to the role of this powerful group, the President himself cleared that doubt during a retreat organised by the Presidency

for the then Ministers-designates. The President ordered that “all communications and appointments from you (ministers) to the Presidency should be routed through the office of the Chief of Staff as it is the normal (procedure) in this presidential system.” In effect, ministers are not allowed access to the President and must pass any communications through his Chief of Staff and also receive instructions through that same medium. One can only imagine how powerful Abba Kyari has become since then. Naturally, and as is usual in our climes, this untrammelled and extreme power without accountability breeds corruption. There was a strong allegation that Abba Kyari demanded and collected N500

‘

The bigger picture however, is the threat posed to Nigeria’s democracy by the constant hijack of power by an unelected and shadowy cabal who, though wields great powers, are not accountable for the powers they wield

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.