BusinessDay 03 Jul 2019

Airtel raises N14bn from Nigerian market, 26% of target …Investors in ‘wait-and-see’ mode Iheanyi Nwachukwu

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irtel Africa plc was able to raise about N14 billion ($38.3 million) from its recent initial pub-

lic offering (IPO) in the Nigerian market, sources tell BusinessDay. Airtel Africa, a unit of India’s Bharti Airtel Limited, after listing on the London Stock Exchange (Prima-

ry Listing) intends to list its shares on the Nigerian Stock Exchange (Secondary Listing) on Thursday, July 4.

Ahead of the listing on Continues on page 38

L-R: Kayode Adegbola, director, government and regulatory affairs, Gokada; Eghosa Isibor, director, public policy, Gokada; Governor Kayode Fayemi of Ekiti State; Ayodeji Adewunmi, co-CEO, Gokada, and Kanayo Okoye, director, public policy, Gokada, during a courtesy call to the governor in Ekiti, yesterday.

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NIGERIA’S FARMER-HERDER CONFLICT

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Restructuring DisCos is first step in fixing a broken power sector

Ruga initiative may hamper government’s agribusiness drive – Experts I

ISAAC ANYAOGU

Ghana holds lessons for Nigeria in herdsmen management

CALEB OJEWALE ransforming agriculture to agribusiness has been one of several rhetoric of the Federal Government in recent years. However, the decision to establish what it calls Ruga settlements for herdsmen appears to be yet another state intervention in what should be business-driven and private sector-led.

Government, agric stakeholders say, should be focused on creating an enabling environment and enforcing law, order, and security for the investments

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Continues on page 38

Mele Kolo Kyari (m), incoming group managing director of NNPC, flanked by Obinna Ufudo (l), Nestoil group executive director, and Chukwueloka Umeh, at the on-going Nigeria Oil and Gas Summit in Abuja.

Analysis

n their current situation, no investor will pay $1 for any of Nigeria’s 11 electricity distribution companies (DisCos). In fact, any serious investor would have to be paid to take them but even then, they probably would still not be attractive. Not with a balance sheet where contingent liabilities far exceed assets.

This situation has led to calls for a radical restructuring of DisCos who are now technically bankrupt, and maintain a semblance of existence only on Continues on page 38

Inside Nigeria counts losses as delay in ministerial appointments hits investors P. 2

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news Yahaya, Abaribe, Kalu, others emerge principal officers of Senate …as upper chamber constitutes committee on Legislative Agenda OWEDE AGBAJILEKE, Abuja

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enate President Ahmed Lawan on Tuesday announced the names of eight other principal officers of the upper legislative chamber.

The lawmakers would form the Body of Principal Officers, also known as Selection Committee, whose responsibility is to assign senators to committees based on interest shown by individual senators.

This followed separate letters sent to the Senate President by the ruling All Progressives Congress (APC) and the main opposition People’s Democratic Party (PDP).

In a letter written by Adams Oshiomhole, APC national chairman, the ruling party named Abdullahi Yahaya (Kebbi State), director general of Lawan Campaign Group, as Senate Majority Leader and Ajayi Boroffice (Ondo) as Deputy Senate Majority Leader.

Also, Orji Uzor Kalu, a former governor of Abia State, was announced as Chief Whip and Aliyu Sabi Abdullahi (Niger State), spokesperson of the Eighth Senate, as deputy.

In another letter written by Uche Secondus, PDP national chairman, the main opposition party picked Enyinnaya Abaribe (Abia State) as Senate Minority Leader and Emmanuel

Bwacha (Taraba) as his deputy.

The Senate also picked Phillip Aduda (Federal Capital Territory) as Minority Whip and Sahabi Yau (Zamfara State) as his deputy.

In their separate acceptance speeches, Yahaya and Abaribe accepted the nominations and promised to discharge their duties effectively.

Lawan also announced a 13-member ad hoc committee to fashion out a Legislative Agenda for the Ninth Senate.

The Agenda is a policy document that contains the direction of the lawmaking body.

The 13-member committee whichhasMohammedAdamu Aliero, a former governor of Kebbi State, as chairman, has two weeks to submit its report.

Also in the committee include Barau Jibrin (APC, Kano), Abdulfattah Buhari (APC, Oyo), Olubunmi Adetumbi (APC, Ekiti), Chimaroke Nnamani (PDP, Enugu), Uche Ekwunife (PDP, Anambra), Istifanus Gyang (PDP, Plateau) and Sadiq Suleiman Umar (APC, Kwara).

Others members of the committee are Aishatu Ahmed Dahiru (APC, Adamawa), Dauda Haliru Jika (APC, Bauchi), Gershom Bassey (PDP, Cross River), Degi Eremienyo Biobaraku (APC, Bayelsa) and Ifeanyi Uba (YPP, Anambra).

Bond yields rebound from 3-month low ahead CBN’s T-Bills auction today OLUWASEGUN OLAKOYENIKAN

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ieldsofNigeriangovernmentbondshaltedtheir bullish trend Tuesday ahead of the Central Bank of Nigeria (CBN) treasury bills (T-Bills) auction scheduled for Wednesday, July 3.

Average yields on Nigeria’s mid and long-term bond tenors rose by 1 basis point and 3 basis points to 14.21 percent and 14.47 percent, respectively, while Nigeria’s benchmark 10-year bond yield rose by 13 basis points to 14.38 percent.

The Nigerian bond market commenced the second half of the year on a positive note as sustained investor appetite for no-risk assets plunged yields on Nigerian government bonds to their weakest level in three months.

“Bond yields had risen to attractive level following the selloffs that we had last month,” Abimbola Omotola, fixed income analyst at Lagosbased Chapel Hill Denham, told BusinessDay. The decline was as a result of “renewed appetite for bonds as investors to get more duration exposure”.

In spite of the negative performance at the bond market, the treasury bills (T-Bills) market was largely bullish as

benchmark discount rates fell by 15 basis points to 11.52 percent with the mid-segment recording the most buy-ins.

Rates at the mid-segment of the market fell by 40 basis points to 11.42 percent, while rates on shorter days- to-maturity declined by 18 basis points to 10.98 percent. For the longend of the market, rates fell by 10 basis points to 12.02 percent.

The CBN is expected to roll over a total of N88.86 billion at the Primary Market Auction (PMA) across the short, medium and long-term maturities as an equal amount in the 91-day, 182-day and 364-day instruments would mature on Thursday, June 4.

This will consist of N10 billion for the short-term, N20 billion for the medium-term, and N58.9 billion for the long term maturities.

The expected stop rates for the 91-day tenor maturity are put at between 9.6 and 10 percent as against the previous stop rate of 9.6 percent. For the 182-day tenor maturity, the expected stop rates are between 11.7 and 11.9 percent compared with 11.89 percent stop rates declared on the instrument previously.

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

Ketil Karlsen (m), head of delegation, European Union, with Kayode Ebatamehi (l), chief operating officer, Bluebird Communications Limited; Nkoli Ogbolu, president, International Women’s Society Nigeria; Ibiwunmi Akinnola, vice president, IWS Nigeria, and another guest, during the Green event organised by the European Union to promote renewable energy in Lagos.

Nigeria counts losses as delay in ministerial appointments hits investors

…Buhari set to release list of nominees to Senate – Sources LOLADE AKINMURELE & MICHAEL ANI, Lagos, & TONY AILEMEN, Abuja

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here are signs of growing discomfort among investors over the delay in Nigerian President Muhammadu Buhari’s appointment of cabinet ministers and it is taking a toll on businesses and the economy.

More than a month after Buhari was sworn in for a second four-year term in the month of May, local and foreign investors are in the dark over who heads which ministry, particularly key positions like finance as well as industry, trade and investment.

Being a developing country with a history of policy inconsistencies and a public sector that is larger than life, foreign investors typically interface with high-level government officials – a category ministers fall under – to set an investment in motion. This

way, they hope to get some assurance over the safety of their investment dollars.

The uncertainty over the identity of Nigeria’s next batch of ministers has led some foreign direct investors to hold off on potential big-ticket deals while portfolio investors are beginning to redirect cash to other countries that are ready for business, two chief executive officers of leading financial houses told BusinessDay. According to them, some foreign government agencies and Development Finance Institutions (DFIs) are also staying away or not engaging because there are no ministers.

“There are people who are currently negotiating to invest in the country but they are waiting to see those that would be appointed to engage with them,” one of the CEOs whose investment firm manages over a thousand foreign clients said.

“Whenever we engage with

investors,theyarecuriousabout knowing who the new minister of finance and who the new minister of trade and investment would be,” another CEO confirmed to BusinessDay. A six-month delay in the appointment of ministers during Buhari’s first term formed part of the recipe for an economic recession in 2016 after it contributed to a steep decline in foreign investment.

Total foreign investment into the country nearly halved to $5.1 billion in 2016 from $9.6 billion in 2015, and was down 75 percent from $20.8 billion in 2014, according to NBS data.

Many Nigerians and international observers had expected President Buhari to hit the ground running in his second term.

“There is nothing to suggest that we have learnt the lessons of 2015,” an independent economist who consults for one of Nigeria’s state governments

said on condition of anonymity.

“It adds like an extra 50 basis points on the country’s risk premium,” the economist said.

Yields on Nigeria’s benchmark 10-year Federal Government bond have ticked upwards, albeit by a mere 4 basis points to 14.39 percent as at July 2, from 14.35 percent at the end of May. Traders say yields have reacted more to the movement in oil prices and the stability in the naira than the delay in ministerial appointments.

TheperformanceofNigeria’s publicly-quotedcompanieshas beenwoeful.Stocksaredownan average of 6.5 percent since the beginning of 2019. Blue chips from Dangote Cement to Guaranty Trust Bank have been hit by negative investor sentiment no thanks to the perceived lack of urgency in the implementation of reforms needed to boost economic growth.

•Continues online at www.businessday.ng

Nigeria’s investment inflows near 6-year high on carry trade …biggest quarterly gain since Q3 2017 CYNTHIA EGBOBOH & SEGUN ADAMS

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fter declining for three straight quarters, capital importation into Nigeria rose to the highest in almost six years and gained the most on a quarterly basis since third quarter (Q3) 2017 as carry trade increased in first quarter (Q1) 2019.

This followed the peaceful conclusion of the 2019 general elections, an attractive yield environment in Nigeria, and the fact that most central banks in developed economies dropped interest rates, analysts say.

Carry trade is a strategy

that involves borrowing at a low interest rate and investing the amount in an asset offering higher returns.

Data released Tuesday by the National Bureau of Statistics (NBS) showed that the total value of capital importation into the country stood at $8.49 billion in the first three months of this year, the highest since Q3 2014, when $6.54 billion flowed into the country.

On a quarterly basis, capital importation rose by 216 percent, the highest gain since Q3 2017, when it increased by 131.27 percent. The latest figure also represents a 34.61

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percent increase from $6.3 billion in the first quarter of 2018.

Nnamdi Olisaeloka, a fixedincomeanalystatZedCrest,said the figure was not surprising.

“When investors became convinced of a win for the incumbent president, they had a risk-on appetite for fixed-income securities even though they were wary of equities,” he said.

Olisaeloka pointed out that investors were lured by the high interest rate and yields environment which buoyed carry trade in Q1.

“Foreign portfolio investors were basically cherry@Businessdayng

picking on interest rate opportunities given the expectations of continuous stability of the naira,” Olisaeloka added.

Capital importation rose to $2 billion, but rose 129 percent to $4.6 billion by March.

Favourable oil cycle and the dovish monetary policy stance in developed countries are also factors supporting carry trade across emerging markets including Nigeria, Omotola Abimbola, macroeconomic and fixed-income analyst at Chapel Hill Denham, said.

•Continues online at www.businessday.ng

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NEWS

Airport security: Senate calls for prosecution of drug cartel OWEDE AGBAJILEKE, Abuja

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he Nigerian Senate has resolved to pursue the prosecution of the cartel responsible for planting illicit drugs in the luggage of Zainab Aliyu and others at the Aminu Kano International Airport Kano.

The victims would have been executed for offense they did not commit in foreign lands if not for the intervention of the Nigerian government that ordered fullscale investigation into the matter.

This followed a motion sponsoredbyIbrahimOloriegbe(APC, Kwara) on the need to strengthen security at Nigerian airports, as the Senate on Tuesday resolved to ensure that the case was pursued to its logical conclusion.

This, it said, will serve as deterrent to others who were in the habit of putting the lives of innocent Nigerians on the line.

The lawmakers urged the Federal Airports Authority of Nigeria (FAAN) and other security agencies to ensure that

all personnel on duty be held accountable.

It also urged committee on aviation, when constituted, to ensure legislative compliance.

They mandated FAAN to ensure the installation and usage of effective close circuit television cameras and other security systems in all Nigerian airports for the purpose of monitoring the airport environments, for the avoidance of planting illicit drugs and other illegal activities.

They also resolved to compel the agency to acknowledge only accredited personnel on duty to be allowed in restricted areas of the airport.

Presenting the motion, Oloriegbe noted with great concern the report in a national daily on May 1, 2019 on how Zainab Aliyu, a Nigerian citizen, was arrested by Saudi Drug Enforcement Agency on allegation of drug trafficking.

According to Oloriegbe, another online media also reported, quoting the Chief Press Secretary of the then Zamfara

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State governor on June 18, 2019, the effort of the Governor to meet with the officials of Saudi Arabian government to discuss ways towards the release of another victim - Zamfara-born Alaramma Ibrahim, who was in detention for almost two years over alleged drug trafficking whose arrest also followed a frame-up initiated from the Mallam Aminu Kano International Airport Kano.

He said from findings they were further informed that there were several other incidents of arrests of innocent Nigerians by the Saudi government and other countries on similar allegations of drug trafficking.

He expressed that the innocent citizens were just victims of circumstances as many of the distasteful situations would have been curtailed but for security lapses at the Nigerian airports infiltrated by drug syndicates with easy access to planting illicit drugs on innocent travellers or their belongings without their knowledge.

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Demystifying the execution challenge

Ifeoluwa Taiwo

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he ability to execute fast is one problem most organizations are grappling with. Those organizations that have not only demystified their execution challenges but also understand the power that customers or consumers have in this fast-changing world are the ones that will win.

With the democratization of data across the globe, there is now a high level of exposure for buyers and users to products availability and transparency. As it is now, a consumer can simply make buying decisions via their smartphones – as they can access product features and prices on the go, so this has put tremendous power in the hands of the consumers. Let’s take for an example, if one needs to buy a television, all he or she needs to do is to call up Google or the likes and search for television prices in any location and at the end will have plethora of options. What does this mean to businesses in general? It means organizations must understand the power of execution especially of what they have to do in order to remain relevant now that organizations are finding it hard to maintain a long-term competitive advantage.

With the strong emergence of

technology and disruptions in almost every sector, it is gradually becoming difficult for organizations to keep competitive advantages over a long time. Organizations need to be aware that competition won’t come from their industries alone, for example, pay-tv won’t compete anymore with other players in the same industry.

Rather they will compete with the likes of YouTube etc. Now, anyone that wants to take the currency out of the customers’ pocket, will have to understand that the dynamics have changed and it is no more business as usual.

Organizations need to understand that in staying ahead of the game, they have to execute faster, and at an averagely lower cost than its competitors. And truth be told execution has been a major challenge in almost every industry. Interestingly it won’t get any easier and the reason is simple. Organizations want to scale, and scaling is a good thing; the more you scale, the more complex things become. Scaling might mean more products offerings, or more locations etc. Scaling comes with its own complexities, and more often than not, execution also becomes a huge challenge, as most managers are not armed with a framework or a structure for execution. What they are armed with is a series of isolated actions that have worked based on knowledge and experience.

A major setback when organizations scale is the notion that execution isn’t as useful as design. The mindset is to simply put out a better strategy out there that they think or assume is better than the competitions intent, and then they hope that

the lower cadre employees will get the job done. CEOs and managers need to understand that execution is for everyone in the organization to partake. CEOs and Managers need to understand that strategic plans won’t just execute itself. Equal time, resources and personnel should be allocated to the execution of their strategic intents for their plans to be successful. Fortune observed that investors aren’t too perturbed about intent, they are looking for CEO’s who can execute.

Most leaders and managers have failed to understand that their organizations are one big system, and decisions should be taken based on how each part of the system interact with each other. What this means is that there is a lot of interdependencies that need to occur when things are set in motion. In most cases, the bigger the organization the bigger the interdependency. A holistic approach has to be taken to execution, managers should understand that the law of cause and effect is always at play within the organization. The law of cause and effect means that for point B to be a reality, I must successfully execute point A. To better understand cause and effect, I have always recommended the causal chain tool. A causal chain helps organizations not just to fish out pain-points but it also helps to lay out a path for achieving the company’s overall objective. It can link ideas with specific actions to be carried out, which ends up aiding the execution process. To be fair, this is not a walk in the park as organizations tend to make leaps of logic when using this tool. Someone might say: If I go on social media, I

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CEOs and Managers need to understand that strategic plans won’t just execute itself. Equal time, resources and personnel should be allocated to the execution of their strategic intents for their plans to be successful

will increase my profits. This sounds pretty straight forward right? But if we peel the layers, we would see that this is a wish, and not direct steps of actions to be taken to get to the company’s overall objective which is to increase profits. Organizations have to put on their thinking caps and ensure that leaps of logics are avoided as much as possible.

The beauty of tools like the one we have discussed here is the ability to help organizations align resources and strategic objective. This is critical in strategy execution. Research has shown that most organizations tend to just throw projects into the fray in the bid of not “putting all their eggs in one basket”. What this means is that resources become scarce, employees become dis-illusioned as they do not know which objective is priority.

Managers should make it a point of duty to always put on the handbrakes before committing to new initiatives.

I am aware that the environment is changing and as such, competitive advantage is been eroded, but you need to understand if your organization has the capacity to pull off the proposed initiatives.

In conclusion, executives and managers must understand that regardless of how compelling their intentions, plans and strategies are towards growing their organizations, if they don’t make execution an accepted culture, they may end up underperforming.

Taiwo is an experienced Business Development and Strategy professional with industry experience spanning years in Educational Management, Financial Services and Media, Human Resources and Management Consulting. ifeoluwapotaiwo@gmail.com. 08057030939

Beyond the symbolisms of June 12

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une 12 1993 was a milestone in the history of Nigeria democracy and political evolution. It is a symbol of the people’s struggle against social injustice, ethnic chauvinism, and the repudiation of the collective will of the people by military tyrants; and the triumph of the will of the people, and their awakened aspirations over the terror of the gun. However, in addition to its symbolisms, June 12 has some lessons for Nigerians.

To overcome the drawbacks of parliamentary democracy and enhance the fragile unity of our heterogeneous country, the crafters of the Nigerian constitutions opted for presidential democracy. Conscientiously, they crafted the Nigerian constitution to encourage the election of national and unifying figures to the presidency. Unlike in parliamentary democracy, where a local, parochial bigot, elected to represent a rustic, insular outpost in parliament, can, through the internal power-play of parliament, emerge the prime minister, only a national figure, with an across the board appeal to the Nigerian electorate, can become a president.

Moshood Abiola was an epitome of this recherché national and unifying figure. For many years, he traversed the length and breadth of Nigeria making friends, forming alliances and doling out his philanthropic largesse. Although, a devote Moslem, he

transcended religious intolerance that emanates from every religion’s tendency to claim a monopoly on the Truth, and thus, impress it on its votaries that theirs is the only true faith. He extended his patronage to Christians, and Christian projects. It was a testament to the trust - that bestrides religious divides - reposed on him by Nigerians that Christians voted en-masse for his Moslem/ Moslem presidential ticket. In addition, he bestrode the divisiveness of tribe in Nigerian politics. His friendship and benevolence knew no bounds; it was totally indifferent to tribal and regional divides. Invariably, he unified what was, for long, a fissiparous and finicky electorate notorious for its extreme sensitivity to ethnic and other peculiarities.

Thus, he won a decisive victory in that most transparent and credible presidential election in the history of Nigeria.

Unfortunately, in stark contrast to Moshood Abiola, President Buhari is an Islamic fundamentalist and an unabashed proponent of the Sharia penal code. His undisguised religious bigotry unnerves many Nigerian Christians; some even suspect that he has an agenda to Islamize Nigeria.

His tribalism and nepotism are deepening and widening the ethnic and sectarian fault lines of the country. Never before, not even during the civil war, have Nigerians been so divided along tribal, religious and regional

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lines. Buhari’s appointments, especially, in the security agencies were totally insensitive to federal character. It was so skewed against southern Nigerians, especially, the Igbo. Of his eighteen appointees to head the military and other security agencies, fourteen were northerners, four, southerners, and none, Igbo. His Fulanization of the leadership of the Nigerian security apparatus and his administration’s obvious support for the Fulani blood-spattered incursions into the Middle Belt and South of Nigeria is very worrisome. Buhari is an extremely divisive figure; his presidency is rattling the peace of the country by eroding mutual trust amongst Nigerians and exacerbating ethnic and sectarian discords.

The June 12 election was acclaimed the most transparent and credible election in Nigerian history. Contrarily, the election that re-elected Buhari to a second term was undoubtedly rigged in favor of Buhari. Many Nigerians suspected it and the opposition Peoples Democratic Party (PDP) has evidence to that effect. In addition, impartial and reputable international election observers, including the European Union, and International Republic Institute, in their final reports of the February 23rd 2019 presidential election that re-elected President Buhari to a second term, wrote that the election was deeply flawed.

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Tochukwu Ezukanma

So, as we extol the recognition of June 12 as the Nigerian Democracy Day, it is important that we appreciate the lessons from June 12. The lessons of June 12 are that Nigerians can organize and hold indisputably free and fair presidential election; and a true national and unifying figure can unify the Nigerian electorate and win a decisive presidential victory without resort to electoral fraud. The other lessons of June 12 include open-mindedness, religious tolerance, and accommodation for all in total blindness to creed and tongue, as opposed to the narrow-mindedness, religious intolerance, tribalism, nepotism and electoral fraud that are the hallmarks of the Buhari administration.

Tochukwu Ezukanma writes from Lagos, Nigeria maciln18@yahoo.com, 0803 529 2908

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Wednesday 03 July 2019

BUSINESS DAY

comment Dare to aspire Character Matters with Daps

Dapo Akande

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he level of national development attainable by any aspiring nation, (or organization) will be determined by the moral character of its people and by the principles upon which they have built their lives”. Professor Vincent Anigbogu.

When a nation unapologetically flaunts a deficit of vital core values, no matter how brilliant its development plans may be, they will amount to building castles on sand. With pinpoint predictability, doom and gloom must follow. Nigeria has been and remains a classic example of this failure. Unfortunately, neither the leaders nor the people have yet

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recognized this immutable fact so we continue to jump gleefully (believing we now have it all worked out) from one failure to another. As a result we have evolved over the last three to four decades, an ecosystem which not only encourages but enables people to misbehave.

Have you ever stopped to consider why Chelsea FC in the United Kingdom suddenly became the football team to support in Nigeria a few years ago? I for one don’t believe it was just because Mikel Obi or Babayaro played for them. Do you not remember seeing the Chelsea stickers with Billionaire’s Club boldly inscribed on it, proudly plastered on at least half of the Danfos (commercial buses) and Keke Marwas (tricycles) plying Lagos roads? Why do you think the music of some of our artists are so popular even though all they sing about is dollars, Roll Royce’s and Gucci shoes in a country that was just recently dubbed the poverty capital of the world?

Either due to pitiful ignorance or equally pitiful desperation to belong, many proudly wear their “Gussi” or “Abibas” T-shirts instead of the Gucci and Adidas original. I believe the

term we’re looking for is aspirational.

And there’s nothing wrong with that.

For the man in the street, the five or so minutes his favourite song plays for is a welcome opium which affords him the opportunity to escape his harsh reality. As he sings along, he can smell and feel the luxurious leather upholstery of the Phantom Rolls Royce he’s driving. With the confidence of a popstar, he waves to the admiring chicks as his wonder on wheels glides past. For that blissful moment the focus of that song is all about him. By association, he too is a proud member of the Billionaire’s club. And as I said before, there’s nothing wrong with being aspirational but there is a condition. You have to keep in mind that you must be willing to pay a price if you’re serious about it becoming your reality. To this end, Ghandi quite rightly maintained in his 7 Social Sins that wealth without without work and religion without sacrifice are an aberration, and both are capable of gnawing away at the fabric of any decent society. Therefore, any religion which preaches that the only sacrifice you need to make to succeed is the spiritual one

‘

We must, as a rule, teach our children to embrace hard work... there’s no such thing as sweatless success. To tell them otherwise would be to do them a great injustice

is a false religion. Fasting, praying and attending vigils alone can never place you on the path to success. Sacrifice must also take the form of material hard work at what you do. A total commitment to your occupation or profession. An unshakable determination to succeed and a fathomless dedication to perfection. Short of this, all the fasting in the world, no matter how many Bentleys you count in your favourite artist’s song, will mercilessly land you in excruciating poverty.

We must as a rule teach our children to embrace hard work as in my book, there’s no such thing as sweatless success. To tell them otherwise would be to do them a great injustice, which they may still blame us for at a time when it’s almost too late. By all means, allow them to dream but remind them it will remain a dream unless they apply themselves and adopt diligence as an integral part of their value system.

Changing the nation...one mind at a time Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

Rape under Nigeria law

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n plain language, in Nigeria, a person has committed rape when he has sexual relations (carnal knowledge) with a woman against her will; or a) without her consent or, b) while putting her in fear of death or hurt or, c) misrepresenting as the husband of the woman or, d) having carnal knowledge of a girl under 14 years, with or without her consent or, e) having carnal knowledge of a girl with unsound mind. See Section 357 and 358 of the Criminal Code Cap “C38”, Laws of the Federation, 2004 It is now settled that in legal parlance, any person who has unlawful carnal knowledge of a woman or girl, without her consent, or with her consent, if the consent is obtained by force or by means of threats or intimidation of any kind or by fear of harm or by means of false and fraudulent representation as to the nature of the act, is guilty of the offence of rape. See Section 357 of the Criminal Code.

The important and essential act of the offence of rape, is penetration. It is also settled that sexual interference, is deemed complete, upon proof of penetration of the P into the V .

“Emission”, is not a necessary requirement. It has however, been held, that any, even the slightest penetration, will be sufficient to constitute the act of sexual intercourse. This is why, even where penetration was proved, but not of such a depth as to injure the hymen, it has been held to be sufficient to constitute the crime of rape.

See R. v. Alien 9 C & P. 31.

Thus, proof of the rupture of the hymen is unnecessary, to establish the offence of rape. See the case of/?, v. Hushes 22 Mood 190.

Thus , it will be a foolish argument for a man to come to our court and argue that he didn’t enjoy it . He cannot also successfully argue that he didn’t ejaculate. Those arguments cannot help him However, if a girl accused a man of rape, there is need for evidence to support the rape especially corroboration. Did another person witness the rape? Who saw when the man commits the rape? Was the girl injured? Did she struggle with the man? Did the man tear the girl’s cloth

particularly her underwear? Was she examined by a medical doctor immediately after the rape?

Some of these points are important to proof rape.

A mere allegation by a woman that a man raped her is not enough unless there is other evidence to support the case Although corroboration is desirable, it is settled that whether a particular evidence, can be corroboration, is for the trial Judge to decide. See the case of Reekie v. The Queen (1954) 14 WACA 501 (a), 502 where the following appear, inter alia: In the cases of a sexual character it is eminently desirable that the evidence of the complainant should be strengthened by other evidence implicating the accused person in some material particular. It is true that there is nothing in law to prevent the Court from convicting on the corroborated evidence of the complainant, but it is an established rule that the presiding Judge must direct himself and the assessors in such a case on the desirability of there being corroboration of the complainant’s evidence” A corroborative evidence, must confirm in some material particulars that: “(a) Sexual intercourse has taken place, and (b) that it took place without the consent of the woman or girl, and (c) that the accused person was the man who committed the crime”.

See also the English case of James v. R. (1971) 55 C.A.R. 299 @ 302 (P.C.) - per Viscount Dilhorne.

In Akpanefe v. The State (1969) 1 All NLR 420, it was held that by section 178(5) of the Evidence Act, the court cannot convict an accused on a charge of rape without corroboration, and in this regard an early report of the commission of the offence is not tantamount to corroboration. Similarly, in Sambo v The State (1993) 6 NWLR(Pt. 300) 399, this court held in 1993 that it is the law that before the prosecution can secure conviction for the offence of rape, the evidence of the prosecutrix {the victim of the rape) must be corroborated in some material particular that sexual intercourse did take place and that it was without her consent. It was also held that a piece of evidence offered as corroboration for the offence of rape must be (a) cogent, compelling, and unequivocal as to show without more that

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the accused committed the offence charged; (b) an independent evidence which connects the accused with the offence charged; and (c) evidence that implicates the accused in the commission of the offence charged. See also Upahar v. State (2003) 6 NWLR (Pt. 816) 230.

In Iko v. The State (2001) 14 NWLR (Pt. 732) 221 in 2001, eight years after the decision in Sambo it was held that it is not the rule of law that an accused person in a charge of rape cannot be convicted on the uncorroborated evidence of the prosecutrix. The proper direction is that it is not safe to convict on the uncorroborated evidence of the prosecutrix. The court may, after paying due attention to the warning, nevertheless convict the -accused person if it is satisfied with the truth of her evidence. This court also held that the fact that the prosecutrix says that an accused inserted his penis into her vagina is not ipso facto sufficient proof of penetration in the absence of corroboration.

Oludotun Ogunbayo v The State, SC. 272/2005, A Man was charged to court for rape.

The trial court convicted him. He appealed to Court of Appeal and then to the Supreme Court, where the Apex court finally sent him to prison.

The case for the prosecution is that on 23r December, 1987, while PW1 - the prosecrutix, was stooling in their own garden toilet, the Appellant surprisingly, opened the door of the said toilet and rained slaps on her face. He then dragged her from the said toilet, through the open boundary/fence of the Appellant’s house and their own house where the PW1 was living.

The P.W.I swore that she was struggling with the Appellant, but she was overpowered by the Appellant, She shouted in the process of her being so dragged. The Appellant dragged her into a room where he undressed by removing his trousers and floored her on the bare floor of the said room and forcefully had carnal knowledge of her i.e. sexual intercourse with her after forcefully removing her pants. That it was in the process of being dragged on the ground, that her dress Exhibit “B”, was/became smeared with mud dirt.

That after the act of having sexual intercourse with her, that the Appellant warned her that if she continued shouting for help, he would open the room door and expose her nakedness to the

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Nnamani Ogbonna world or household so as to shame her.

That shortly thereafter, one of her sisters by name Yemisi, came to knock on the door of the said room and told her that her father wanted to see her. That when she got up from the floor and came out of the room reeling with pains, she came face to face, with her father who was coming in her direction. She there and then, reported the entire incident to him of how the Appellant forcefully had sexual intercourse with her and that her father enquired from her, the whereabout of the Appellant. She took the father to the said room where the Appellant was. That at the sight of her father, the Appellant bolted away or fled. That her father beat her up and took her to the police station where he reported the ugly incident of the forcible sexual intercourse with her by the Appellant.

She identified the dresses - (Buba and native trousers) worn by the Appellant at the time of the incident, which were tendered and marked Exhibits A and B respectively.

The Appellant who claimed to be an Actor or Dramatist, denied the allegation or charge and claimed that the PW1, had been his girl friend for eight (8) months before the date of the incident. That he had never had any sexual intercourse with the PW1. That PW1 visited him about 3.15 p.m. on the day in question to solicit for his assistance to find out from her school teacher, whether she had indeed failed in her examination which result was being expected.

That while in the bathroom, he heard the voice of the PW2 - the father of the PW1 asking about his (Appellant’s) whereabout. That PW2 met him in the bathroom in company of some others and gave him “unexpected” slaps and then, ordered his drivers (two of whom he knew very well) to beat him up.

Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Ogbonna is an Abuja based Legal practitioner, Nnamani.ogbonna@yahoo.com, 08068599914

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Wednesday 03 July 2019

BUSINESS DAY

Editorial Publisher/CEO

Frank Aigbogun editor Patrick Atuanya DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Chuks Oluigbo EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua

Nigeria and the African Continental Free Trade Area

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n April 2019, Gambia ratified the African Continental Free Trade Area (AfCFTA), helping the AfCFTA reach its twenty-two member threshold. It means the trade area will take off later this year with or without Nigeria.

It is a shame that Nigeria has not yet signed nor ratified the African Continental Free Trade Area (AfCFTA). We must now do so or risk being left behind by the rest of the continent.

Curiously, Nigeria’s reasons for refusing to sign the trade treaty, in which its international trade policy expert was the lead negotiator, was that it does not want to become a dumping ground for goods from African and European countries, who would use smaller countries to gain free entry into the Nigerian market. “We will not agree to anything that will undermine local manufacturers and entrepreneurs, or that may lead to Nigeria becoming a dumping ground for finished goods,” President Buhari tweeted while declining to

sign the treaty last year. The special adviser to the president on Media and publicity, added subsequently that the president said the country is yet to fully understand the economic and security implications of the agreement.

This only brings to focus the embarrassing lack of coordination within the Federal Government and its agents. Does it mean that on such an important issue, policy papers and memoranda had not been previously read by the President and Vice President before the crucial FEC meeting that ratified the treaty? Does it mean that the Vice President did not consult the President to know his thoughts before leading the entire cabinet to ratify a treaty with which their Principal disagreed?

What do we make of the fact that the globally-respected trade policy expert, Ambassador Chiedu Osakwe, who led Nigeria’s negotiations and played a very significant role in bringing African countries to achieve this momentous milestone, must now be extremely embarrassed that his President never believed in the

job he was tapped and mandated to spearhead.

And what exactly are Nigerian manufacturers afraid of? What have we been for imports from China and South East Asia all these decades? Which African country has a greater manufacturing/trade capacity than Nigeria outside South Africa? What does South Africa “dump” in Nigeria that harms us? The treaty is also not merely about goods. What about services? What about intellectual property? These are areas in which Nigeria enjoys significant advantages. However, by refusing to ratify the African Trade Treaty, we have effectively ranged ourselves against all our major trading partners. This is almost like our own Brexit, except that the President’s decision to act against the advice of his entire Cabinet lacks a credible basis.

Does the government realise that in Africa, it has, perhaps, the largest number of its citizens living and doing business in other African countries? Does it realise that perhaps, beside South Africa, it has the largest number of its

banks and companies pursuing internationalisation programmes in other African states? What will become the fate of Nigeria’s biggest industrialist now operating in over fourteen African countries?

Perhaps, the president needs to consider the benefits of the AfCFTA to Nigeria and Africa as a whole. The AfCFTA has the potentials to permanently change Africa’s fortune from dependence on assistance to increased trade.

Intra-African trade, which currently stands at only 10 percent, is the lowest in the world and one of the chief reasons for Africa’s backwardness. Our salvation ultimately lies in trading amongst ourselves and consequently developing our economies and not in isolationism as Nigeria is tending towards.

Although rumours from the presidency has it that the president will sign the agreement before the implementation, we cannot be consoled by rumours.

The president needs to sign the treaty now. It is a shame that Nigeria that should be leading such initiatives, now finds itself struggling to follow from behind.

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Restructuring Nigeria: Start with our legal system (2)

Franklin Ngwu

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orruption is perceived to be high in Nigeria because the formal governance system is regulated by a formal legal system that is not widely accepted and internalized. Governance therefore suffers from problems of common resource and free rider due to its regulation by unaccepted and internalized legal system that can be bought and sold ( even the enforcement agencies and individuals do not believe in it). This is why unquestionable cases of corrupt enrichment and fraud normally degenerate to ethnic confrontations with the tribes of the concerned individuals emerging as unrepentant supporters of corruption with intriguing cries of ethnic persecution of their illustrious sons/daughters.

On the contrary, a petty criminal or thief can easily be lynched within his village or tribe even on mere allegation.

The question therefore is why it is easy for us to kill a petty criminal from our tribe but defend and support a big thief that stole from the national resource?

The answer is that the small petty thief is abhorred using our tribal legal system which forbids stealing and which we accept and have internalized but the big thief that has embezzled public funds is perceived using our formal legal system which we have not accepted and internalized. In the same vein, our traditional rulers and elders are still largely believed to be people of high

morals and integrity of which corrupt allegations are normally repudiated at.

This is due to the tribal legal system that is understood, accepted and internalized and which abhors corruption.

The current demands for regionalism, devolution of powers and state police are all connected to the limitedly accepted and weakly internalized formal legal system. They are demands for the transfer of power and control of public revenue from the centre with a limitedly accepted legal system to regions with societies of common tribal legal system (South East, South West, South South, North Central, North West and North East). This will leave the centre (federal government) with issues such as foreign affairs and national defense which are of common interest to all the tribes and their legal systems. It is therefore deeply important that the restructuring of our national formal legal system be given utmost priority and diligently executed.

If we agree that Nigeria should remain the way it is, then our formal national legal system will need to be comprehensively restructured and rewritten to deeply reflect our national values and cultures. The contents should be discussed and determined by the ethnic nationalities and derive mainly from the similarities in our values and norms. However, if we agree that there should be devolution of powers to regions, the suggestion will be to create two legal systems. The first should be a national legal system and the second a regional legal system. The national legal system should develop through the collation and harmonization of similarities and differences in our respective tribal legal systems on issues that will be controlled by the federal government such as national governance, foreign affairs, national security, revenue generation and sharing etc. The regional legal system should be

‘

The current demands for regionalism, devolution of powers and state police are all connected to the limitedly accepted and weakly internalized formal legal system

developed by the regions and dictated by their common values and norms and then used to moderate issues that will be allocated to the regions like development policies, revenue generation and distribution, education, health etc. This suggestion does not mean that our current formal legal system adopted from Britain should be discarded. It should not, but, we need to deeply look at the contents and use only the elements that are amenable to our past, current and future values and norms. This is also the case with our tribal legal systems in which we should discard practices and laws which we consider inappropriate and retrogressive.

If devolution is agreed, each region can have its own supreme court and the other lesser courts while the federal government can have only appeal and supreme courts to adjudicate in cases between the regions or between individuals/groups and regions. Allowing the regions to have their own supreme courts will not only expedite resolution of cases but will trigger a wider usage of the legal system by the citizens who will be aware and conversant with contents and procedures of the law which derive from their common norms and values. Irrespective of the structure of governance agreed for Nigeria, it is imperative that a wide and elaborate socio-legal socialization of the citizens is carried out to ensure good understanding, acceptance and societal ownership of the legal system.

Regardless of preferred course or profession, it might be important that law modules are made compulsory in levels of education (from primary to tertiary schools). In the same vein, the judiciary will need to be effectively restructured to enhance delivery of justice. A key reform is the need for specialization of judges. A situation where one Judge can adjudicate in

all cases from criminal to land issues and from constitutional matters to bankruptcy issues is flawed. The reform should entail the recruitment of Judges with specialism in different key areas of Law. The above suggestion will ensure that all interests are considered and protected. It will ensure sustainable development and peaceful co-existence due to the emergence of properly discussed legal system that will regulate both the federal, regional, state and local governments. Achieving regionalism and devolution of powers without comprehensive restructuring of our legal system to reflect our traditional values and norms will only achieve a transfer and expansion of the current problems we are facing to the regions. As stated earlier, this approach of a legal system emerging from the traditional norms and society in question is the case with most developed societies. The UK where we adopted our current legal system has no single documented constitution or legal system. Their legal system is effective and has led to sustainable economic development due to the fact that it is deeply rooted to their values and norms. USA passed through difficult challenges and wars until 1787 when they restructured their legal system to create the Northwest Ordinance Act that deeply appreciated and incorporated their complex traditional values and norms in what is presently referred as the American constitution.

It is the cause and main reason for the differences in laws across the American states and regions. The ball is in our court and the time to act is now!

Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mailfngwu@lbs.edu.ng,

Of what use is foreign direct investment without the capacity to exploit it?

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apital is very shy and does not like being harassed. You cannot harass private capital and expect to grow the economy.

In fact, government should find a way of bringing in shy capital rather than chase and harass it away.” This emphasis on investment attraction was stressed, by a speaker at a recent colloquium, organised by alumni of the University of Oxford and the University of Cambridge. Nigeria needs investment. The original Petroleum Industry Bill (now broken into four separate Bills) was first presented in the year 2000.

The 19 years of delay without passing the Bill created uncertainty in the minds of potential investors, who value clarity and predictability. One estimate is that more than $120 billion worth of investment was missed out on, because invest was either withheld or diverted due to uncertainty surrounding the Bill.

Foremost economist, Ayo Teriba (who was also present at the Oxbridge alumni colloquium) previously stressed the importance of foreign direct investment (FDI) in Nigeria. In a 2018 paper titled ‘Harmonization of Fiscal and Monetary Policies in Nigeria’, Teriba stated that: “Nigeria must build foreign reserve buffers to insure and insulate the macroeconomy against adverse shocks… To build up reserves, Nigeria could attract large brownfield foreign direct investment (FDI) into all state-owned enterprises

(SOEs) in energy, transportation, and social infrastructures. Saudi [Arabia] seeks US$200 billion from FDI inflows into 16 sectors that were lined up for privatization in May 2017.

Nigeria could easily seek US$1 trillion or more because much larger infrastructure networks are required to serve Nigeria’s 200 million populace than Saudi Arabia’s 40 million populace.”

According to the United Nations Conference on Trade and Development’s ‘World Investment Report’, FDI into Nigeria declined by 36% in 2018 ($2.2 billion). Ghana was the most favoured West African destination for FDI in 2018 ($3.3 billion), previously Nigeria was favourite.Poor economic growth prospects in developed nations had made sub-Saharan Africa a promising destination of FDI.There was an increase of about 50 percent in FDI to Sub-Saharan Africa between 2005 and 2012. In 2012, the American bank J.P Morgan added Nigeria to its governmentbond index for emerging markets; up until then, South Africa had been the only African country on that list. A large increase in the contribution of FDI to economic growth (GDP) in Nigeria occurred just after Nigeria’s transition in 1999 from military rule to democratic governance. By 2005, FDI inflow into Nigeria accelerated after Nigeria and the Paris Club reached an agreement for $18 billion debt relief package.

But the question some economists ask is how effective is FDI and what ensures that

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it benefits the host country? Researchers have provided evidence that suggests a bi-directional relationship between economic growth and FDI inflows to Nigeria.

They explain that FDI encourages growth, more growth also encourages more FDI: a positive feedback relationship. However, the efficacy of FDI in generating economic growth is limited by the level of infrastructure and human capital development in Nigeria. The International Monetary Fund defines a foreign direct investment enterprise as: “an enterprise (institutional unit) in the financial or non-financial corporate sectors of the economy in which a non-resident investor owns 10 percent or more of the voting power of an incorporated enterprise or has the equivalent ownership in an enterprise operating under another legal structure.” FDI can also be thought of as a composite bundle of capital stock, know-how and technology that can (through labour training, skill acquisition/ diffusion and the introduction of alternative management practice/organizational arrangement) augment the existing stock of knowledge in the recipient economy.

FDI can only be productive when the host country has a minimum threshold stock of human capital. A study showed that an increase in FDI leads to higher growth in countries with well-developed financial markets compared with countries with poorly-developed ones. Local condi-

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Uyiosa Omoregie

tions (absorptive capacities) are important factors contributing to the effect of FDI on economic growth. Host country absorptive capacities describe the domestic firms’ ability to respond successfully to new entrants, new technology and new competition. Research show that FDI can promote economic growth by itself (directly) but also indirectly via its interaction terms: a strong positive interaction effect of FDI with human capital and a strong negative interaction effect of FDI with the technology gap on economic growth in developing countries. The flow of FDI into a developing country is also affected by certain factors or conditions present or absent in the host country: the political system, economic system, public and private sector transparency.

Uyiosa Omoregie is a petroleum economist and management analyst.

He can be contacted at uyiosaomoregie@yahoo.co.uk

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Wednesday 03 July 2019

BUSINESS DAY

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Bridging Nigeria’s farm yields gap to tackle rural poverty Stories by Josephine Okojie

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t the outskirts of Ajokete village in Iseyin Local Government Area of Oyo State is four hectares of land belonging to Temidayo Adegoke, a 62 years old farmer who farms maize, vegetables and cassava.

Despite being a farmer for over 10years, Adegoke is still unable to improve his livelihood and does not want any of his seven children to be a farmer.

“For many years I have worked so hard on my farm and yet I have very little to show for the hard work,” he told BusinessDay. This is because he has recorded a particular yield per hectare over these periods, as he is unable to find the right hybrid seeds and seedlings for cultivation.

In the past, he has purchased several seeds labelled as hybrid from the market only to later discover that they are adulterated or fake.

This forced Adegoke to result to replanting the grains harvested from his farm for maize and vegetable production as well as stems for cassava.

As a result, he has maintained 1.2MT tons per hectare for maize and 2MTtons per hectare for cassava, when his peers in other African countries are growing between 3MT and 6MT per hectare.

The situation has made Adegoke income remains’ perpetually low with it having a negative impact on his livelihood.

D a t a f r o m t h e Fo o d a n d Agricultural Organisation (FAO) shows that Nigeria records the least yield per hectare among its peers.

For tomatoes, the average yield per hectare in Nigeria is 7 metric tons (MT), Kenya’s average yield for the crop is 20MT, Ghana tomato yield is 8MT and South Africa’s average yield for the crop is 76MT. Similarly, for maize - which is the most consumed grain on the continent, Nigeria’s yield per hectare is 1.6 on the average despite being the second largest grower of the crop while Kenya and Ghana

have same average yield of 2MT per hectare and South Africa’s average yield is 6MT per hectare.

For potatoes, which is the best rounded and nutrient root in all of Africa, Nigeria’s yield per hectare for the crop is 3.7MT, Kenya average is 15.5MT and South Africa average yield for the crop is 38.8MT. Nigeria’s average yield per hectare for rice paddy which is the most consumed staple in the country is 2MT, while Kenya, South Africa and Ghana has same average yield per hectare of 3MT According to a recent data by the World Poverty Clock, Nigeria is now the poverty capital of the world with 91.8 million people living in extreme poverty.

A 2010 data from the World Bank collection of development indicator states that rural communities account for 52.8 percent of poverty rate in Nigeria.

Smallholder farmers accounts for the larger population in rural communities and have remained poor despite the enormous potential in the agricultural sector.

Their limited access to improve seeds and seedlings have made Nigeria’s farm yield and income

from farming activities remain perpetually low, thus, leading to high production cost and making the sector unattractive to the younger population.

In addition, farmers failure to adopt good agronomy practices has also made yields per hectare for various crops to remain low.

Owing to the low crop yields, Nigeria now records huge demandsupply gaps in most of its staple foods, even as the population growth rate stands at 2.6 percent per annum and projected to surpass the 300 million people mark by 2050, according to The World Population Prospects 2017.

“Nigeria has the lowest yields per hectare globally. We abandoned agriculture for a very long time when other countries were developing theirs. It is now we are coming back to it and there is still a lot that has to be done,” Emmanuel Ijewere, vice president, Nigeria Agribusiness Group (NABG) said at CEO’s breakfast meeting in Lagos last year.

“In tomatoes for instance only one percent of Nigerian farmers plant their tomatoes using hybrid seeds and seedlings. In Ghana 40

percent of their farmer’s farm with hybrid seeds and in Kenya it is 68 percent of their farmers that use improved seeds and seedlings,” Ijewere said.

Apart from low yields, infrastructural deficit across the country is also a challenge to farmers’ income, as it has continued to erode their profit and impact their capacity to expand production negatively.

Half of the fruits and vegetables grown in Nigeria often get riot on farms before they get to the markets owing to inadequate storage facilities and huge road deficits, experts say.

“Post-harvest losses in Nigeria are huge due to inadequate storage facility in the country,” said Mawuli Coffie, team leader, West Africa Food Markets Programme.

Coffie stated that the despite the country is not growing enough owing to low yields per hectare, he says most of what is grown often rots in the field because it is difficult to move them easily from the farms to the market and the facilities to store them are lacking also.

Investments in the country’s primary agricultural infrastructure

will help integrate the poorer sections of the population into a sustainable process of economic growth and development, experts say.

In turn this will reduce poverty by providing jobs directly and indirectly that will serve as a stimulus to the Nigerian economy and agricultural sector specifically.

Also, high logistics cost has limited farmers to easily access markets with their produce while reducing their profits. “ Fa r m e r s p ay s o m u c h transporting their produce from the farm to the market because the roads are very bad. This further increase the cost of production and deter farmers from easily accessing the market and moaking most to resolve selling their produce to middle men who reap them off,” Lawrence Afere, founder and CEO of Springboard Nigeria.

Afere said that Nigeria can only feed itself and improve farmers livelihood when infrastructures needed to boost productivity across the value chain are provided, stating that infrastructural facilities such as storage, good road and adequate access to quality seed varieties will lift farmers out of poverty.

Experts say that the country can only tackle its poverty issue when the incomes of smallholder farmers who account for 65percent of the rural population are improved.

They say that the government must create the enabling environment for growth in the sector and for it to attract seed investors that does not just export put develop and breed their seeds here.

Isaac Ogara, secretary, MSN and a lecturer at the department of Agronomy, Nasarawa State University said that there is need for capacity building for farmers on good agronomy practises.

“Farmers must also ensure that they carry out good farming practices by ensuring that they carry out all the cultivation practices according to recommendations and dry their crops properly. Crops must be properly dried with moisture content of about 12-14 percent,” Ogara said.

Africa needs digital innovation to transform agric, rural areas - report

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frica needs digital innovations to transform its rural areas and agriculture to tackle youth unemployment, food insecurity and drive economic growth, says a new report The report on’ Policy Innovation for Transforming Africa’s Food System with Digital Technologies,’ says that around 60 percent of African population is under the age of 24 and that one in four Africans remains food insecure – the highest rate globally.

“These conditions present a perfect opportunity for digital agriculture to scale up across rural Africa,” Joachim von Braun, a professor and co-chair of the Malabo Montpellier Panel study said.

“It is the many emerging digital

tools targeting agriculture and services that will generate attractive jobs on the continent in coming decades,” he said.

The report calls for investments in infrastructure to bridge the urban-rural digital divide, including connections to the electrical grid, reliable telecommunications and internet connection.

It also recommends the establishment of digital innovation hubs as well as fiscal incentives, including lower import duties initially, to facilitate market entry and the import of technologies until local markets are developed. These include long-term finance, affordable (mobile) internet, fair competition standards, and lower overall prices for consumers. www.businessday.ng

The report urges African leaders to place digitalization at the core of national agricultural development policies and public investment plans.

Also, the report called for a transparent regulatory environment to promote further adoption of digital technologies and services while balancing the free-flow of data and information with privacy policies.

“Digitalization done smartly and at scale offers the opportunity for African countries to overcome the many infrastructural, institutional and technological obstacles that have hampered growth and transformation of the agricultural and rural economy,” said Ousmane Badiane, another co-chair of the Malabo Montpellier Panel.

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“It would other wise take generations and substantial investments to overcome the above obstacles – time and money that countries do not have.”

“Digital technologies can be deployed to upgrade skills, deliver services, connect business to reach a critical mass of operators across widely dispersed geographic areas in much shorter time and at lower cost,” Badiane added.

One area that the report flagged as lacking in digital innovation is postharvest losses. This is a crucial issue in Africa’s agricultural value chain, which the UN’s Food and Agriculture Organization estimates at as high as 37 per cent of total production.

The report also warns that @Businessdayng

Africa needs to tackle the IT skills and digital literacy gap, especially amongst farmers, extension agents and e-agriculture entrepreneurs.

If not addressed, these could limit the region’s efforts to contributing to or leading the Fourth Industrial Revolution at the expense of the agriculture sector.

Benefits of digitalization are already being seen across much of the agricultural value chain, from providing access to information and other services including finance all the way to improving links to markets, the report said.

It added that the technologies can include blockchain, Big Data, robotics, and the Internet of Things, as well as more low-tech and frugal innovations.

Wednesday 03 July 2019

BUSINESS DAY

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OCP Africa, ABU Zaria collaborate to launch Agribooster Campus Offer …supports 5,000 farmers Josephine Okojie

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CP Africa, global producer and expor ter of phosphate based fertilisers and Ahmadu Bello University (ABU) Zaria have collaborated to launch an Agribooser Campus Offer initiative to boost maize production in the country.

The initiative which is an intervention program will provide support to 5,000 maize farmers within the university and its immediate environs.

As part of the launching of this program, the Faculty of Agriculture ABU Zaria nominated 15 of its postgraduate students to be trained and equipped by OCP Africa on agriculture extension skills in order to reach the target 5,000 farmers, teaching them best practices in the application of various farm inputs to maximize their

yield in maize cultivation.

“Agr ibooster Campus Offer is the first of its kind for Nigerian universities and we will provide the farmers with key inputs such as fertilizers, seeds, and agrochemicals. We will fund the project through our partnerABU Microfinance Bank Limited and training for the postgraduate extension workers who will, in turn, train the farmers,” Caleb Usoh, country manager of OCP Africa, said during the launch.

“We are very positive that this program will significantly expand the yields of these farmers, based on the quality of the seeds and fertilizers we have brought in. The students who are going to become agri-promoters in the different villages where these 5,000 framers are operating will create awareness for them in the proper use of farm inputs,” Usoh said.

“With this intervention by OCP Africa and its partners, the farmers will be able to get

L-R:Olufunmilola Alabi, dean- Faculty of Agriculture,Ahmadu Bello University(ABU); Ibrahim Garba, vice-chancellor, ABU, Zaria and Caleb Usoh, country manager,OCP Africa during the signing of Memorandum of Understanding (MoU) on Agribooster Campus Offer between OCP Africa and ABU Zaria recently in Kaduna.

the right types of fertilizers and other critical inputs in sufficient quantities, and at the right time,” he added.

Also speaking, Olufunmilola Alabi, a professor and dean – Faculty of Agriculture, ABU Zaria said that the University is glady

that OCP Africa has chosen the institution to roll out its agriboooster campus initiative.

“The selected postgraduate students are being trained to become extension workers who will work with the farmers within our immediate environs. We expect that this

Cross River commences supply of rice seedlings to Bayelsa, Delta, others MIKE ABANG, Calabar

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he rice initiative of the Cross River State Government has started yielding results with the supply of rice seedlings to Delta and Bayelsa states.

Other states within the Southern region are next in line in the supply chain from the automated rice seeds and seedlings factory commissioned in June last year.

The supply forms part of the first batch of production worth N3billion of a N10.8 billion order for the southern states under the auspices of Rice Farmers Association of Nigeria (RIFAN) with the support of Central Bank of Nigeria (CBN).

Speaking to newsmen at the Ayade Industrial park in Calabar, Cross River governor, Ben Ayade stated that the state will also provide all the seedlings support services for the states.

Giving insight on the feat which reflects a complete realisation of the vision for rice seeds and seedlings factory in Cross River, Ayade said, “We are gradually migrating into technology-

based rice farming where we move from the cultivation of seeds to seedlings.”

“When you start with the seedlings, it gives you pleasure because you are already dealing with the seed that has already germinated and it is set to go into the soil and grow very fast, “ he added.

“As we do this harvest, we are conscious that harvest has to be done in the evening because that is when there is minimal destruction in terms of atmospheric temperature that affects the bio-stability of the seedlings,” The governor also explained.

He p o i n t e d o u t t h a t the trucks delivering the seedlings w ill move all through the night to arrive at the states early hours of the day and plant the seedlings straight into the planter.

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“We are also going to p rov i d e m e c h a n i s a t i o n support and planting services, so indeed what is happening is that Nigeria gradually is migrating from the primitive, rural and African method of rice farming to a civilised modern technology driven farming as our yield will increase,” the governor said.

Ayade who personally joined in loading the consignment into a wooden truck said that overtime, Cross River will lead the country into a situation where it will be the next exporter.

“The payment for the supply is not done by individual farmer or state, but coordinated under the RIFAN- CBN program, so that is the way to handle it. Before we make a supply to a state, we receive an order from RIFAN, go to that state, do a

intervention would increase the maize yield drastically for the farmers concerned, and it will translate into more money for them,” Alabi said.

Abdulkadir Kasim, permanent secretary, Ministry of Agriculture, Kaduna State, and representative of the

state governor at the event, expressed optimism that Agribooster Campus Offer will be a powerful complement towards the transformation of agriculture in Kaduna state.

“We congratulate the company and its partners for putting together this inter vention which w ill ultimately help our state to move agriculture away from subsistence levels and make it a more profitable business,” he said.

Elijah Ogunshola, one of the selected postgraduate extension workers who spoke with journalists said that the training he has undergone under the programme has further deepened his capacity.

“It is high time we brought our local farmers up to speed with modern practices, and

by God’s grace, we will try our best to see that we put a smile on the farmers face, helping them to make farming a more profitable venture than what they are used to,” Ogunshola said.

Low agric budgetary allocation hampers productivity, says expert valuation of the preparedness of the people and farmers to receive, we then have a list of all the potential recipients farmers and on the basis of that, we compute that into our system and know the quantity that will be loaded to a particular state,” he further explained.

In his remark, the governor said that his joy is that the seedlings factory is now a reality and that the state now has a huge challenge of almost converting every single soil that is arable into rice farming owing to the huge demand.

He commended President Muhammadu Buhari for the special commitment to have the project come into full realisation.

While encouraging young Nigerians to go into ag r i c u l t u re i n o rd e r t o become agropreneurs and millionaires from agriculture, “I intend to make 18 green millionaires driven from agriculture, green because they were peasants before they met Ayade and become millionaires of agriculture, so every local government area in Cross River will have one millionaire made by Ayade,” he added.

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Victoria Nnakiaike, Lokoja

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n expert, Abdul Miliki, d i re c t o r- g e n e ra l of Conscience for Human Rights and Conflict Resolution (CHRCR) has said that the low budgetary allocation to the agricultural sector by the Kogi state government is limiting farmers productivity in the state.

Miliki made this remark at a two day citizen’s dialogue on budget analysis of approved 2019 state agriculture budget recently in Lokoja, saying that budgets are passed to ensure adequate infrastructural and human development in the state.

He equally decried the low allocation of 4.4% for agriculture against the 10% commitment of the Maputo Declaration.

According to him, the budget analysis, its break down and publication by budget and planning ministry will keep the citizen and stakeholders of various sectors abreast of government acitivies.

Earlier in his address the Mathias Okpanachi, chairman of Public Finance of Agriculture (PFA) budget committee disclosed that the committee is committed @Businessdayng

to the production of budget analysis as it affect agriculture and to convene stakeholders and citizens interactive meeting that would ensure food security in the state, adding that the meeting i s a i m e d at i d e nt i f y i ng challenges in the sector.

Okpanachi emphasized the need for citizen friendly version of the state agriculture budget which he said would enable average Kogi citizens understand, participate and fully engage in the deliberation of the approved budget.

He added that the budget analysis would provide a clear view of the sector which will benefit the small scale farmers and the general community in holding the duty bearer accountable for efficient inclusion for participatory governance.

According to him, the committee membership cuts across NGOs, media and small scale women farmers of Nigeria ( SWOFON ) and has equally established a periodic interface between citizen and public office holders in terms of financing of Agriculture sector especially human capital development for increased investment in the state

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Wednesday 03 July 2019

BUSINESS DAY

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Wednesday 03 July 2019

BUSINESS DAY

COMPANIES & MARKETS

17

KPMG unveils Africa’s first Insight Centre, revolutionizes

COMPANY NEWS ANALYSIS INSIGHT

Pg. 18

MARKETS

Our biggest takeaway from G-20 summit & why it matters to Nigeria LOLADE AKINMURELE

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onald Trump and Xi Jinping seem eager to put an end to a fractious trade war that looms large on the global economy.

At the ongoing G-20 summit, the pair struck a truce in their trade war and agreed to return to the negotiating table to pick up from where they left off after talks fell apart last month.

Trump said he wouldn’t be putting additional tariffs on China for the “time being,” and that he’ll allow U.S. companies to supply Chinese tech Giant, Huawei Technologies Co. Trump also said Chinese President Xi Jinping had promised to buy “tremendous” amounts of U.S. agricultural products in exchange. “We’re going to give them a list of things we’d like them to buy,” Trump said at a news conference following the Group of 20 summit in Osaka, Japan.

Agreeing to start fresh negotiations with China is no outright guarantee that a trade truce may finally be in the offing, but there’s no

denying that Trump’s change of tone means a layer of worry about global growth has been removed.

The significant downside risks from the 18-month old trade war between the world’s two largest economies had threatened to disrupt the global economy and caused economists to forecast a slowdown in global economic growth this year.

The International Monetary Fund (IMF) lowered its growth forecast for 2019 to 3.3 percent- the lowest since the financial crisis- from the previous level of 3.5 percent in its latest World Economic Outlook(WEO), marking the third time in six months that the fund revised its outlook downward, as the trade war worsened.

A trade truce would put some of the fears about slowing global growth to rest. It would also give global equities a boost.

—How Nigeria benefits from a truce A trade truce between the US and China is not only beneficial to the global economy but also to Nigeria, Africa’s largest oil producer.

That’s because wherever

global growth goes, the demand for crude oil tends to follow.

In periods of economic booms, oil demand jumps, along with prices, but when there’s a slowdown demand softens and prices fall.

This is not to say there aren’t other factors that could

cause oil prices to climb in the face of an economic slowdown (like when there are supply disruptions).

The positive relationship between oil prices and global economic growth is one Nigeria benefits from.

That means if a trade truce is struck and the global

economy is able to perform better, then the price of oilwhich accounts for the single largest chunk of government revenue in Nigeria- is likely to increase, implying more cash for Nigeria.

More cash for Nigeria translates to a stronger chance of implementing the

2019 budget, which is predicated on an oil price of $60 per barrel.

A possible downside of the truce would be the negative impact of a stronger dollar on the exchange rate. The stronger the dollar, the higher the chances of a weaker Naira.

L-R: Dennis Okoro, director, MTN Foundation; Julius Adelusi-Adeluyi, chairman, MTN Foundation; Reginald Okeya, director, MTN Foundation, and Femi Amos Oloruntoba, chief of staff to the NDLEA chairman, at the awareness walk for the MTN-led Anti-Substance Abuse Programme (ASAP) in Abuja

MORTGAGE

Infinity Trust’s half-year profit hits 7-year high on interest income surge ISRAEL ODUBOLA

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nfinity Trust Mortgage Bank Plc, Abuja-headquartered mortgage lender, posted a stellar half year performance, as profit advanced to its highest level in seven years since 2013, driven by surge in interest income.

Figures from the lender’s half-year earnings scorecard, showed profit after tax increased to N211 million between January and June 2019, indicating some 50 percent increase over N141 million realized in the previous comparable period.

Analysis of the company’s bottom-line figures between 2013 and 2019, revealed that profit surged 219 percent from N66 million to N211 million, within the seven-year period, with compound profit growth rate settling at 18 percent.

Infinity Trust Mortgage

Source: Company’s financials

Bank’s interest income rose to a record high of N497 million in the first six months of 2019, N161 million or 48 percent higher than N336 million posted a year earlier.

All the four constituents of the lender’s interest income except estate mortgage income, trended northwards in the review period.

Interest earned on other mortgage loans and advances to customers, which accounted for 46 percent share in interest income, spiked 52 percent from N152 million to N231 million.

While interest on – national housing funds loan and treasury operations & placement advanced 53 percent and 74 percent re-

spectively to N29 million and N178 million, estate mortgage income contracted 7 percent.

Interest expense grew more than double to N90 million in the review period, a sharp rise of 105 percent over N44million posted in the previous similar period.

The spike in interest expense was fuelled by debt

issued and other borrowed funds, its major component with 64 percent share, which appreciated 123 percent in the first six months of 2019.

Interest paid on customer deposits nearly doubled to N32 million from N17 million in the prior period.

Fe e s & c o m m i s s i o n income realized by the Abuja-headed bank nearly doubled its N27 million last year figure, settling at N53 million in half year 2019, buoyed by spike in credit related fees & commission.

Credit related fees & commission, which accounted for 68 percent in total fees & commission income, jumped 125 percent from N15 million to N36 million, with commission on turnover, facilities management fees & other commission grew 67 percent, 71 percent and 46 percent respectively.

The bank’s other operating income climbed 21 percent higher to N117 million, on the back of a triple-digit growth of 108 percent in rental income, while the largest component, investment income, dipped 17 percent in face of the low interest environment.

The mortgage bank earmarked N4.3 million as credit loss expense in the first six months of 2019; peradventure customers fail to repay money owed, compared to N2.1 million in the previous similar period.

Shares of the bank have remained flat at N1.39 for the past two months, down 2.1 percent year-to-date, outpacing the Lagos bourse that has lost 5.8 percent year-long.

Infinity Trust Mortgage Bank Plc offers a wide range of mortgage banking services including mortgage lending and lines of credit.

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: David Ogar

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Wednesday 03 July 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

TECHNOLOGY

KPMG unveils Africa’s first Insight Centre, revolutionizes business technology SEGUN ADAMS

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magine being able to bring your ideas to life with cutting edge technology that allows you to interact directly with data, and create potential solutions for your business challenges. KPMG, a leading professional services firm globally and in Nigeria is pushing the frontier of business technology through its Insight Centre.

KPMG in Nigeria has announced the opening of the KPMG Insights Centre in Lagos, the firm’s first and foremost Digital Centre designed to provide digital solutions to its clients to become more competitive in the industry.

The Centre which is located at the KPMG Tower in Lagos, Nigeria, leverages the firm’s collective capabilities across signal sensing, design thinking, data and analytics,

Artificial Intelligence (AI), digital transformation, strategy, business process and technology to bring greater efficiency and competitive advantage to businesses.

According to Kunle Elebute, Senior Partner, KPMG in Nigeria and Chairman, KPMG Africa, KPMG is constantly focused on making strategic short and long-term investments that address market disruption and support a transformation journey.

“The KPMG Insights Centre helps us to bring together our capabilities in innovation, facilitation and leading/ emerging technologies in a new way that represents how KPMG is transforming businesses across the industry and how we can help our clients succeed,” He said.

At the event graced by business leaders, Alhaji Aliko Dangote, owner of the Dangote

Group, who said the group is targeting 30 billion dollars revenue from its current 4 billion dollars, expressed his delight in the KPMG innovation.

“This will assist in our own businesses by predicting our customer behaviour and our operations in various industries because we have a lot of industries that are very complex, but this will help sort out our issues and help us run our businesses,” he said.

Jim Ovia, chairman and founder of Zenith Bank also expressed satisfaction with the KPMG Insight Centre. “We are very impressed with the AI (Artificial Intelligence) and the innovations, and we do think that’s the future, and many organisations will look forward to partnering with KPMG in this regard,” Ovia said.

L-R: Wayne Qiu, deputy project director, Africa and UK GRG Banking; Adam Lee, general manager, GRG Banking, China; Adewale Adeyipo, acting CEO, CWG Plc, and George Kaloutas, sales manager, Africa GRG Banking, at a courtesy visit to CWG Plc recently.

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TECHNOLOGY

Top technology players set to discuss progressive innovation at PAADC design competition FRANK ELEANYA

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he Professor Ayodele Awojobi Design Competition (PAADC) would be hosting over 2000 technology enthusiasts, students, and innovators who will be converging at the University of Lagos, Akoka for the grand finale of the annual competition on July 27, 2019.

PAADC is a national event that spurs and encourages innovation among young Nigerians, creates relevant solutions to solve some of Nigeria’s biggest challenges and encourages a focus on STEM education in Nigeria.

The third edition (PAADC 3.0) is themed “The influence of innovation and technology in a progressive society” and will foster a dialogue on ground-breaking technological breakthroughs and methods, feature leading technology

and start-up founders.

PAADC 3.o would also feature the top five teams shortlisted for the finals, from a pool from over 45 African tertiary institutions, all competing to win the grand prize of one million naira with ideas that proffer solutions to societal problems in health, transport, agriculture and financial technology among others.

Speaking ahead of the event, Chairman, PAADC Planning Committee, and Engineering Student at the University of Lagos, Adedayo Aruwajoye said “The PAADC 3.0 Grand Finale promises to be exciting and filled with new innovative solutions and a fantastic line-up of speakers and partners.

We expect representatives from our partners, educational and research institutions across Nigeria and students who will be providing insights

into how technology is disrupting Africa and Nigeria in particular, the role of sustainability and the existence of transformational opportunities within the continent.

PAADC will also throw up the need for us to upskill quickly to meet the demand of digital transformation within the continent and become better prepared for the 4th revolution”.

Some of Nigeria’s biggest companies have already thrown their weight behind the event. Verraki Partners, a Business, Technology, and Consulting firm will be sponsoring the grand prize of One Million Naira to the best idea while other partners and sponsors include Kawai Technologies, Jumia, Lagos State Government, Lagos State Employment Trust Fund (LSETF), Primero Transport Services Limited, The Future Africa Project and so on.

L-R: Sekinat Kayode-Lawal, fertility nurse; Uwa Joseph Olayinka, clinical embryologist; Ogunniran Babatunde, consultant gynecologist, all of Bridge Clinic, and Alero Edu, at the facility tour to commemorate 20years anniversary of Bridge Clinic in Lagos.

Pic by Olawale Amoo

L-R: John Aderibigbe, managing consultant, DU&T Consulting; Akindele Olugbenga, admin manager, Sarsoli Industrial Limited; Baskaran. T, GM, Sarsoli Industrial Limited; Ada Nsoedo, PA to MD, Sarsoli Industrial Limited, and Azeez Rasheed internal auditor, Sarsoli Industrial Limited, at the presentation of ISO certificate to Sarsoli Industrial Limited.

HEALTH

PharmAccess, EDC partner to commence HMP phase three initiative IFEOMA OKEKE

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he PharmAccess Group and Enterprise Development Centre (EDC) of the Pan Atlantic University have entered the third cohort of the Health Management Programme (HMP) initiative.

The capacity building programme is geared towards teaching healthcare professionals about the business end of the critical services.

The programme, designed by a faculty consisting of seasoned professionals

from PharmAccess and EDC, runs for five months at the ultra-modern facilities of the EDC, Pan Atlantic University, Lagos.

Over the last two cohorts, a total of 67 participants have been trained in the business of healthcare. Of this number, about seven participants have become involved in public-private partnerships to renovate and operate defunct health facilities, with access to finance scheme designed by PharmAccess, in partnership with the gov-

ernments of Lagos and Delta States.

The objective of PharmAccess is to strengthen the capacity of healthcare professionals to run their businesses on a profitable and sustainable basis and also help them prepare their business for structure growth by access innovative loans through its medical credit fund.

The current cohort of the HMP, which commenced in June 2019, is expected to run until October 2019.

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L-R: Chinwe Egwim, economist, FBN Quest Merchant Bank; Evans Woherem, chairman, Digital Africa; Ifedayo Durosinmi-Etti, founder, Parliamo Bambini, and Michael Oluwagbemi, co-founder, Wennovation Hub, at the 7th digital africa conference and exhibition in Abuja, recently

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Wednesday 03 July 2019

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19

cityfile

Court sentences 2 in Ibadan for internet fraud REMI FEYISIPO, Ibadan

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Gridlock at Lagos/Abeokuta expressway, after the downpour on Monday.

Pic by David Apara

Lagos plans repair of dilapidated school facilities JOSHUA BASSEY

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overnor of Lagos State, Babajide Sanwo-Olu, has kicked-off an assessment tour of public schools across the state with a view to undertaking their rehabilitation during the long holidays.

The aim is to improve quality of education in state-owned schools which would impact positively on the students.

Sanwo-Olu, represented by his deputy, Obafemi Hamzat, while touring

some of the schools on Monday, assured of the immediate repairs of all identified dilapidated facilities in the first phase of the plan to strengthen the public schools.

“The reason why we are embarking on a tour of our schools is to physically assess the quality of facilities and see things for ourselves. We are choosing schools that are in bad shapes for immediate rehabilitation. Children will be going on holiday; before they come back, we want to see what we can immediately fix, so that

these pupils won’t be at disadvantage in the area of learning,” he said.

Hamzat said that pupils and students needed to be protected from harsh weather and made comfortable while while in school.

“If it is dilapidated classrooms, we are fixing immediately in these schools, this would go a long way in reducing overcrowding in our schools. But, we understand the challenges vary from one school to another; we are committed to changing their conditions for the future of our children and state.”

Among the schools visited was Maryland Primary School, where the headmistress, Adeyemi, conducted the deputy governor round and explained the challenges posed by decrepit facilities to pupils.

It was discovered that of the 32 classrooms originally built by the government, only 22 classrooms are currently in use in the school - a development that has led to overcrowding.

Also visited were Saint Francis Primary School, also in Maryland, as well as other schools in Papa Ajao and Agege areas of the state.

Lagos residents cry out over AMCON’s plan to evict them from estate …We’re not against negotiation, says AMCON JOSHUA BASSEY

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esidents of Victory Park Estate sitting on 33 hectares of land at Osapa London along the Lekki-Epe corridor have urged the Asset Management Corporation of Nigeria (AMCON) to stay action on its planned forcefully eviction of over 300 families from their properties within the estate.

Benjamin Atebe, counsel to the residents, who spoke with journalists in Lagos, also urged the Federal Government to intervene and call AMCON and other concerned authorities in the matter to order.

According to the residents, the planned eviction has brought upon them untold hardship due to a “combination of corporate fraud, unbridled abuse of power, and deliberate orchestration of inhuman treatment.”

Atebe said “we wish to state that categorically that AMCON, some banks, the Awosedo family, and the police are all culpable in this gross act of human rights abuse which has seen people being forcefully evicted from their homes using the instrument of government (the police), and faceless thugs.

Below are the facts of the matter to further corroborate our position.” www.businessday.ng

He explained that as far back as 2003 some of the residents bought into Victory Park Estate to develop their houses after due legal diligence and confirmation at the Lagos State land registry which showed that the title to the land that was in the name of Knight Rook Limited, and was free from any encumbrance.

The legal interpretation of this was that the title was good, no mortgage, pledge, charge etc that had been obtained against it by any financial institution or any other company. From 2003 till about June 2017, the present homeowners in the estate continued to buy into the

estate and also developed, living in the estate without molestation by anyone until in June 2017 when they woke up one morning to see a publication that Knight Rook Limited, the owner of the global C of O over Victory Park Estate was in receivership with other companies over a loan one of the companies allegedly took from Sterling Bank, Skye Bank (now Polaris Bank), Wema Bank and FCMB and used Knight Rook Limited with its shares as security that the companies have defaulted in paying while the said loan, now an eligible bank assets was subsequently sold to AMCON in 2011 or 2012.

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he Federal High Court, Ibadan Division has convicted two young men for internet related offences and sentenced them to jail.

The convicts, Olubayo Oluwaseyi, and Abe Tolulope Emmanuel were found guilty of fraudulent impersonation and sending pornographic and indecent pictures in the respective one-count charge filed against them by the Economic and Financial Crimes Commission (EFCC), Ibadan zonal office.

Due to the plea bargain agreement between them and the commission, the original charges were replaced with the amended charges as presented before the court on Monday.

Olubayo’s offence was contrary to Section 22(3) (b) of Cyber Crime (Prohibition, Prevention Etc) Act, 2015, and punishable under Section 22(4) of the

Act. Sending pornographic and indecent picture, the charge against Abe, runs contrary to Section 24 (1) (a) of Cyber Crime (Prohibition, Prevention Etc) Act, 2015, and punishable under Section 24 (1) of the Act. They pleaded guilty to the latest charges when they were read to them.

After the pleas, the prosecution counsel, Iyabo Daramola, prayed the court to convict and sentence them accordingly.

In delivering her judgment, Justice Patricia Ajoku, upheld the terms in the respective plea bargain agreements as she sentenced Olubayo to six months in prison, and jailed Abe for five months.

The convicts were also ordered to restitute to their victims the money they fraudulently collected from them, and also to forfeit all the items recovered from them to the Federal Government of Nigeria.

Oyo orders contractors back to site REMI FEYISIPO, Ibadan

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yo State government has ordered that the contractor handling abandoned building projects on the premises of St. Paul’s Anglican School 1&2, Yanbule, Bashorun, Ibadan, Bamolaid Multi-Business Services to return to site with immediate effect.

The executive chairman, Oyo State Universal Basic Education Board, Nureni Adeniran, gave the order while inspecting school construction projects across Ibadan, the state capital.

Adeniran opined that pupils in primary schools must be given necessary supports and morals that would endear them to their studies, one of which is having a good roof over their heads while studying.

He promised an im@Businessdayng

mediate offset of backlog of arrears owed the contractor by the previous government, noting that the decongestion of the little space on the school premises is key.

T h e c h a i r m a n e xpressed his dissatisfaction at the slow pace at which the project was executed, while expressing optimism that there would be a quick return to normalcy and prompt completion of the project before the incumbent administration’s 100 days in office.

“There is a significant cost here. In this case, it is very important to complete this project in earnest, considering the unconducive environment in which these children are learning. The contractor must come back and we assure him that the debts owed by the previous government will be paid,” he said.

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Wednesday 03 July 2019

BUSINESS DAY

BANKING

In Association with

Banking industry CAR rises to 15.60% in April Stories by HOPE MOSES-ASHIKE

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anking industry capital adequacy ratio (CAR) increased marginally to 15.60 per cent in April 2019 from 15.14 per cent in February 2019, while Non-Performing Loans (NPLs) decreased to 10.95 per cent from 11.28 per cent during the same period.

However, the NPLs ratio is still higher than the prudential limit of 5.0 per cent. Other vulnerabilities in the industry include high concentration and contagion risks as well as significant FX exposure.

Total banking industry credits declined by 0.58 percent between April 2018 and April 2019, a trend that has persisted since 2017.

“This is a worrisome development given the slow and fragile economic activity in the country”, said Godwin Emefiele, governor of the CBN in his personal statement.

Maximum and prime lending rates rose in April, while rates on consolidated demand, savings and terms deposit declined, further worsening the gap between the average lending

and deposit rates.

“It is also disappointing that the decrease in the MPR in March has not impacted in expected way on rates at the retail end of the credit market, although rates on intermediate financial assets decrease”, Adeola Festus Adenikinju said in his personal statement.

He said Coordination between monetary policy and fiscal policy is important to ensure that current policy interventions have the desired impacts on the economy. Fiscal deficit is high and worrisome, government debt is rising in the face of underperforming revenue, and security is a major challenge, posing significant threat to investment and economic growth.

These conditions have tended to increase averseness to risk in the industry leading to some form of asset substitution. It is especially concerning that credit to the private sector is declining and this needs to be halted and possibly reversed to strengthen economic activity and job creation.

Almost three months after the Central Bank of Nigeria (CBN) cut its benchmark interest rate by 50 bps to 13.5 per cent, in March 2019, lending to the private sector continued to decline with attendant high cost.

This was the position of members of the Monetary Policy Committee (MPC) who participated in the last meeting held in May 2019 as released on Tuesday by the CBN. “In arriving at a decision at the May MPC meeting, I reckoned that the effects of the

downward adjustment of the MPR in March had not fully manifested and that downside risks to growth were quite strong”, Edward Lametek, deputy governor said.

Although, interbank rates slightly eased in response to the adjustment in the policy rate, retail rates remained sticky downwards.

More importantly, credit to the real economy declined.

From March 2019 and May 2019, central banks survey revealed that only Nigeria reduced her policy rates, while others held their policy rate constant.

These included the Fed, Bank of England, ECB, Reserve Bank of India, Bank of Japan and Peoples Bank of China, all of which retained their policy rate in response to the prevailing uncertainties in the global economy.

Balami, Dahiru Hassan explained in his personal statement that the reduction in the NPLs was driven by write offs and recoveries. There was also increase in provisioning by banks for NPLs in the review period. Similarly, the industry liquidity ratio (LR) rose further from 51.05 percent in February, 2019 to 52.61 percent in April 2019. This performance was 4.81 percentage points.

Sterling Bank opens Computer Village branch in Lagos Union Bank is building capacity in education sector

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terling Bank Plc has opened a new branch at the popular Computer Village in Ikeja, Lagos, to meet the financial needs of its numerous customers operating in the area.

The computer village is a marketplace designed to offer trusted, speedy and happy shopping experience to technology consumers as well as a servicing hub for both retailers and wholesalers of technology products in Nigeria and Africa.

Speaking at the opening ceremony, Grama Narasimhan, executive director, retail and consumer banking, Sterling Bank enjoined operators in the market to move their financial transactions to the bank, remarking that the bank is capable of meeting their financial needs.

He informed operators in the market that the bank has a stable and reliable information technology platform that is capable of meeting their financial needs in the market.

The executive director enjoined them to demand for prompt services as well as give feedback, whether positive or negative, to enable the bank to serve them better.

Also speaking, Eniola Obe, regional business executive for Ikeja region with Sterling Bank, remarked that as a business executive for the region for about nine years running, “One of my

dreams has always been to open a branch at the Computer Village and I am happy today that this particular dream has come to pass.”

She thanked the management of the bank and her colleagues for their effort in helping to turn her dream into reality.

She assured operators in the market of the readiness of the bank to support them to grow, adding that the bank will design products to meet their needs in cases where existing products that could meet such needs, as well as offer interest rates that suit their business needs, are inadequate.

Adewusi Oluwakemi, a member of the cluster marketing unit of the bank said the unit is ready to work with operators in the market as partners in a bid to make their businesses more successful.

In his contribution, the President of Computer and Allied Products Dealers Association of Nigeria (CAPDAN), Ahmed Ojikutu, thanked Sterling Bank for opening the branch and for helping to clean the environment of the market, remarking that modern business has changed from pure capitalism to social capitalism by putting a human face to the things they do instead of only pursuing profit.

He advised officials of the bank to make the customers’ journey short and encouraging by offering quality services to them.

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nion Bank recently held a series of training sessions for educators in Lagos, Abuja and Rivers as part of its initiatives to support the development of the education sector.

Over 175 teachers attended the free workshops which were organised to upskill and equip them for more effective teaching. The classes covered modules on ‘Inspiring and Motivating Learners’ and ‘Developing Critical Thinking Skills’ among others, and were delivered by NFCR Educational Consultants.

The Bank also organised conferences for heads of schools in Lagos and Abuja where renowned educators spoke on the theme, ‘Leading Change in a Dynamic Environment’.

Among the speakers were Lai Koiki, Proprietor, Greensprings School; Femi Ogunsanya, managing director, Oxbridge College; Aisha Babangida, board member, El-Amin Schools; Folasade Adefisayo, Principal Consultant, Leading Learning Limited and Angela Ajala, executive director, Ladela Schools.

The training sessions and conferences were organised on the platform of Union Bank’s education initiative - edu360, launched in October 2018 to promote collaboration and partnerships that will boost the development of education in Nigeria. The inaugural two-day edu360 event

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featured exhibitions, panel discussions and seminars that brought together investors, parents, school proprietors, teachers and students.

During the event, over 200 teachers from private and government owned schools benefitted from free training workshops organised by the Bank.

Speaking concerning Union Bank’s focus on education in Nigeria, Kunle Sonola , head of commercial banking, said, “Union Bank recognises the need for greater involvement of the private sector in education if we hope to achieve the level of growth and development we seek. We therefore designed edu360 as a holistic, multidimensional platform to engage the various stakeholders in the sector and facilitate much needed investments, capacity building for teachers and collaboration of parents and educators on child development and curriculum.”

The Bank will host the second edition of its annual edu360 event in October. The event will take place in Lagos and is expected to draw thousands of education stakeholders including government officials and regulators, educators, parents and students.

Union Bank remains committed to supporting Nigeria’s growth by identifying and investing in sectors that are vital to shaping a better, more sustainable future for generations to come.

@Businessdayng

Wednesday 03 July 2019

BUSINESS DAY

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Debutant Rolls Royce SUV hosts Nigeria’s super rich …a heritage of perfection, craft mastery, luxury adventure in all-terrain, whether off-road or on the road. It is named after the Cullinan Diamond, the largest gem-quality rough diamond ever discovered.

The Cullinan sits above the Ghost and below the Phantom in RollsRoyce’s line-up. Series production of the Cullinan began in the second half of 2018 while first customer deliveries started first quarter of 2019.

The testing phase started January 2, 2016 and has been tested on different terrain including on snow.

Its innovative features enhance every journey and makes driving experience truly luxurious. The signature Rolls-Royce motifs on the SUV speak to a heritage of perfection, and the mastery of craft creates a new dimension in luxury adventure.

In every way, Cullinan has come to

MIKE OCHONMA Transport Editor

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rom the timeless appeal of Phantom to the fearless attitude and looks of the Black Badge, it was indeed an evening of great fun, popping of champaigns, exquisite meal and networking and sealing of business deals among the Nigeria’s super rich and the upwardly mobile gathered at the residence of the deputy British High Commissioner (BHC) to Nigeria to welcome the first ever Rolls Royce Cullinan SUV (Sport Utility Vehicle) from the Rolls-Royce Motor automakers.

The event afforded the super rich exclusive audience, collectors and prospective clients of the super luxury British automaker to experience the all-new Cullinan, world’s most expensive SUV in an exclusive luxury setting.

The Rolls Royce Cullinan luxury nameplate led a roll call of different other variants of Rolls-Royce cars parked on the green lawn before guests were ushered into the expansive dining area for dinner. On the list of the Rolls-Royce’s roll call of honours in addition to the Cullinan were the new Phantom and the Black Badge Ghost.

As guests arrived, most of them entered into the lush green residence ambience of the the British envoy’s to Nigeria in their classy Rolls-Royce cars. It was a roll call of exclusive owners of the brand in Nigeria whose identity is jealously guarded with utmost respect, secrecy and confidentiality. Driving into the venue by these set of privileged Nigerians was as if, owning a Rolls-Royce car was the ultimate visa to be a part of the dinner.

While the mystery and secrecy

surrounding the Rolls Royce pricing details makes it a difficult disclosure by most franchise owners across the globe due to customer’s individual customisation, checks on pricing details of the new Cullinan SUV indicates that it costs between $250,000 and $425,000.

Well-dressed ushers led the carefully selected high networth personalities to the welcome cocktail in the waiting room in the house of the British envoy. Later, they all moved to the dining table well decorated with flowers and other bespoke accessories.

Laure Beaufils, the British envoy started the dinner part of the evening by welcoming everyone to the ‘country home’ of Rolls-Royce in Nigeria, while expressing her excitement in co-hosting the select VIPs to an exclusive dinner event to celebrate the British luxury brand.

Cosmas Maduka, president of the sprawling and enterprising Coscharis Group, in his comments

spoke about the objectives of the gathering. According to him, “This evening event is put together to simply say thank you to you our ever loyal customers for your patronage over the years and equally give you the exclusive privilege to privately view some of our latest collections of the globally respected iconic RollsRoyce brand especially the new SUV Cullinan, the new Phantom and the new Black Badge Ghost all on display tonight to further excite you as our Rolls-Royce ambassadors in Nigeria’’.

Cesar Habib, regional director, Rolls-Royce Motor Cars, Middle East and Africa (MEA) leading a team from the regional office in Dubai said, “we are excited with this gathering of credible brand’s enthusiasts that gathered to view our new variants to further delight them as Nigeria remains one of our growing market with great potentials”.

It would be recalled that in 2018, Rolls-Royce Motor Car announced

4th L-R: Laure Beaufils, deputy British High Commissioner to Nigeria and Cosmas Maduka, president Coscharis group with few privileged Rolls Royce freaks during the presentation of the new Phanthom, Black Badge with the Cullinan SUV leading the British automotive namepalte inside the residence of the envoy in Lagos.

the debut of its first Sports Utility Vehicle (SUV), Cullinan, a masterpiece that can be referred to as a show of absolute freedom.

The SUV is the pinnacle of luxury that shows lovers of Rolls-Royce can live their desired luxury lifestyle

change the game.

The Cullinan of an incomparable luxury that Rolls-Royce is known for wherever adventure takes the occupants with its elegant inteContinue on page 22

Cheki.com.ng takes vehicle financing burden off Nigerians …Offers price comparison and insurance tools

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heki.com.ng, the pioneering digital marketplace for cars in Nigeria has announced a major advancement in its long term plan of making the car buying process easy for Nigerians. This follows the successful launching of the first set of products that is primarily aimed at improving the car buying experience among Nigerians.

The two financial technology products which were launched in the first and second quarter of this year are the Cheki Finance; a quick car loans service called Cheki Finance, and the Cheki True Price which is car price comparison tool.

Among other imperatives, Gbenro Dara, the chief executive officer Cheki. com.ng, a digital marketplace for cars in Nigeria disclosed that, the Cheki Finance aims at easing the financial burden of acquiring both new and used car in Nigeria.

Under this arrangement, car buyers can apply for loans to purchase

L-R: Gbenro Dara, chief executive officer; Adebanke Ogunlesi, Corporate sales manager; Ikenna Oyenta, marketing campaign manager and Olumide Aduwo, senior corporate sales executive, all of Cheki.com.ng at the recent unveiling of the Cheki.com.ng finance scheme in Lagos

cars being sold on Cheki.com.ng, and this can be done at the click of a button. The second product on the other hand called Cheki True Price aims to foster price transparency and help car buyers get value for the money they intend to spend on acquiring cars. www.businessday.ng

True Price shows the price range that a car falls within and goes on to compare this price range with the price that a car seller is asking. This proves to be a valuable tool for car shoppers as it helps them get value for their money.

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“Our strong commitment to customer-centricity is what has allowed us to remain a top player in Nigeria’s automotive market for almost a decade. In furtherance of our efforts, we’re investing more in technology solutions that help our users to overcome the most prevalent challenges as regards car acquisition’’, say Cheki Nigeria’s CEO, Gbenro Dara’’.

Over the years, Cheki.com.ng has continually made efforts to innovate its processes, products and packages and also in the development of technology solutions that improve the buying experience of car buyers in Nigeria. In addition to its fintech solutions, the platform also provides car user reviews and car buying concierge services.

Cheki Finance is a car loan service designed to effectively meet the financing needs of car buyers in the country. This service aims to provide car buyers with quick car loans for the purchase of Nigerian used cars, @Businessdayng

foreign used (Tokunbo) cars, or brand new cars that are available on its website; Cheki.com.ng. Cheki is offering the exciting car loan service in collaboration with top-rated financial institutions in Nigeria at a very conducive terms and conditions and convenient interest rates.

Giving more details about the company’s background, Ikenna Oyenta, Cheki.com.ng marketing campaign manager said that, Cheki is a digital marketplace for quality vehicles.

The platform provides car buyers with a wide variety of quality cars and supports car purchasing with a range of supplementary services that include car loans, insurance, and car buying concierge. Cheki also provides private car sellers and car dealerships of all sizes with qualified leads and buyers. The company has been in the business of of providing intermediary services to prospective vehicle buyers in the past six years.

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Motorists defy state traffic laws over failed Lagos-Badagry road

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NRC freight haulage up 15 percent as passenger traffic drops MIKE OCHONMA Transport Editor

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he Lagos railway district of the Nigeria Railway Corporation (NRC) has recorded a 15.20 percent in the number of wagons and 15.81 percent increase in the number of cargo haulage on its freight train services in the month of April and May 2019, with a drop in passenger traffic.

A breakdown of the statistics of passengers and goods of Lagos district for the year 2019 indicates that in terms of movement of freight, the district moved 532 wagons/17,326 tons of goods in January, 401 wagons/15,646 tons in the month of February, 438 wagons/17,520 tons in March, 684 wagons/27,320 tons for the month of April and 788 wagons/ 31,640 tons of goods in May. During a telephone chat with BusinessDay, Jerry Oche, railway district manager (RDM) of the Nigeria Railway Corporation, he disclosed that between April and May, freight movement by the Lagos railway district grew 15.20 percent in number of wagons

and 15.81 percent in terms of containerised goods moved from the Apapa port complex to the Ebute-Metta Junction (EBJ) facility of Nigerian Railway Corporation, Ijoko and Sanusi in Ogun State as far as the Kaduna Inland Container Depot.

Meanwhile, there was a decrease in the number of passengers it conveyed both in its mass transit train, (MTT), diesel multiple units (DMU) and the express train passenger trains.

A breakdown of the volume of passenger conveyed on the mass transit train services (MTT) shows that in January, it moved 130,244, February 141,244, March 162,440 with a decine to 138,673 in April and 131,641 in the month of May. The diesel multiple units (DMU) service passenger movement recorded 11,705 in January, 9,231 in February, dropped further to 7,025 in March, and later rise to 11,379 in April and dropped to 10,868 passengers that used the service in May. For the premium express train passenger service, the railway district manager, a total of 1,572 passengers used the service in Jan-

uary, for the month of Fenruary it recorded 668; 1,110 in March and 1,433 in April followed by a sharp drop to 267 passengers in May. A summary of total passenger moved from the different departure points under the Lagos district shows that between January and May, the MTT conveyed carried 70,4242, DMU 50,208 while the Express train service moved a total of 5,050 paseengers.

Responding to what are the causes of the decline in the number of passengers carried on return trip from April to May for the mass transit train (MTT), diesel multiple units (DMU) and Express train services, Jerry Oche stated that a number of factors accounted for it which is normal in the course of its operations.

These ranges from recurring incidences of derailments as result of the wet season which may cause a delay in the resumption of services as aresult of the length of time it takes to fix the problems, including obstructions experienced in passsengers trains movement as a result of the ongoing construction of the 156 kilometer Lagos-Ibadan standard gauge rain project.

Nigeria’s super rich feels Rolls Royce SUV...

Continued from page 21

rior design. The viewing suite in the rear cabin which slides out of the compartment with a single button consists of two leather seats and a cocktail table. Its personalized configuration gives you the best place in the house for the most beautiful views in the world.

Guests also had the unique privilege to preview the latest Phantom.

Phantom is not only the ultimate status symbol, but it is also the holy grail of handcrafted luxury automobiles.

Its decadent design is derived from an aluminum structure that rides atop an air suspension for euphoric comfort. It is an excellent way to show the world the finest of a luxury automobile.

Phantom comes with an inte-

rior tailored for kings which can be adorned with a custom-artwork dash. Acres of wood, real metal accents and vast expanses of fine leather cover nearly every square inch of the cabin.

Rolls-Royce offers both a standard- and long-wheelbase version of the Phantom, with the latter being 8.6 inches longer, much of which is offered as additional rear-seat legroom.

Rear-hinged coach doors open to allow easy ingress and egress to the rear seat where passengers can be treated to a myriad of luxuries such as deep-pile carpeted floor mats, power-adjustable seats with massage, a refrigerated console compartment, and remote controls for the car’s infotainment system.

Its dizzying array of optional tech includes night vision and a distinct laser-light system, but Rolls-Royce www.businessday.ng

also offers more mundane driverassistance features such as forward collision and lane-departure warning as standard.

The 2019 Black Badge Ghost that was also previewed at the event, and with it, Rolls-Royce unleashed, its aura intensified. More power, more audacity, more spirit. The boldest expression that the brand is crafted for those who will never conform.

It is Rolls-Royce’s masterpiece of sculptural grace with its daring aesthetic. Black Badge Ghost is a tenacious incarnation of elegance and a beacon for those who defy convention, and adding a supernatural power to Ghost’s elegant charisma.

Enhanced performance makes this the fastest Ghost ever. Within the opulent interior of the Black Badge, the Piano Black veneer surrounds you with an echo of darkness.

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or most private and commercial vehicle drivers along the Lagos-Badagry road, Nigeria’s gateway to other West African neighbours, the frustration of navigating through failed portions of the corridor to get to their destinations remains top priority rather than obeying the new traffic laws rolled out by governor Babajide Sanwolu few weeks upon his assumption of office.

For many of the road users who spends not less than four hours from Mile 2 to Badagry for a journey of not more than one hour if the roads are in good condition and on an average speed of 70 kilomterers/hour, it is only when there is good road infrastructure can any traffic laws will apply.

Over the past years, especially because of the total neglect by the past administration of former governor Akinwunmi Ambode, the deplorable state of the Lagos -Badagry Expressway with its attendant difficulties experienced

sity entrance gate is a deep hole inward Mile 2 on one hand and a large pool of water which can be likened to a river inward Agbara.

These alternating bottlenecks that have long divided the road into fragments at this spot as a result creating long vehicular traffic and pains to road users coupled also constitute security risks that has resulted to frequent robbery attacks on motorists.

Recounting her ugly travelling experiences along the Lagos-Badagry road, Patience Jakpa-Mike, a business-woman lamented that it has been a tedious movement with its associated harrowing experinces and health implications.

According to her, ‘’travellers to other border countries are really suffering both economic loses and health challenges due to the bad state of the LagosBadagry Expressway. I used to spend almost one day travelling between Lagos and Accra, but today, I spend nothing less than

Shame, feeling of frustration and life threatening among the Nigeria’s tax payers and other road users as the Lagos-Badagry international remains uncompleted 10 years after commencement by successive state governments.

by business owners, particularly bilateral trade between Nigeria and other Western African countries has remained a national embarrasment.

BusinessDay’s transport editor who drives along that LagosBadagry corridor can authoritatively report that, glaringly that officials of the Lagos State Traffic Management Authority whose pay package was recently increased by the new state governor using tax payers money some of who uses the decrepit road does not have any other traffic duty to carry out as a result of total collapse and confusion along the corridor.

For instance, a journey from the Agbara end all through to Iyana-Era, Ketu, Iyana-Isashi and terminating at Okokomaiko presents a picture of a vehicular density driving against traffic in an effort to avoid damages to their vehicles as a result of ditches and gullies on the highway due to many years of neglect by both the state and federal governments.

Right in front of the Okokomaiko police station near the DSS and Nigerian Navy staff quarters leading to the collapsed Iyana-Iba road and the Lagos State Univer@Businessdayng

three days”.

Some of us pay more as transportation fare to haul cargoes, which suffer delay before arriving destination and more to commute as well as to maintain one’s health.

Only recently, the Federal Roads Maintenance Agency, (FERMA) assured motorists of speedy completion of repairs on the Lagos-Badagry Expressway.

Nuruddeen Rafindadi, FERMA managing director, who flagged off the work at Igbo-Elerin area, gave the assurance during the start of the general maintenance of the Lagos-Badagry-Seme dual carriageway, Okokomaiko-Agbara sections at Igbo-Elerin on the highway.

The FERMA managing director disclosed that, the federal government awarded the contract in May and was committed to making the portion under contract from Igbo-Elerin to Agbara junction motorable.

The 70-kilometer road repair works would commence from Kilometre 20 up to kilometre 32.

The contract was awarded to WIZCHINO Engineering Limited at the cost of N3, 609,968,772.35, with a completion period of 18 months.

Wednesday 03 July 2019

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Real reasons Nigeria struggles with establishment of National Fleet, after NNSL amaka Anagor-Ewuzie

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nfavorable crude oil trade policies, high taxation and poor business practices have been identified as major impediments to the successful establishment of the long-awaited National Fleet, commissioned at the beginning of the President Muhammadu Buhari’s administration in 2016.

The call for the establishment of National Fleet became essential following the need for Nigeria and Nigerians to take their pride of place in the nation’s lucrative shipping business, largely dominated by foreign-owned ships.

BusinessDay understands that since the demise of the Nigeria National Shipping Line (NNSL) in the 90s, the country has not been able to establish shipping lines that will fly Nigerian flags, thus the domination of the business by foreigners.

For the success of the project, the Buhari’s administration in 2016 set up a National Fleet Implementation Committee (NFIC), which said it is currently clearing some of the impediments that would pave way for the establishment of

R-L: Yemi Osinbajo, vice president; Olusegun Osoba, former Ogun State governor and member, board of directors, African Circle Pollution Management Limited (ACPML), and Nyesom Wike, Rivers State governor at the formal unveiling of ACPML liquid waste treatment plant at Port Harcourt Dockyard, Port Harcourt…recently.

a sustainable National Fleet in Nigeria.

Hassan Bello, chairman of the committee and executive secretary/CEO of the Nigerian Shippers Council (NSC), who spoke in an interview with newsmen last week, expressed worries that a total of $9 billion in terms of freight on dry cargo was earned in Nigeria in 2015, all of which went to foreign ship owners due to the absence of a vessel on Nigeria’s fleet.

According to him, this has had serious negative implications on creating jobs for

Nigerian seafarers and cadets including women, the banks, insurance companies, shipbuilding and ship repair yards and the overall economy, a development that makes it urgent for the country to have an enduring national fleet.

“At the course of the work of the committee, which is a 3-year programme, it was established that there exist some major impediments in terms of laws, policies, taxes and business practices that must be cleared to create the necessary environment for the National Fleet project to

C & I Leasing, OCS Services DMCC in joint venture to operate FPSOs in Nigeria amaka Anagor-Ewuzie

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& I Leasing Plc has announced a new joint venture partnership with OCS Services DMCC (OCS) India.

The venture, which shall operate under the brand name of OCS Integrated Services Nigeria Limited (OCSISNL), was set up to operate and maintain offshore assets with emphasis on Floating, Production, Storage and Offloading (FPSO) units used by the offshore oil and gas industry for the production and processing of hydrocarbon and storage of oil.

Speaking at the official unveiling of the venture, Andrew Otike-Odibi, managing director of C&I Leasing Plc, said the partnership brought two forces together as C & I Leasing has strength in marine services and managing of marine assets, while OCS is a specialist in managing and operating FPSOs. “OCS is an affiliate of PW Offshore, one of the topmost FPSOs providers in the world.

This brings the expertise of

PW Offshore into the country, and C & I Leasing, which provides specialised services to operators in the Nigerian oil and gas industry,” he said.

According to Otike-Odibi, the joint venture was expected to offer excellent, differentiated service to businesses in the sector by leveraging on the decades of experience and expertise from both organisations that have been providing offshore support in Africa and Asia in areas like business process outsourcing, personnel management, offshore vessel operation and maintenance.

He further said that the partnership was committed to impacting the sector by identifying and nurturing talents in the sector and creating prospects for more jobs and skill development opportunities for interested young Nigerians.

“You might not have the total outsourcing of the maintenance, but you can have some of it and that for us creates a room for growth. We believe that once the expertise and the professionalism is seen and with the use of the Nigerian oil www.businessday.ng

and gas advantage, which C & I Leasing has, the JV should be able to gain traction,” he added.

Sangram Dhote, senior vice president, Operation and Maintenance, stated that OCSISNL intends to introduce a growth agenda to the Nigerian offshore business environment. To him, the joint venture has remarkable potential to provide a winwin for all stakeholders.

He added that OCSISNL will provide a perfect mix of technical expertise, operational efficiency, local understanding and quality service delivery.

Dinesh Rehani, director of OCSISNL, stated that OCS has a very strong global brand name and expertise in the field of operation and maintenance of oil production assets.

“We also provide crew for our technical services. We have a corrosion management business and also do steal replacement on offshore running assets due to the backing and equity holding of BW Offshore. We have very strong background in technology,” he said.

work,” he said.

To achieve this, it was gathered that the NFIC is working with the National Economic Management Team headed by Vice President Yemi Osinbajo, Department of Petroleum Resources (DPR), Federal Ministry of Finance, the Nigeria Customs Service (NCS), Nigeria Investment Promotion Council (NIPC), Federal Ministry of Budget and National Planning, Federal Inland Revenue Service FIRS and the Nigerian Maritime Administration and Safety Agency (NIMASA) to achieve

this objective.

Findings show that laws such as carriage of the nation’s export on Free On Board (FoB) in place of Cost, Insurance and Freight (CIF), is injurious to the nation’s economy as well as the high import duty rate of 14 percent on imported vessels and vessel spare parts, hinders the takeoff of the project.

This makes Nigerian shipping lines uncompetitive with their foreign counterparts, who acquire vessels with less than 3 percent interest and less than 2 percent import duty rate.

Meanwhile, Bello stated that the National Fleet is going to be private sector-led as the Federal Government is not putting down a kobo.

“When we create the n e c e s s a r y e nv i ro n m e nt that would make the fleet to thrive, we also create incentives that would be attractive to the investors because it is not just acquiring ships that would shut down tomorrow but we want a National Fleet that would stand the test of time”, Bello added.

Shipping, he said, contributes a paltry 0.1 percent to the nation’s Gross Domestic Product (GDP), which is far less than the contribution of the Nollywood industry, and is an aberration, given the vast

maritime endowments at the disposal of the country, most of which are untapped.

He also disclosed that with the involvement of NIMASA, the National Fleet, when fully operational, would be given a National Carrier Status, which implies that it would carry all government cargo, which would include crude oil, various materials for rail and power projects as well as other sundry cargo belonging to government agencies.

Olu Akinsoji, a shipping expert, had in a different forum, confirmed the National Fleet would be 100 percent private sector-driven.

He said the role of government is to create a conducive environment, which would in turn make the shipping business attractive to indigenous players to participate.

It is expected that the emergence of the shipping line would provide Nigerians the opportunity to own different categories of oceangoing vessels such as crude tankers, containerised vessel, bulk cargo carrier, general and dry cargo carriers among other type of vessels.

It would also help Nigeria to domesticate over N2 trillion lost in capital flight annually to foreign shipping companies that dominate Nigerian shipping business.

Maersk values role of women in development of global economy - De Werd

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aersk has become conscious of the important role women play in achieving sustainable development in the global economy, said Anita De Werd, head of Marketing and Business Development for Maersk Africa.

Speaking in Lagos on Friday, when she paid a courtesy call on Aisha Ali-Ibrahim, founder of Women in Logistics and Transport (WILAT), Maersk has made a public commitment to empower women in trade, by signing

a significant agreement with SheTrades Global.

She pointed out that the SheTrades initiative, launched in 2015, seeks to connect one million women entrepreneurs to the global market by 2020.

De Werd, who is also the global head of Marketing for Safmarine, commended WILAT for championing the course of women in the transport and logistics profession since its establishment in 2013.

She said Maersk’s vision was to be the global integrator of container logistics, and

L-R: Folake Rogers, member of WILAT; Anita De Werd, Maersk’s head of Marketing and Business Development, Africa; Aisha AliIbrahim, founder of WILAT, and Khadijat Jagun Shabi, another WILAT member, when De Werd visited WILAT founder at the Lagos Port Complex, Apapa.

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@Businessdayng

thus seeks to transform the industry.

According to her, Maersk believes diversity and inclusion are key levers to strengthen business results in the markets where it operates.

“Our company creates an inclusive culture where employees from various backgrounds are encouraged to contribute to their fullest. In doing so, Maersk has established itself in a prime position to attract people from a wide talent pool, specifically, increasing the gender and nationality diversity at senior levels in the organisation,” she added.

Aisha Ali-Ibrahim, WILAT founder, said the body, which is an arm of the Chartered Institute of Logistics and Transport (CILT), was set up to promote the status of women in logistics and transport and to bring together those who support talent and career development of women.

Ali-Ibrahim, who is also the outgoing Port Manager of the Lagos Port Complex (LPC), Apapa, said WILAT is present in 22 countries with more than 5,000 members.

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Gender inequity: Only 9.3% of Nigerian registered seafarers are women - NIMASA amaka Anagor-Ewuzie

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ut of the 6,039 seafarers on the Nigerian seafarers’ register, 567 representing 9.3 percent were females, the Nigerian Maritime Administration and Safety Agency (NIMASA), has said.

Meanwhile, the Maritime Academy of Nigeria (MAN), Oron, data show that 26 of the total 250 students in the school representing 10.4 percent are female.

Worried about this gender imbalance, NIMASA has promised to redress the situation through deliberate steps designed to accommodate more women in the nation’s shipping business.

Dakuku Peterside, director-general of NIMASA, who

gave this assurance at the weekend, said the Agency was set up to do more in collaboration with stakeholders.

Recall the Internation-

al Maritime Organisation (IMO) made gender equality the focus of this year’s Day of the Seafarer, marked June 25, with the campaign theme,

“On board with gender equality,” echoing the 2019 World Maritime Day theme, “Empowering Women in the Maritime Community.”

IMO said the emphasis on women empowerment this year was meant to draw international attention to an awful inequality in the maritime sector, where women constitute only 2 percent of the total seafaring population.

Aisha Buhari, first lady, who chaired the celebration in Nigeria hosted in Lagos

by NIMASA, also expressed worry about the poor worldwide number of women in maritime, adding that President Muhammadu Buhari was determined to provide platforms that would encourage more women’s participation in the sector.

However, Peterside said in contrast to the worldwide record of 2 percent women seafarers, Nigeria posts better statistics.

Also, while 304 of the 2,041, representing 14.9 per-

cent, beneficiaries of the Nigerian Seafarers Development Programme (NSDP) were females, 32, representing 13.4 percent, of the 239 cadets currently enjoying sea time training sponsored by NIMASA were females.

“We have adopted deliberate policies tailored towards bringing in more women to the maritime industry, particularly, the seafaring profession, in response to the global concerns. The maritime sector cannot afford to exclude the women, who make up about 50 percent of our population,” he said.

NIMASA, he said, would be engaging stakeholders in the sector to design measures and modalities for the engagement of more women in shipping activities and other areas within the maritime workforce.

Africa pledges to deliver Blue Economy at ABEF forum

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he international and Pan-African organisations have agreed to collaborate on initiatives that would promote the development of Blue Economy in Africa.

At the African Blue Economy Forum held in South African recently, the need for direct action to deliver the environmental, economic and social benefits for Africa, and particularly its coastal nations given that 90 percent of Africa’s trade is conducted by sea, was stressed during the two days of insight.

Speakers agreed on the urgent need for better cooperation between the ocean stakeholders, better governance and law enforcement.

They say that regional, national and local strategies are required to build a long-term plan and develop partnerships that are beyond short-term projects.

According to them, engaging with new technologies and innovative financing mechanisms are also critical to shaping a sustainable Blue Economy in Africa.

“We can no longer just dip our toe in the water; we

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must dive in and be decisive in making and delivering change that will serve Africa for many years to come. It is no longer business as usual.

Africa must have a sustainable blue business plan which will have a positive impact on the environment, on the economy and on society,” said Leila Ben Hassen, ABEF founder and CEO of Blue Jay Communication, organisers’ of the forum.

She said a sustainable blue business plan would accelerate Africa’s transformation, create jobs, sustain livelihoods and empower commu-

nities, while offering impactful climate change measures.

This was acknowledged at ABEF2019 across a range of panels with topics that explored how governments and the private sector can collaborate; tackling ocean pollution; innovative funding solutions; enhanced food security and sustainable growth for the fishing industry; sustainable ocean energy; how to engage more women to work in the maritime value chains, and the opportunities to embrace the youth in the Blue Economy.

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L-R: Mide Kunle-Akinlaja, executive producer, The Next Titan; Jumoke Oduwole, senior special assistant to the President of Nigeria on Industry, Trade and Investment; Adekunle Oyinloye, group managing director, SIFAX Group, and Kyari Bukar, judge, The Next Titan during The Next Titan milestone evening and unveiling of the show’s Season 6.

@Businessdayng

Wednesday 03 July 2019

BUSINESS DAY

PENSION today

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In Association With with contributions from

Hopes of prospective retirees in states hinged on successful implementation CPS – say’s PenCom

P

L-R: Owolabi James, perm. sec, Ekiti State Pension Commission; Edgar Amos, head of civil service of Adamawa State; Dan Ndackson, head, States Operations Department of National Pension Commission (PenCom); A.M. Saleem, DGM, States Operations Department of PenCom; Peter Aghahowa, head, Corporate Communications Department; Alma Eluwa, head of civil service of Imo State; Talmon Z. Fwa, perm. sec. establishment and training, OHCS Adamawa State at the Second Quarter 2019 Consultative Forum with States and the FCT on Pension matters held in Lagos.

have commenced the process of implementing the CPS, the Benue State Law incorporated all the observations made by the Commission in the draft Bill before passage into law.”

The Dg. expressed confidence that with this sound and sustainable legal framework in place, Benue State’s implementation would not face serious challenges.

The Commission also noted the reenactment of the Rivers State Pension Reform Law 2019, which repealed the Rivers State Pension Reform Law 2012 as well as the Zamfara State Contributory Pension Scheme Board Law 2019 that established a Contributory Defined Benefits Scheme.

“While States are at liberty to come up with their own pension laws, the Commission is however, concerned that despite the collaboration with the Commission, several provisions of the pension laws of these two States’ laws that were not in tandem with the philosophy of the CPS were retained despite the Commission’s advice, DahiruUmar noted.

While expressing happiness on the progress of implementation of the CPS in the States, especially with regards to remittance of pension contributions, she noted that returns submitted to the Commission by the PFAs showed that over N8.09 billion

was remitted to them as pension contributions of State employees in the first quarter of 2019.

She however observed that a major concern is issue of unaccredited remittances

‘

This Forum is a very important medium, especially in the light of the Commission’s desire to implement a uniform set of rules, regulations and standards to guide the administration and payment of pensions, notwithstanding the differences in the pension laws of the various States

‘

ension regulator, the National Pension Commission (PenCom) in its commitment towards ensuring effective implementation of the Contributory Pension Scheme(CPS) across the states has continued to engage stakeholders to enable them appreciate the scheme and address some of the challenges confronting them.

These efforts the Commission noted is driven by the key objective of the CPS, which is to ensure that all workers receive their retirement benefits as and when due.

Aisha Dahiru-Umar, acting director general of PenCom made the disclosure at the 2019 Second Quarter Consultative Forum for States held in Lagos, which was attended by some head of service of state’s civil service, permanent secretaries, heads of Pension Bureaux, boards and representatives of Pension Fund Administrators ( PFAs).

Dahiru-Umar, who was represented by Dan Ndackson, head, States Operations Department of National Pension Commission (PenCom) informed the stakeholders that the second quarter has recorded remarkable achievements in ensuring seamless implementation of the CPS in States.

According to her, the Commission, as part of its mandate of supervising the smooth implementation of the CPS and to ensure excellent service delivery especially in state pension administration, introduced branch inspection of Pension Fund Administrators in States.

“I am pleased to report that the Commission has so far conducted three of such branch inspections in Edo, Ondo and Ekiti States. As more inspections of PFA branches are upcoming, the commission is currently utilizing the outcomes of these inspections in ensuring that PFAs take necessary remedial actions to ensure excellent service delivery in the Pension Industry.”

Dahiru-Umar further noted that collaborations with the Commission since after the first quarter forum and concerted efforts in the various States have led to significant in- roads in the areas of stakeholder engagement, capacity development and implementation milestones.

Notable amongst the many achievements within the second quarter, she observed are the meetings held with the Governors-Elect (now Governors) of Lagos and Bauchi States. Furthermore, we are also pleased to note the giant stride taken by the Benue State Government recently by enacting the Benue State Pension Reform Law 2019, in May 2019.

Besides joining the league of States that

which denies concerned employees the investment income that should have accrued to them.

“Based on PFAs’ returns, over N3.40 billion pension contributions is unaccredited into State employees’ RSAs as at 31st May 2019 and the age analysis showed that over 38 percent of this amount had been outstanding for over one year.”

She appealed that all hands must be on deck to address this problem holistically.

She also informed that as part of efforts to engender best practices and to recognise excellence among States in their implementation of the CPS, the Commission has instituted an Annual Recognition/Award Event to recognize and award States and operators that are foremost in implementing the CPS. The maiden edition for the year 2019 would be coming in the first quarter of 2020, she informed.

“As emphasised previously, this Forum is a very important medium, especially in the light of the Commission’s desire to implement a uniform set of rules, regulations and standards to guide the administration and payment of pensions, notwithstanding the differences in the pension laws of the various States.

Key discussion at the forum was a presentation on the Administration of Pension Benefits.

RC634453

Diamond Pension Fund Custodian Limited with contributions from

1A, Tiamiyu Savage Street, Victoria Island, Lagos State.

Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com www.businessday.ng

This section is created to increase awarness and deepen knowledge about the contributory pension scheme.

If you have enquiries or contributions, send to this e-mail: diamondpfcbusday@yahoo.com

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26

Wednesday 03 July 2019

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

Insurers search for growth as technological disruption changes business dynamics Stories by Modestus Anaesoronye

I

nsurance operators are searching for growth and continued relevance in the midst of challenges that are being heightened by technological innovation and increased consumer expectation.

The industry believes that the opportunities in traditional space may be shrinking, so failure to do something may pose future dangers that will be difficult to contain.

During the ongoing National Insurance Conference in Abuja with the theme: “Disruption, Innovation and Business Growth”, organized by the Insurance Industry Consultative Council (IICC), stakeholders emphasised the need for insurers to embrace change and technology adoption or be left behind.

Mohammed Kari, commissioner for Insurance in his welcome address said the theme is relevant against the backdrop of the need for the Nigerian insurance industry to remain relevant in an era of dynamism where operating in the same way is an assured route to irrelevance.

Kari also noted that radical reforms have been accentuated by the disruptive

L-R: Funmi Babington Ashaye, former chairman, Insurance Industry Consultative Council; Eddie Efekoha, chairman of IICC; Mohammed Kari, commissioner for Insurance; and Mahmoud Isa-Dutse, at the 2019 National Insurance Conference held in Abuja

impact on the insurance industry of a series of digital innovations.

“While these new technologies are already making it easier for consumers/

NAICOM approves appointment of Chidiebere Nwokeocha as ED at Cornerstone Insurance

T

he National Insurance Commission (NAICOM), the apex regulatory authority in Nigeria’s insurance market, has confirmed the appointment of Chidiebere Nwokeocha as the executive director(ED), Institutional Business of Cornerstone Insurance Plc. The confirmation was conveyed in a letter addressed to the Chairman of the Board of Directors of Cornerstone Insurance Plc, and signed by Leonard Akah, director governance, enforcement & compliance on behalf of the Commissioner for Insurance.

Chidiebere Nwokeocha has over twentyeight years’ experience in the banking and finance and oil and gas sectors. His experience spans through executive, general and branch management; corporate, commercial and retail banking; structured credits; commercial lending; merger and acquisitions to strategic planning.

He has undergone several local and international trainings on leadership, finance, marketing and business management. These trainings include trainings at London Business School and Institute of Management Development (IMD), Lausanne, Switzerland. Due to his strong leadership and management skills, he has received several awards both in the finance and oil and gas sectors.

With his wealth of experience, Mr. Nwokeocha is providing the strategic leadership in the Institutional Business to ensure significant growth in the company’s market share and profitability.

He obtained his B.Eng. from the University of Nigeria, Nsukka, and his M.Eng. from the

Ahmadu Bello University. He also holds an MBA from the ESUT Business School and is a fellow of the Institute of Chartered Accountants of Nigeria (ICAN), and a senior member of the Chartered Insurance Institute of Nigeria (CIIN).

Cornerstone Insurance Plc, incorporated on 26th July 1991 as a private limited liability company, became a Public Limited Liability company, quoted on the Nigerian Stock Exchange in 1997. Our organization was established to conduct Insurance business in a professional, ethical and customer-focused manner and has remained committed to these values over the years.

Chidiebere Nwokeocha, ED, Cornerstone Insurance www.businessday.ng

policyholders to benefit from superior service and more choice as well as lower prices, there are corresponding challenges.

According to him, in order to remain

relevant and become a critical contributor to the national economy, the industry must consciously be proactive and organized so as to take advantage of the opportunities provided by these disruptive developments while at the same time curbing their corresponding negative impacts.

“It is important to note that firms will only benefit from digital technology only if they embrace its potentials along the entire insurance value chain, including underwriting and claims management.”

Eddie Efekoha, president, Insurance Industry Consultative Council (IICC), organisers of the conference said the theme of the Conference is a fitting subject matter that brings into perspective, the growing influence of technological advancement and lateral thinking in today’s business clime.

He noted that to capitalize on the great opportunities this cocktail of disruptions provides and to respond to the economic and social challenges we face today, courageous and comprehensive reforms are needed, stating that reforms require the collaborative efforts of governments, businesses and other stakeholders in the society in order for the process to be truly successful.

Mutual Benefits Assurance pays N3bn claims

U

nderwriting firm, Mutual Benefits Assurance Plc. has released its audited financial statements for 2018, recording an underwriting income of N13.9 billion. This represents a 19 percent increase from the N11.77 billion recorded in 2017 for the Group.

According to the result released on the floor of the Nigerian Stock Exchange (NSE), the Company’s gross premium written also grew by 13 percent from N14.03 billion in 2017 to N15.84 billion in the year under review. Net premium income stood at N13.47 billion representing an 18 percent increase from N11.46 billion in 2017, while profit after income tax stood at N1.149 billion; a 12 percent increase from 2017 figure of N1.02 billion.

The 70 percent increase in claims paid over the 2017 figures impacted the company’s underwriting profit which dipped by 17 percent to N3.05 billion.

Mutual Benefits Assurance Plc during the same period paid claims amounting to N3 billion, with Motor business accounting for the highest, amounting to N1.10billion, followed by Fire which was N664 million.

General Accident was N330 million while Aviation risks attracted N441.90 million. Claims paid on other classes of business includes Engineering N166 million; Oil and Gas risksN108.90 million and Marine N241.60million.

Segun Omosehin, managing director, Mutual Benefits Assurance Plc said “the claims paid shows our commitment to

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meeting our obligations to our esteemed customers.”

According to him, the company has put in place systems and processes to ensure efficient claims service delivery.

“We are committed to prompt settlement of all genuine claims, as this aligns with our mission statement of “Transcending the expectations of our customers for the satisfaction of their wealth protection needs through the provision of qualitative insurance and risk management services thereby creating values for all stakeholders.”

Speaking further, Omosehin said “2019 is the third year of our five year strategic plan and we have made remarkable progress.

Our IT transformation will soon be completed, which will take our service delivery level to greater heights with innovative customer centric solutions.”

@Businessdayng

Wednesday 03 July 2019

BUSINESS DAY

27

insurance today E-mail: insurancetoday@businessdayonline.com

Analysts lose hope for reinsurance rate increase July Stories by Modestus Anaesoronye

M

arket expectations for rate increases across the July 1 reinsurance renewals may not be met, according to analysts from Deutsche Bank, who while expecting positive rate movement say increases may not be as high as hoped for.

Reinsurance renewals hope or despairAfter strong rate increases seen at reinsurance renewals in April and June this year, the market expectation has been for continued strong price rises in July.

But analysts generally and

our sources have pointed out that while April and June saw regions where there had been significant loss activity and continued loss creep renewing, namely Japan and Florida, the July reinsurance renewal features more global and national type accounts renewing, suggesting that upwards pressure may be more muted.

Deutsche Bank’s analysts say that as a result the price impact for the big European reinsurance firms they track may be muted in July, perhaps with rates only tracking a similar level of increase as a year earlier, when the impacts of hurricanes were being absorbed by the market.

“We, therefore, see a risk that the outcome of renew-

als could disappoint some investors with higher expectations,” the equity analysts explain.

The analysts went on to explain that the effect of improvements in individual businesses, like Florida catastrophe risk, can be significantly diluted by the well-diversified portfolios of the European reinsurers.

Which means while rate increases will be available, they may not bump up the overall average market rate very much at all and the analyst team say to “expect price increases of 1.5 – 2% during July renewals”, similar to the levels reported in 2018 after the 2017 Harvey, Irma and Maria hurricanes.

Another reason for the rate response being more

muted for the major European reinsurance firms is the fact they are underweight Florida and U.S. coastal catastrophe risks, in the main.

Unlike ILS funds and other insurance-linked securities (ILS) investment vehicles which given their appetite for cat exposure

are benefiting more from the overall portfolio rate increases, it seems.

However, we’re told that nationwide U.S. reinsurance business should see increases at July 1st renewals, to the benefit of those reinsurers and also ILS funds that target this business.

But this may not meet the expectations of equity investors in the space, as the analysts suggest the pace of rate movement seen so far this year may now be set to slow down.

Of course, this slowing of rate rises may purely be optics, as the underlying business conditions and terms may improve as well, making the risk-adjusted returns better.

After the impacts of the wildfires in California, loss creep from hurricane Michael now emerging, as well as the erosion of aggregate layers, it’s likely the market will be seeking a stricter line on terms at this renewal, which could raise the underlying risk-return, even if the price itself isn’t flying

NEM Insurance pays N2.6bn claims, rewards shareholders with dividend

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L-R: Richard Borokini, director general, Chartered Insurance Institute of Nigeria(CIIN); Muftau Oyegunle, Council member CIIN; Eddie Efekoha, president, CIIN & Chairman of Council, Insurance Industry Consultative Council (IICC); Femi Hassan, president, Institute of Loss Adjusters of Nigeria(ILAN); and Fatai Adegbenro during the 2019 Media Retreat for Journalist with the theme “Evolving Media and the changing Business climate” held in Ijebuode.

Law Union & Rock pays N1.6 bn on claims

U

nderwriting firm, Law Union and Rock Insurance Plc’s net benefit and claims increased by 117 per cent, to N1.6 bn at the end of 2018 financial period, from N737 million in the corresponding period of 2017.

The Chairman of the company, Remi Babalola, disclosed this during the company’s 50th annual general meeting in Lagos.

While presenting the annual report to the shareholders, he said, “We are pleased to be one of the top claim paying insurance companies as our claim paid per premium earned

is one of the highest in the industry.”

Based on the phenomenal increase in net benefits and claims, Babalola said that the company’s profit before tax fell by 55.4 per cent to N0.490bn from N1.099bn recorded in 2017.

In furtherance of its commitment to continually enrich our shareholders, he said the board of directors recommended a cash dividend of two kobo per share for the 2018 financial year.

The chairman said that the company’s gross premium written rose slightly by 6.79 per cent from www.businessday.ng

N4.252bn achieved in 2017 to N4.541bn.

Under writing profit however dropped significantly by 46.05 per cent to N0.638bn from N1.182bn posted in the preceding year, he added.

Babalola said that the company had remained unrelenting in sustaining high corporate and ethical governance standards in its business.

Speaking on the future outlook of the company, Ad e m a y ow a Ad e d u r o, managing director of the Company said, “While we anticipate an improved operating economy, our strategic initiatives for

the year 2019 includes to begin sales in AutoRegCourtville franchise that bundles our auto insurance with vehicles licence renewal.

“We will broaden the horizon of our financial institution/bancassurance and broker marketing groups; to have two sub-units under FI and three sub-units under brokers.”

He said that the company will develop a product for market women, campus and camp.

“We will give intensive attention to branches with a view to ensuring uptick in activities and meeting targets,” he said.

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nderwriting firm, NEM Insurance Plc in the 2019 financial year paid N2.6 billion on claims as against N1.8 billion in 2017, resulting in an increase of 43.2 per cent. The Net Claims ratio was 23.9 per cent for the year under review and 18.2 per cent for 2017, an increase of 5.7 per cent, he said.

Fidelis Ayebae, chairman of the Company who disclosed this at the company’s Annual General Meeting (AGM) in Lagos, announced payment of 13 kobo dividend per 50 kobo ordinary shares amounting to N686.5 million.

He also disclosed that the firm recorded a gross premium of N15.04 billion, an increase of 12.2 per cent over the previous year’s turnover of N13.4 billion, an increase of 9.1 per cent, stressing that an increase of 34.2 per cent was achieved on investment income, as the income for 2018 was N952.8 million that of 2017 was N709.9 million.

On claims paid, he said net claims paid for the year was N2.6 billion, while that of the previous year wasN1.8 billion; resulting into an increase of 43.2 per cent. The Net Claims ratio was 23.9 per cent for the year under review and 18.2 per cent for 2017; an increase of 5.7 per cent, he said.

He maintained that the board during the year under review supervised the management’s efficiency that brought about a reduction in the management expenses from N2.9 billion in 2017 to N2.8 billion in 2018 According to him, the Group’s Profits Before Tax @Businessdayng

(PBT) for the year under review was N2.69 billion and N3.09 billion in 2017, a decrease of 13.2 per cent, while the Parent Company’s PBT was N2.67 billion for 2018 and N3.08 billion for 2017 a decrease of 13.4 per cent.

“The positions of the Group’s Financial Assets decreased by 39.1 per cent while Total Assets and Total Equity improved by 27.7 per cent and 27.6 per cent respectively.

The Parent Company also had the same percentage decrease in Financial Assets as that of the Group i.e. 39.1 per cent. The Total Assets and Total Equity increased by the same percentage i.e.

27.4 per cent.

“The Group’s EPS for the year under review was 39 kobo while that of the previous year was 53 kobo; a decrease of 26.6 per cent.

The Parent Company’s EPS for 2018 was 38 kobo while that of the preceding year was 52 kobo; a decrease of 26.9 per cent,” he said.

On future prospects, he noted that the company shall proactively begin to prepare to raise fund for increase of its issued share capital.

Tope Smart, group managing director, stressed that despite the difficult operating environment the company has maintained its focus as it continued to increase her market share, adding that from about five per cent market share, the firm now control close to seven percent market share of non life business and that it is determined to improve on this figure.

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Wednesday 03 July 2019

BUSINESS DAY

Harvard Business Review

MANAGEMENTDIGEST

The kind of authenticity customers will pay more for KIERAN O’CONNOR, DAVID W. LEHMAN AND GLENN R. CARROL

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e seem to care about authenticity a lot these days. When it comes to our work, our leaders, our experiences, even our products, we increasingly value what’s real, genuine or true.

But how do people respond to authenticity when they see it? Do they pay more for it? Do they review it positively? New research shows that how people react depends on what kind of authenticity is being evoked.

Even though the term authenticity has grown in popularity, the meaning it conveys for an organization and its products — say, a restaurant and its food — can fundamentally differ.

For example, consider the food scene in New York. Critics and consumers laud two landmark establishments, DiFara’s Pizza in Brooklyn and Blue Hill in Greenwich Village, as “authentic.” Yet, what “authenticity” means for DiFara’s is different from what it means for Blue Hill.

Visitors looking for the most authentic pizza in New York can read hundreds of reviews online calling DiFara’s Pizza in Brooklyn “as authentic as they come.”

Authentic here means that it is representative of a particular social category or genre — in this case, New York pizzeria. The pizzaiolo, Domenico DeMarco, immigrated to the U.S. from a small town near Naples and has been making traditional thincrust pizzas since 1964.

On the other end stands Blue Hill at Stone Barn. Forbes Travel Guide calls it “an authentic Hudson Valley culinary experience,” using farm-to-table ingredients with a focus on creating “a more sustainable food system.” This meaning of authenticity derives from values, and its roots can be found in existential philosophy as well as social psychology. Values-based authenticity relates to whether or not someone or something offers a true expres-

sion of core beliefs.

The distinction between these meanings of authenticity has long been recognized, but few studies have considered whether consumers might react differently depending on which meaning is evoked. Findings from our four studies suggest that they do.

We first set out to measure what people mean when they call an organization authentic.

We developed two authenticity scales, asking consumers one set of questions about how much an organization fits within a specific social category and another set about how much it expresses its core beliefs. We then took these surveys to 24 restaurants participating in Charlottesville’s Restaurant Week event, asking hundreds of diners to rate their restaurant experience on these two interpretations of authenticity and then to report whether they would revisit the restaurant.

We measured how much they valued the experience through their online ratings and their “willingness to pay” (i.e., “How much would you be willing to pay for this exact same meal if it were outside of Restaurant Week?”). We analyzed completed survey responses from 172 diners.

Partnership our core value

through 125 years

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Both meanings of authenticity predicted a unique form of value for the restaurant. When diners evaluated a restaurant as more authentic because it fit within a specific category (e.g., “Italian” or “barbecue”), they were also more likely to give it a higher star rating — but they were not necessarily willing to pay more for the meal at the restaurant. When diners evaluated a restaurant as more authentic because it was true to its values, they expressed an increased willingness to pay more for a meal there — but, interestingly, they were not necessarily more willing to give it a higher star rating. (In all of these analyses, we statistically controlled for several factors, including price as well as the diner’s perceptions of the quality of the restaurant, party size, prior experiences at the restaurant, age, gender, average number of times they eat out per month and the typical price of meal when they dined out.)

We replicated these findings in three additional experiments with 631 respondents, including one study of value and authenticity in the context of music. Consistent with our earlier findings, we found that people associated bands and musicians who fit within a musical

genre with higher star ratings, and bands or musicians who expressed their true beliefs or core values with a willingness to pay more for an album or concert experience — but not vice versa.

Across all four studies, the evidence suggests that consumers recognize and distinguish among different meanings of authenticity in organizations, and that they ascribe unique types of value to each. Authenticity that conveys fitting within a category might lead to higher social evaluations like star ratings but not an increase in consumers’ willingness to pay more. Meanwhile, authenticity that conveys adhering to one’s core beliefs might persuade consumers to pay more for those products but not necessarily rate them any higher.

Why might this be? One theory is that being true to a social category leads to more social praise — in this case high star ratings online — whereas adhering to core values taps into consumers’ own personal values and leads them to pay more.

Another theory is that online ratings serve as an attempt to persuade others or to share information in order to reinforce authenticity within a social category, while higher willingness

As your trusted advisor and business partner, we stay true to our promise to always deliver the ultimate ‘gold standard’ of value and excellence.

Let’s journey to the next 125 years together.

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to pay rewards producers who uphold values despite potentially higher costs. We did not test these specific mechanisms in our studies, so future research should help clarify which explanations play a role.

Managers should consider these patterns as they attempt to appeal to customers. Rather than assume that any mention of authenticity leads to a better reputation or more revenue (or both), managers might do well to think carefully about what kind of authenticity their organization expresses. For organizations that convey authenticity because they exemplify a specific category or genre, they might focus on generating value by winning higher star ratings — which can increase sales traffic — rather than attempting to charge more for products or services. (For example, research has found that a 1-star increase in Yelp reviews corresponds to an increase in revenues of 5% to 9% for some producers.) Organizations that evoke authenticity by adhering to their core beliefs might benefit more from charging a premium for products and services to a more selective set of customers.

Of course, other research by our team has shown that consumers tend to punish organizations that simply tout their own authenticity. Claiming to be authentic seems akin to claiming to be humble or wise — merely making the claim suggests a lack of understanding of what it means to be authentic in the first place. So managers face a bit of a paradox: Consumers demand authenticity, but managers must be careful in crafting an authentic image because efforts to do so can easily backfire.

Kieran O’Connor is an assistant professor at the McIntire School of Commerce, University of Virginia, where David W. Lehman is an associate professor. Glenn R. Carroll is a professor at the Stanford Graduate School of Business.

Wednesday 03 July 2019

Harvard Business Review

BUSINESS DAY

29

MANAGEMENTDIGEST

How to reduce personal bias when hiring RUCHIKA TULSHYAN

W CONNECTING

hen it comes to hiring diverse candidates, good intentions do not necessarily lead to good results. Well-intentioned hiring managers often end up inadvertently weeding out qualified candidates from underestimated backgrounds because of unconscious bias.

We are biologically hard-wired to align with people like us and reject those we consider different. Undoing these behaviors requires moving from a fixed mindset to one of openness and growth. Here are the strategies I recommend: — ACCEPT THAT YOU HAVE BIASES: Even if you head up your organization’s diversity committee, even if you are from an underrepresented community, you have biases that affect your professional decisions.

Affinity bias is one of the most common. In hiring this often means referring or selecting a candidate who shares our race or gender, or who went to the same school, speaks the same language or reminds us of our younger selves.

— CREATE A PERSONAL LEARNING LIST: Spend time learning about the experience of underrepresented communities at work. Among the

books I recommend are “So You Want to Talk About Race” by Ijeoma Oluo, “White Fragility” by Robin DiAngelo and “ What Works” by Iris Bohnet.

Harvard Business Review’s “Women at Work” podcast is also an excellent resource.

— ASK: ‘WHERE IS, OR COULD, BIAS SHOW UP IN THIS DECISION?’ One team I work with had hiring managers who would often flippantly say phrases like: “We should hire this per-

son. I could easily see myself having beers with them after work.” Or “This candidate is qualified, but really isn’t a cultural fit.” These comments, laden with unconscious bias, would go unchecked. When the leadership team, which was entirely male and white, asked for my help in reducing bias in the hiring processes, I suggested they start candidate debrief meetings by asking, “Where could unconscious bias show up in our decisions today?”

This intervention, along with other process changes, led the team to hire two women leaders.

— REDUCE THE INFLUENCE OF YOUR PEERS’ OPINIONS: Refrain from comparing notes with other hiring managers until you have formed your own point of view on a candidate. I recommend writing down your thoughts about the candidate before you debrief with your colleagues.

Again, ask yourself as you’re writing:

“How might bias have affected my assessment and recommendation?”

— USE A ‘FLIP IT TO TEST IT’ APPROACH: In 2017, Fortune 500 executive Kristen Pressner gave a brave TEDx talk in which she admitted to harboring gender bias against women leaders. Pressner developed a technique to disrupt bias: Asking herself whether she would have the same reaction to the behavior of a candidate from an underrepresented background, if she were to swap out that candidate with a more typical hire. For example, if a woman of color candidate spoke passionately, and Pressner was less inclined to hire her because she thought of her as “angry,” the executive would ask herself: Would I have the same response to a white man speaking in the same way?

— UNDERSTAND HOW REDUCING BIAS COULD PERSONALLY BENEFIT YOU: Diversity in our workplace makes us smarter and more innovative and promotes better critical thinking. It’s not only the organization that benefits. By recognizing how we benefit from reducing our own bias, we’re likely to be more motivated to take action.

Ruchika Tulshyan is the author of “The Diversity Advantage: Fixing Gender Inequality in the Workplace” and the founder of Candour, an inclusion strategy firm.

The rising US maternal mortality rate demands action from employers care at lower costs. Health plans can also offer access to doulas.

The high maternal mortality rate is distressing. By wielding their purchasing power, employers can help do something about it. They can help bring about much better outcomes, and by doing so, they can lower their costs and those incurred by their employees and their families.

SUZANNE DELBANCO, THI MONTALVO AND JEFFREY LEVIN-SCHERZ HEALTH mprovements in maternal health around the globe have produced a steady decline in the number of women dying from childbirth over the last 30 years. But in the United States the maternal-mortality rate has been steadily rising — the only developed country where this is happening.

A report from the Commonwealth Fund found American women have the greatest risk of dying from pregnancy complications among 11 high-income countries. Black women are three to four times more likely to die in childbirth than white women.

Some of these statistics can be explained by Caesarean-section deliveries, a procedure that carries added risk and financial burden and is frequently performed unnecessarily in the United States.

Given that women with employer-sponsored health insurance account for over half of the annual pregnancies in the United States, businesses are in a position to demand higher-quality care. In addition to the lives at stake, C-sections and their risk of complications create a significant and wasteful financial cost for employers and employees to bear.

In fact, data from IBM Marketscan Research Databases sug-

I

gests, on average, that each Csection costs an employer $5,100 more than a vaginal delivery. With 1.9 million deliveries in employersponsored health insurance plans each year, even a 1% decrease from the current rate of Caesarean deliveries of 32% would save about $97 million.

What can employers do?

— Push contracted health plans to create strong incentives for health care providers to charge a single “bundled” price for the entire episode of maternity care.

Since C-sections cost more than vaginal deliveries, a bundled payment would give providers an incentive to avoid unnecessary Caesarean births.

— Demand that health plans www.businessday.ng

require participating hospitals to follow best evidence-based practices, such as those endorsed by the California Maternal Quality Care Collaborative and the Alliance for Innovation on Maternal Health Program. These include the prohibition of early elective deliveries, which the Joint Commission, the largest hospital accreditation body in the United States, defines as less than 39 weeks. Such efforts have helped California decrease its rate of maternal mortality by over half in less than a decade.

— Implement benefit designs to connect pregnant mothers with high-value providers (those offering the best outcomes at a relatively low cost). These designs should

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include a “centers of excellence” program that encourages mothers-to-be to select high-value providers for labor and delivery services by reducing or waiving their share of the costs. Furthermore, they should urge women with low-risk pregnancies to consider using free-standing birth centers, which have excellent outcomes.

— Educate employees on the importance of full-term births and the potential adverse health consequences of elective inductions and unnecessary Caesarean deliveries.

— Push health plans to contract with and provide full coverage for certified nurse midwives, who often deliver high-quality @Businessdayng

Suzanne Delbanco is executive director of Catalyst for Payment Reform, where Maclaine Lehan is a project and research assistant.

Thi Montalvo is North America health analytics practice leader at Willis Towers Watson. Jeffrey Levin-Scherz is North American co-leader of the Health Management Practice at Willis Towers Watson and an assistant professor at the Harvard T.H. Chan School of Public Health.

30

Wednesday 03 July 2019

BUSINESS DAY

tax issues Driving responsible tax policy in developing countries (1) Ngozi Okonjo-Iweala

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frica is a continent of opportunity, not least for business. To give just one figure that illustrates that reality, consumer expenditure on the continent has grown by 3.9 percent annually since 2010, reaching $1.4 trillion in 2015.

This figure is expected to reach $2.5 trillion by 2030.

But of course, significant challenges remain. The Sustainable Development Goals - the ambitious development vision for 2030, as set out by the United Nations - articulate what remains to be achieved, and none of us should underestimate the scale of the challenge. Not least, development financing needs to be ramped up by an order of magnitude – from billions to trillions. Those sorts of numbers cannot be achieved through aid; resources need to be mobilised at a domestic level, by attracting investment, catalysing growth, and substantially increasing tax revenues.

In many African countries, taxto-GDP ratios are much too low and remain stagnant. According to the Organisation for Economic Cooperation and Development (OECD), the average tax to GDP ratio in Africa in 2016 was 18.2 – a little over half the level seen in OECD member countries. In my country Nigeria, it was 12percent - already not so good, but when we rebased the economy

to twice its size after 24 years of inaction, ratios all changed and the tax to GDP ratio halved to 6percent. Who wants to be the finance minister of a country with such low ratios?

So we made domestic resource mobilisation a priority, because 15percent is generally considered to be the minimum level necessary to provide basic services. If we are to have any chance of achieving the Sustainable Development Goals and creating the conditions necessary for business investment to grow further, current tax to GDP ratios in large parts of Africa are simply unsustainable.

Corporate tax - the solution?

So how then might we fix it? The answer is certainly not straightforward, but corporate taxes are a vital piece of the puzzle. This is because corporate income taxes make up a much higher proportion of government revenue in developing countries – an average of 16percent compared with 8percent in the OECD. Let me say at this point that I am under no illusions: corporate taxation is not a panacea for Africa. And there are perhaps, too many who suggest that if we simply squeeze corporates for more revenue, our development challenges will be solved.

They won’t. But that doesn’t change the fact that corporate tax is crucial.

Since corporate taxes are relatively more important to African governments, it naturally follows that issues relating to corporate tax planning, tax avoidance and tax evasion

Ngozi Okonjo-Iweala

are relatively more pressing in an African setting.

The UN Conference on Trade and Development estimated1 in 2015 that developing countries lost around $100 billion per year in revenues due to corporate tax avoidance, whilst the High Level Panel on Illicit Financial Flows from Africa - set up

by African Finance Ministers and led by former South African President

Thabo Mbeki - estimated a figure of $50 billion from Africa alone. I know that these figures are contested, and that the nature of tax avoidance is such that making such estimates with certainty is impossible. But I hope we can all agree that there is a significant problem.

In addressing tax avoidance, the leadership of the OECD over recent years has been very welcome. The

BEPS process is addressing some of the most acute problems inherent in the international tax system, and has made tax avoidance more difficult.

And I welcome the fact that the OECD is taking on the issue of digitalisation, on which we enjoyed a rich discussion this morning.

But acute challenges remain.

Some companies continue to practice aggressive tax planning. Treaty shopping and the use of intermediary jurisdictions is depriving countries of revenue that they might otherwise expect. And tax incentives are too often granted – and accepted – without good cause. So further change is needed.

The role of government Much of this change needs to come from governments. The starting point must be creating a businessfriendly environment. When, I was Finance Minister in Nigeria, the governments that I was a part of enacted major reforms, liberalising markets and cutting unnecessary government interference.

We need more businesses to invest in Africa and once they have, we need to allow them to thrive.

After all, if businesses don’t make any profit, then there is nothing for governments to tax.

These are excerpts from OkonjoIweala’s keynote speech at the just concluded 2019 OECD International Tax Conference hosted last month by United States Council for International Business (USCIB) in Washington D.C. To be continued next week

How shifting tax rules can complicate M&A deals (2) EY Global

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et another source of uncertainty arises from the many unknowns associated with US tax reform.

Tax can have a dramatic impact on asset valuations. With companies not certain of how and when US tax rates and policies will change, deal assumptions become less reliable.

“Not knowing when or how the rules will evolve complicates any transaction involving the US,” Lawee says. “It’s a challenge both for existing portfolios and future deals.”

The global-based nature of today’s business environment poses yet another challenge in terms of accurately assessing and determining a deal’s tax implications.

“M&A has become increasingly global and competitive in nature,” Walsh says. “For example, we see an attractive asset in France being chased by a China-based fund that is, in turn, largely financed by US investors as well as PE bidders from the UK and Canadian pension funds.

These types of combinations have now become typical.”

Mind the gap Marc Demuth, the Paris-based Managing Director of Corporate Finance in charge of Advisory for listed companies, EMEA (Europe, Middle East and Africa) for BNP Paribas, says a good first step for buyers is to understand how the

new company and combined assets will be taxed going forward — the effective cash tax rate.

“There can be a huge difference between the tax rate prior to the sale and afterwards,” Demuth says. For example, “the target company might be enjoying a range of tax credits granted on the basis of their activities, perhaps for locating R&D [research and development] activities, central corporate services or their workforce in certain countries.”

Depending on how the organization is reshaped after the sale or acquisition, these incentives may no longer be available, according to Demuth.

Acquirers would also be well advised to consider what is often referred to as the character or the tax basis of the target company or assets.

The asset or company may have

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characteristics such as tax loss carryforwards that may or may not be transferable to the buyer. Or the buyer might be seeking to use the losses or other characteristics in some manner other than that of the target or benefit from a step-up in tax basis of the assets being acquired — approaches that might be overruled by the responsible tax authorities.

“It is important to perform due diligence to understand how a change of control will impact the tax position of the acquirer or the newly formed entity,” Demuth says.

Other important considerations for both buyers and sellers in any transaction are whether any capital gains taxes or transfer taxes arise from a deal.

Designing deals Careful consideration of a transaction’s form can have a considerable

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impact on valuations.

Jesse Lv, EY Greater China Transaction Tax Leader, who is based in Shanghai, explains that in certain cases, sellers and buyers may be able to work together to improve a transaction’s tax efficiency by changing the nature of the terms of sale. A shift from a share-based to asset-based acquisition can improve the tax aspects of a transaction, according to Lv. “There can be very different tax consequences when you gain control of a target by buying its shares on the open market, vs. structuring the deal as a sale of discrete assets,” Lv says.

“Purchasing shares means taking on all of the target’s assets and liabilities, whereas an asset purchase carries fewer tax attributes for the buyer to assume.”

Still, asset-based transactions can be more difficult to execute. There are more legal considerations and greater cooperation is required from the seller who must carve out such assets from its ownership structure, according to Lv. Luxottica’s Soldani sees the company’s M&A and tax teams as partners — and not only in deal making.

With so much change taking place in areas such as transfer pricing, the company increasingly needs to update its valuations for tax purposes — with valuation being a specialty within the M&A practice.

“So very much so, what we have is @Businessdayng

a partnership between M&A and tax,” Soldani says.

Divestment is tricky, too Accurately determining potential tax risks from a divestment is often a complex task for sellers today.

Nevertheless, it is key for sellers to understand these tax risks early on in the divestment process, and to identify potential tax upsides for buyers in order to secure the best price for their asset.

Key action points In response to today’s high and still-rising tax uncertainty, it is advisable to engage tax expertise early on in deal development to assess potential tax challenges, risks and synergies.

While tax should never be a driver of M&A, it can have a significant impact on transaction valuation and outcome.

Various elements within a transaction, such as the tax rate in the target country or whether grants, incentives or loss carryforwards are transferable, can be an important factor in deal valuation.

Shifting from the purchase of a target’s shares to instead acquiring a target’s carved-out assets can sometimes improve the tax effectiveness of an acquisition.

With so many regulations and tax rates in flux and with enforcement action on the rise worldwide, companies need to make certain their transactions take tax costs, compliance and risks into full account.

Wednesday 03 July 2019

BUSINESS DAY

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FINANCIAL INCLUSION

& INNOVATION

How mobile money can ease stress of Nigerians in urban areas Stories by Endurance Okafor

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o b i l e money may be as important in ensuring seamless means of transactions in the urban areas as it may be in including the excluded persons in the rural areas, checks by BusinessDay revealed.

Checks by BusinessDay revealed that the Telco ledfinancial inclusion model when implemented by the Central Bank of Nigeria (CBN) will not only be important in reducing exclusion the rate in the rural areas but will also help to provide a stress-free process of carrying out transactions for the urban populace.

Mattew O laniyi is a young graduate who recently moved to the busy city of Lagos from Edo State. He was happy to have finally gotten a job with one of the Big Four (accounting firms) in the commercial city of Nigeria.

Working as a graduate trainee in one of the biggest tax advisory firms in Nigeria, the accounting graduate told BusinessDay

that he was aware of the stress he would go through every day, considering he travels from the Mainland to work on the Island. But he wasn’t prepared for what came next.

“Almost every day, I have had issues trying to collect my balance (change) each time I give the commercial bus conductors a high denomination of the Naira,” Olaniyi lamented.

He added that “the issue of change arises from the fact that most times, the bus

conductors or drivers usually, don’t have change as I normally take two N1,000 notes with him when going to work.

According to him, “as a result of the time I spend looking for a change, most of the time I go late to work.

Just last week my supervisor asked me to check my late coming.”

“Today, I’m sure I will be late. When I even asked the driver for his account number so I can transfer him the money since we

both couldn’t get change, he said he doesn’t have, and the conductor said he doesn’t receive an alert on his phone,” as such Olaniyi was at the mercy of the petty traders at Obalende Bus stop for change.

On the 5th of October 2018, the CBN proposed Payment S er vice Bank (PSB), a payment service initiative which would allow Telcos to operate in the financial service industry.

This means that Nigeria will no longer operate a

bank led-financial inclusion model, an approach that has left 36.6 million of the country’s adult population excluded from having access to financial services.

According to the apex bank, the PSB initiative aims at ensuring access to financial services for the unbanked rural segments of the society, but is not limited to that.

Checks by BusinessDay revealed that similar situation as that of Olaniyi would have been different in its was in Kenya or Ghana as almost every bus or taxi driver has mobile money wallet, and with a shortcode they can receive or send money within a few seconds.

“The rural areas shouldn’t be the only thing that should come to mind whenever mobile money is mentioned,” a Lagos based financial inclusion consultant told BusinessDay on the condition of anonymity.

He added that “the urban populace can benefit even much more. Imagine every woman selling in that market you buy your foodstuffs all have mobile wallets even though they may not have a bank ac-

count. Our grandmothers don’t have to know how to read and write to show a customer their mobile wallet number or check to see that money has been transferred to them. When it comes to money matters everyone is educated. This won’t be as complicated as filling deposit and withdrawer slips in the banks,” he explained.

The cashless policy in Nigeria was introduced in 2012 by Gowdin Emefiele’s predecessor, Sanusi Lamido Sanusi, to reduce the amount of physical cash used in business transactions in the economy.

Two years after he suspended the cashless policy, the current CBN governor, Emefiele recently unveiled plans to extend it nationwide.

“We had to wait a while because we felt that there was need to be sure that the rate of financial inclusion in Nigeria has effectively penetrated all the nooks and crannies of the country for us to proceed on cashless banking. Very soon all the structures that have been put in place would improve banking services in Nigeria,” he said.

Analysts charge CBN to hasten implementation of mobile money to meet new 95% inclusion target

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speedy implementation of mobile money and a proper management of the process are critical factors to the actualisation of the 95 percent financial inclusion target by 2024, announced Monday by the Central Bank of Nigeria (CBN), analysts have said.

Godwin Emefiele, the governor of CBN, said over the next five years, through initiatives and policy measures such as the Shared Agent Network (SANEF) and the Payment Service Bank (PSB), the apex bank intended to broaden access to financial services to individuals in underserved parts of the country.

“Our ultimate objective is to ensure that 95 percent of eligible Nigerians have access to financial services by 2024,” Emefiele said on Monday, as he unveiled his

programme for his second term of five years.

Questioning the new target by CBN, Yewande Adewusi, a financial inclusion consultant, sought to know what would drive the new inclusion target. “The population is not stagnant.

That is my problem, because people who were not eligible for financial services are now joining the excluded adult, so the numbers are growing.

What exactly is happening that they suddenly going to have 15 percent inclusion in five years?”

According to EFInA’s data analysed by BusinessDay, Nigerian adult population who are both formally and informally excluded from the financial market stood at 36.6 million. This represents 36.8 percent, leaving the industry regulator with 31.8 percentage points to achieve the five year target.

According to the apex bank, it plans to intensify financial literacy and consumer protection programmes such that current and eligible bank customers are fully aware of the financial services being offered to them as well as the cost of utilising these services, “which will enable them to make well informed choices.”

“The onus is now on CBN to ensure a speedy implantation of the mobile money because, I think the introduction of PSB could be a game changer. If you look at the level of telephone penetration in Nigeria, nearly almost the entire population already has handset,” said Omotola Abimbola, Research Analyst at Lagosbased Chapel Hill On October 23, 2012, the central bank of Nigeria in collaboration with industry

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stakeholders launched the National Financial Inclusion Strategy (NFIS) aimed at reducing the financial exclusion rate of adult population from about 53 percent in 2008 to 20 percent in 2020.

Less than a year to the deadline, the apex bank has 16.8 gap to bridge for it to achieve the set target. With the aim to meet up with the projected time frame, the regulator proposed the issuance of PSB license to allow other industry players to share form financial inclusion space.

“The progress may not be linear but by the time the mobile money commences, coupled with the initiative to collaborate with microfinance, they should be on track but all they need to do is to ensure the implementation of all they have talked about,” Paul Uzuma, MD of Halo Nigeria Capital

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Ltd, said.

The analyst’s claim was affirmed by Abimbola, as he noted the apex bank has to ensure that they manage the PSB implementation process well, to enable they meet and exceed their target.

“I think it is very important on how they manage the process because, we have had a lot of mobile operators who have tried in that space but haven’t been able to breakthrough,” Abimbola told BusinessDay by phone.

According the CBN governor, an efficient payment system is vital to the effectiveness of monetary policy interventions, adding that it also helps in reducing the cost involved in payment for goods and services.

“The Payment Services Management Department in the CBN will work to enable the build-up of a robust and secure payments infrastruc@Businessdayng

ture in Nigeria that is reliable and easy to access. We will reinvigorate our efforts at driving the cashless initiative across the country, due to the immense efficiency gains that will be derived from it, and the impact it could have on our financial inclusion drive,” Emefiele said.

Also commenting on the new target, Andrew S. Nevin, Advisory Partner and Chief Economist at PwC said he believes the CBN is right to set this ambitious target.

“While it may not be reached, we believe financial inclusion is going to increase rapidly because of the focus of the CBN (through SANEF and other initiatives already in process) and because payment innovation is going to make payments much easier at lower cost, including for feature phones,” Nevin told BusinessDay by mail.

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Wednesday 03 July 2019

BUSINESS DAY

INTERVIEW The future holds great prospect for social research in Africa The managing director/CEO, Africa Polling Institute, Bell Ihua, in this interview speaks about efforts being taken by the institute to ensure poll results get to the ears of decision makers and key stakeholders. Ihua adds that he foresees an Africa where data and information would become the new crude oil You have recently been appointed Executive Director at the Africa Polling Institute, what is the institute about? esponse: Yes, thank you very much for the opportunity. Africa Polling Institute is an independent, non-profit and nonpartisan opinion research think-tank that conducts polls, surveys, social research and evaluation studies at the intersection of democracy, governance, economic conditions and public life. The institute seeks to deepen the availability and access of public opinion research to support critical state and non-state actors; with a key focus on sub-Saharan Africa. As an institute, we are not-forprofit and independent of governments, political parties, commercial interests, trade unions and other interest groups. Our model is to seek partnerships and collaborations to understand opinion, attitudes and perceptions that support different institutions: CSOs, the media, policy makers, development partners and the general public. Given the nature of challenges faced in the sub-region, there are opportunities to seek better understanding of the issues and generate home-grown solutions through opinion research.

This is interesting, so what makes this institute different and what’s new?

That’s a very good question. Well for starters, in terms of structure we are different. API is a non-profit think-tank; we are not a business, so structurally we are different. Secondly, in terms of funding, we rely more on partnerships and collaborations with corporations, foundations and policy-based institutions, and less of commercial clients. Thirdly, at API advocacy forms an essential part of our work. We don’t just stop at polling, but move a step further to getting poll results to the ears of decisionmakers and key stakeholders. Finally, our focus on sub-Saharan Africa sets the institute apart, as we hope to be quite active on the sub-regional polling scene, beyond Nigeria. We are glad the space is open and today you can find people making reference to polls from indigenous pollsters and polling firms.

Are you saying there are now several polling organizations in the country?

Oh yes! Over the last decade or so, I can say that the awareness of public opinion polling has grown in Nigeria and across the sub-region, especially with the work an institution like Afrobarometer has been doing on the continent. However, locally NOI Polls remains a major player, but we also have the likes of IPSOS, AMD Poll, Crowdforce,

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Bell Ihua

GeoPoll, CMRG, Zeus Polls, GFK, Milward Brown, Khana Group, RMS-TNS, MRC, Panafields and others conducting polls on various topics. You even have foreign companies like Pew, Williams Poll, and Marist Poll conducting polls locally; as well as those who operate mainly on social media such as Naija poll, Omojuwa poll, Scoop poll and so on. Interestingly, platforms like Twitter and Facebook have now created a whole community of tech-saavy data enthusiasts and extempore pollsters. We also know that election seasons breed the proliferation of pollsters and polling firms. This is why we need to start pushing for professionalism in the industry, as it is gradually becoming an all-comers affair. Anyone can wake up and say he or she is a pollster simply because they can gather a bunch of folks to collect some data. But that does not make you a pollster. There’s a requisite skill set you must have, which can only be acquired through training and capacity building. There are front-end functions like questionnaire design and data collection; but more importantly, there are critical back-end functions such as data processing, weighting and calibration. These processes have to be conducted scientifically; and if they are not, the poll loses its credibility. That is really where the rubber meets the road. www.businessday.ng

You have been referred to as the George Gallup of Polling in Nigeria, what is your response to this?

Hahaha… George Gallup of Nigeria? That’s a really big shoe to fill. You must remember that before I was appointed CEO at NOI polls, I had two predecessors who also contributed immensely to growing the company and expanding the polling space in Nigeria. In any case, I consider it most humbling to be referred to as Nigeria’s George Gallup. I reckon it is due to the amount of work accomplished under my leadership of the company. It was really an interesting time managing landmark research assignments such as the study on the state of IDPs in the country, which was the first study in Nigeria to report cases of sex for food and sexual abuse at IDP camps. Then we conducted the study which found that 8 out of every 10 Medical doctor in Nigeria is planning to leave the country in search of greener pastures abroad.

I also led a major migration study, funded by the German Embassy, which examined the motivations for irregular or illegal migration amongst Nigerian youths, or what we refer to as Europe by Road. We visited Benin, Agbor, Asaba and Lagos, interviewing returnees from Libya, prospective migrants and so on. I can clearly remember moderating those interviews and focus groups, and listening to the stories of those returnees.

It was a very engaging and detailed

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study, and I believe the report should be online somewhere. We even identified something called the 10 commandments of illegal migration, which are slangs and buzz-words used and known only to persons who have made those horrifying journeys through the Sahara Desert.

We also conducted several studies on the manufacturing sector, SMEs sector and the business environment amongst others. I’m sincerely grateful to God for the opportunity to have led such assignments.

You seem to be very passionate about social research, what is responsible for this?

That’s a very good observation.

As far as I’m concerned, public opinion polling or social research isn’t merely a career, it’s a calling.

I know this, because of the way we conceptualize research projects.

For most social researchers, project conceptualization can be one of the most difficult aspects. But you see, conceptualization comes to me naturally. I have learnt to conceptualize social research projects from situations and happenings in the environment. Especially here in Nigeria, and even across the continent, there are opportunities to conduct great research studies given the challenges that we face.

Interestingly, I have always been a very hands-on researcher, and was always on the field with my colleagues. We went into difficult terrains to handle assignments together. I remember travelling to Maiduguri with my colleagues at the height of the insurgency to conduct the study on the state of IDPs. I personally visited Benin, Agbor and Asaba to interview migrant returnees from Libya.

I travelled to Bonny, Brass and even Nembe with my colleagues via speedboat, visiting Bassambri and Ogbolomabri for some Niger Delta studies funded by the US state department. So, when I make presentations on my research findings or grant media interviews, I speak with insight, depth and knowledge of someone who was personally on the field, not someone who was told what happened on the field. I once shared about how I often catch myself veering off at events. Instead of enjoying the moment, I intuitively start scanning the crowd, wishing I could conduct some quick interviews; especially when I’ve spotted a few yarns-men in the crowd. I have always found home in the academia as my natural habitation. As I often say, as long as there are human beings, there’s so much that can be achieved around the 3 cardinal blocks of the academia – Teaching, Research and Community Service. I have been involved in all 3 of them @Businessdayng

over the last decade.

Who are your greatest influencers as an academic?

My academic life has been influenced by several academics and mentors who have crossed my path over the years. But a few of them are worth noting. Professor Temi Abimbola is one of such mentors. She was my academic director at Birmingham City University and currently a Senior Advisor at the African Development Bank in Abidjan. Temi was the first academic to spot my academic skills and mentored me to hone them. The second is Professor Andrew Fearne, who I call my father. He was my PhD supervisor at Kent Business School, but is currently based at Norwich Business School I believe. He has a very witty style of writing that makes his articles very interesting to read and understand. He taught me a lot in terms of academic writing, justification of methodology and all that kind of stuff. The third is Professor David Hughes, who I call my grandfather, because he was my professor’s professor. At the time I met him, he was professor emeritus at Imperial College, a leading conference speaker and consultant to several global food companies. He opened my eyes to see that academics can excel in the classroom as well as in the industry as consultants. There’s also Dr. AnneMarie McTavish, who was my Head of Department during my lecturing days at Coventry University. She had so much confidence in me and gave me the opportunity to handle several tasks within the department of strategy and applied management, which helped to strengthen my experience as an academic. I am particularly grateful to these four mentors for their impact on my life.

Looking into the future, what do you see as the future of polling in Africa?

Response: The future holds great prospect for social research in general, and opinion research in particular. I dare say that we have barely scratched the surface on the continent in terms of supporting state and non-state actors. Although I recognize that a lot of work needs to be done, because knowledge gaps exist. Nonetheless, there are so much potential to be explored research-wise. With Africa’s population projected to hit 1.5 billion by 2030, I foresee an Africa where data and information would become the new crude oil, and polls, surveys, big data and artificial intelligence would be given their due prominence in the scheme of things. I foresee rapid uptake of opinion polls and survey data by decisionmakers in the public, private and social sectors. And our vision at Africa Polling Institute is to be the preferred opinion polling partner in sub-Saharan Africa.

Wednesday 03 July 2019

BUSINESS DAY

news AHCO eyes N35bn turnover in new strategic growth plan IHEANYI NWACHUKWU

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igerian Aviation Handling Company (NAHCO aviance) Plc plans to grow its profit by 323.3 percent to N2.13 billion in 2019 as the management of the company assured that ongoing strategic initiatives would deliver significant growths over the next five years.

The management of the company presented the underlying facts behind the operations of the company to capital market stakeholders Tuesday at the Nigerian Stock Exchange (NSE).

Group Managing Director, NigerianAviationHandlingCompany(NAHCOaviance),Olatokunbo Fagbemi, said new investment in ground support equipment, strategicinvestmentsininfrastructure and human capital development and improving operational efficiency at the airports would drive considerable growths this year and the years ahead.

She outlined that the company would achieve a turnover of N13.27 billion in 2019 as against N9.88 billion in 2018 while profit before tax is expected to rise from N503 million in 2018 to N2.13 billion in 2019. Profit after tax is

projected to rise to N1.81 billion.

Over the next five years, the company expects its revenue to rise steadily from N9.8 billion in 2018 to N13.269 in 2019. From 2020 to 2023, the company’s revenue projections stood at N16.916 billion, N21.567 billion, N27.495 billion and N35.054 billion, respectively.

She assured the investing public that the company is confident of paying nothing less than 25 kobo dividend per share noting that the company expects to see a significant impact of its transformation agenda on its performance as from the third quarter given the seasonal nature of the aviation business.

“Wecanassureyouthatwewill achieve our targets in 2019. We believe we can achieve our forecasts.

We had thought deeply about the figures and put everything in place to ensure we achieve the forecasts.

We stand by the forecasts that we haveandwebelievewewillachieve them,” Fagbemi said.

She pointed out that the company has already invested about N2 billion on new equipment and plans to increase such investment to more than N3 billion by the end of this business year.

She noted that new investments in equipment will particularly help to reduce operations cost, which was largely due to infrastructure failure at the airport and aging equipment that lead to increased maintenance cost.

She said with the injection of new ground support equipment and ongoing improvement of airportfacilities,operatingcostwould reduce substantially, enabling the companytopassitssteadyrevenue growth to shareholders.

“We are deliberate and focused on improving and turning around the company. We will focus majorly on strategic initiatives that will deliver operational efficiency and impact the bottom-line,” Fagbemi said.

According to her, NAHCO aviance has been well positioned to take advantage of the positive growth potential of the aviation industry in Africa and Nigeria as NAHCO, which controls 63 percent of the Nigerian market, has remainedapreferredhandlerforthe mailandcargotrafficinthecountry.

Mail traffic increased by 19.96 percent in 2018 compared with 2017 while international air cargo and domestic cargo rose by 3.5 percent and 1.94 per cent respectively.

was part of the fruits of recent reforms initiated by the Agency and deliberate investment in enforcement equipment.

“In NIMASA, we are conscious of global best practices and determined to rid our waterways of all substandard vessels, with the ultimate aim of ensuring a safe and robust maritime domain. This will afford us the capacity to be a competitive player in the global maritime space, giving us an edge in the comity of maritime investment destinations,” Peterside said.

The Abuja MoU, led by Mfon Usoro, the secretarygeneral, stated in the report that Nigeria dominated in detailed inspection of vessels, with 13 exercises out of

the total 14 carried out in the continent in 2018.

Signatories to the MoU are Angola, Benin Republic, Cameroon, Cape Verde, Congo, Ivory Coast, Gabon, Ghana, Guinea, Equatorial Guinea, Liberia, Mauritania, Namibia, Nigeria, Senegal, Sierra Leone, South Africa, Sao Tome and Principe, Democratic Republic of Congo, Guinea Bissau, The Gambia, and Togo.

The report showed a significant rise in recorded deficiencies across the continent, as 727 vessel deficiencies were recorded in 2018 as against 587 in 2017. This was attributed to increased enforcement exercises across the various regions, with Nigeria in the lead with 339 deficiencies.

NIMASA ranks top on port, flag state control in West, Central Africa

AMAKA ANAGOR-EWUZIE

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igerian Maritime Administration and Safety Agency (NIMASA) has topped the chart on Port and Flag State Control in the West and Central Africa Sub-Region following its consistency in reforms and availability of enforcement on vessels.

NIMASA outranked other maritime regulators in the region in the inspection of vessels calling at Nigeria’s ports, according to the latest report by the Abuja Memorandum of Understanding (MoU) on Port State Control for West and Central Africa Region, otherwise known as Abuja MoU. Dakuku Peterside, directorgeneral of NIMASA, said it

EdoJobs commences recruitment of Uber riders as state charges youths to explore opportunity … as EdoJobs, GIZ commence training for 100 youths BUNMI BAILEY

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s a testament to the booming investment climate in Benin City, the Edo State capital, global ride-sharing service, Uber has commenced recruitment of riders on its platform in Benin City, with the Edo State Skills Development Agency (EdoJobs) driving the process.

In a statement, Crusoe Osagie, special adviser to the Edo State Governor on Media and Communication Strategy, said the coming of Uber to Benin was another testimony to the governor’s drive to open the state up for more investments.

Recall that the management of Uber in Nigeria paid a recent visit to state governor,

Godwin Obaseki, some weeks ago, where modalities for the kick-off of the service in Benin City, was finalised.

Osagie said, “The service would soon commence operations in Benin City. We see this as another means for youths in the state to get engaged in a worthy business venture. This will open up space for more young people to get busy and leverage the opportunity to meaningfully contribute to the economy.

“EdoJobs is working with the Uber team in marketing and other logistics for the full rollout of their services in Benin City. We see this as another opportunity for the private sector to work towards achieving the governor’s promise of creating www.businessday.ng

200,000 jobs in the state.”

He charged young people with the necessary skills to take advantage of the Uber service to earn a decent income, noting that the state government’s urban renewal efforts through massive infrastructural development will ensure a favourable business environment for those who invest in the ride-sharing service in the state.

Recall that Uber’s rival, Taxify commenced operations in Benin City in December last year, opening the space for global players in the ridesharing scene to exploit the investment opportunities being created by the Governor Obaseki-led administration in the state. https://www.facebook.com/businessdayng

@Businessdayng

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Wednesday 03 July 2019

BUSINESS DAY

POLITICS & POLICY Okowa reiterates administration’s quest to diversify Delta economy Francis Sadhere, Warri

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feanyi Okowa, Delta State governor, on Tuesday reiterated his administration’s resolve to have a diversified, inclusive and self-reliant economy that will withstand any external shocks.

Governor Okowa said this at the Government House, Asaba, during the administration of oath of office on five Special Advisers.

Those who were sworn in as Special Advisers at the well-attended ceremony were Prof. Sylvester Monye (senior policy adviser); Kingsley Emu (chief economic adviser); Emmanuel Aguariavwodo (housing and human development) Emmanuel Okoro (rural and community development) and Efe Ofoburuku (legislative matters).

He said though it was true that their first tenure ended

on a high note, and they had continued to receive plaudits for their phenomenal achievements in job creation, human capital development and infrastructural renewal, observations show that the expectations were high as his administration builds a

“stronger Delta.”

He said his administration cannot afford to rest on its oars because, the next four years promise to be as fulfilling as it would be challenging.

“This administration is always ready and willing to work with Deltans at home

L-R: Gboyega Oyetola, Governor of Osun State; his predecessor, Rauf Areagbesola; Tayo Ayinde, chief of staff to Lagos State Governor, and Governor Babajide Sanwo-Olu during the 6th year Fidau Remembrance of Alhaja Abibatu Mogaji at the Tafawa Balewa Square, Lagos.

Atiku condemns alleged persecution of Saraki by Buhari

F

ormer Vice President and the Presidential candidate o f t h e P e o p l e ’s Democratic Party (PDP) in the 2019 election, Atiku Abubakar, has condemned the alleged persecution of former President of the Senate Bukola Saraki by the President Muhammadu Buhari administration under the guise of fighting corruption.

Atiku made this ass e r t i o n i n a s t at e m e nt he personally signed on Tuesday, made available t o B u s i n e s s D ay by h i s Media Adviser, Paul Ibe, following reports that the Economic and Financial Crimes Commission (EFCC) had allegedly revived cases against Saraki said to have been concluded at the Supreme Court. Atiku argued that his anti-corruption stance was not in doubt, which

was why his office personally facilitated the take-off of the EFCC, after it was created by then President Olusegun Obasanjo.

He however, pointed out that there is a huge difference between prosecution and persecution, saying, “I am all for prosecuting the corrupt, but I believe it is wrong to use the instruments of state to persecute political opponent.

“Bukola Abubakar Saraki, the immediate past Senate president, is one of the most investigated politicians in Nigeria. He has been investigated and prosecuted all the way to the Supreme Court and has prevailed against his accusers. It was expected that that should have been the end of the matter.

“However, the revival of previously investigated cases, and the fact that Saraki was politically opposed to the administration of General Muhammadu

of this administration because when we succeed, the citizens are all the better for it.

“We must think outside the box in order to proffer creative solutions to unexpected developments as we march forward; we are resolved in our quest for a diversified, inclusive and self-reliant economy that will withstand any external shocks,” Okowa said.

The governor said the knowledge, wisdom and experience of the special advisers will improve the performance of his administration as it strives to deliver on its electoral promise of a stronger Delta.

“Special advisers play important roles in our modern democratic setting; they are carefully selected for their specific policy expertise and ability to skillfully navigate the layers of bureaucracy and partisan viewpoints to

deliver on the administration’s goals and objectives.

Modern statecraft places a demand on them to lessen the burden of the demanding and complex workload of the Chief Executive.

“As Special Advisers, being experts in your respective fields, I expect nothing but sound, practical advice that meets global best practices because, this administration expects from you bold ideas and initiatives that will engender prosperity, peace and progress,” Okowa said.

Responding on behalf of other Special Advisers who were sworn in, Prof. Sylvester Monye thanked Governor Okowa for believing in their abilities to render advice and contribute to the success stories of his administration, assuring that they will do their best to contribute towards achieving a stronger Delta State.

Oyo is technically bankrupt - Governor REMI FEYISIPO, Ibadan

...Says silence in the face of tyranny is acquiescence Innocent Odoh, Abuja

and in the Diaspora and from all walks of life; we welcome advice and suggestions that will help us better the lot of our people and make our beloved Delta State the pride of all and I also expect all and sundry people to continue to pray for the continued success

Buhari seems to give strong grounds for objective bystanders to conclude that his current travails have gone beyond prosecution and are now tending towards persecution,” Atiku said.

He stressed that the laws of the Federal Republic of Nigeria are made for all, adding that Nigerians fought for democracy so that the powers of the state would not be used to suborn tyranny and oppression.

He urged Saraki to stand firm and take solace in the fact that Nigerians still hold the constitution higher than any other authority.

“I urge all Nigerians, and especially those tasked with upholding the constitution and the laws of the land, to note that silence in the face of oppression is akin to acquiescence. I, Atiku Abubakar, will always stand up for the constitution and Nigeria,” he said.

G

overnor Seyi Makinde has disclosed that Oyo State is technically bankrupt, but looking for a way to keep government running.

“As we came in, we are still looking at ways to salvage the situation and run the government because technically, the government of Oyo State is bankrupt.

“If I take it as a private entity, I won’t lend a dime to the government of Oyo State. I will ask them to start winding up proceedings. So, we have been looking for ways to keep the government running,” he said.

At the weekend, Makinde revealed that the state is indebted to the tune of at least N150billion while collation of other debts is on-going.

The governor spoke when he received in audience the Governing Council of the University of Ibadan, led by the Pro-Chancellor of the institution and Chairman of Council, Waklek Mutka, on a courtesy visit to his office at the Governor’s Office, Secre-

tariat, Ibadan.

He however, said his government has beamed its searchlight on areas it can get money.

“The Bureau of Internal Revenue came to me and said they had issue of PAYE with the University of Ibadan. And at the Governor’s Forum, I saw a document where a lot of the states got huge refund from PAYE due to the federal institutions located in such states.

I believe Ogun State got about N8 billion; another state in the South West got N10 billion; and Oyo state got only about N91 million.”

“Then, I wondered what was going on here. They told me that there was work in progress and that they had been talking and did not have cooperation from the University of Ibadan.”

“I can give you the assurance that this is something for the Federal Government to refund to us. All we need to do here is open the books and see what has gone on and have an agreement. I told the Chairman of Bereau of Internal Revenue that himself and myself will come and meet with the University of Ibadan to get money.”

“We will utilise such money immediately to do things that will lift our environment,” the governor assured He therefore promised to turn around the hitherto moribund Agbowo shopping Complex which he described as eyesore and security threat to both the university and neighbouring communities within the first 100 days of his administration so that it would be of benefit to the state in general.

While saying that UI is an important member of the community, Makinde said his government would collaborate with the institution especially in the areas of Public-Private Partnership which will endear a kind of synergy between academia and the government.

“The University is a very important member of this community. We will like to collaborate with the university especially in the area of PublicPrivate Partnership (PPP) and for us, there should be a serious synergy between the academia and the government because the majority of the very good research outcomes stay on the shelf in the university.

Lanlehin, ADC guber candidate in Oyo, withdraws from coalition pact with Makinde REMI FEYISIPO, Ibadan

T

he governorship candidate of African Democratic Congress (ADC), in the just concluded election, Olufemi Lanlehin, has withdrawn from the coalition agreement he and his

party had with Governor Seyi Makinde.

Lanlehin and other governorship candidates of the Zenith Labour Party (ZLP), Sharafadeen Alli and Bolaji Ayorinde of the Social Democratic Party (SDP) had formed an alliance against the All Progressives Congress www.businessday.ng

(APC).

The parties had also then, adopted Makinde of the People’s Democratic Party (PDP), as their candidate against Adebayo Adelabu of the APC. There was a ‘sharing formula’ before the agreement was sealed before the governorship election in which

former governor Rashidi Ladoja was deeply involved.

However, in a statement by his media office on Tuesday, Lanlehin said he was opting out because of Makinde’s non-compliance with the spirit and letters of the terms of the gubernatorial preelection agreement reached.

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According to the statement, Lanlehin hinged his decision to quit the coalition on what he termed Governor Makinde’s non-compliance with the spirit and letters of the terms of the gubernatorial pre-election agreement reached, however maintains that his party, the ADC is at @Businessdayng

liberty to remain in the coalition, and believes it should, in fact, remain.

“Lanlehin, going forward, states that while he remains a committed member of the ADC, he would adopt a “siddon look” posture in the governance of Oyo State and allied matters”.

Wednesay 03 July 2019

BUSINESS DAY

35

Live @ The Exchanges

SOLID MINERAL BUSINESS

Stock investors book N250bn loss in 2 trading days into July

Mining industry stakeholders chart path for West Africa gold future

Stories by Iheanyi Nwachukwu

T

he value of Nigeria’s listed stocks decreased further

by N93billion at the close of trading on Tuesday July, 2. This latest decline represents 0.74 percent dip by the Nigerian Stock Exchange (NSE) All Share Index (ASI).

Tuesday’s outcome increased the record loss in just two trading days into this month of July to N250billion.

The market had lost N156billion on the first trading day in July. The value of listed stocks on the Nigerian Stock Exchange (NSE) which opened this month at N13.206trillion has decreased to N12.956trillion, NSE data showed.

The Year-to-Date (Ytd)

return stood at -6.48percent. The All Share Index (ASI) closed at 29,395.14 points as against the preceding day close of 29,614.61 points. It was 29,966.87 points at the beginning of July.

As stock market continues to exhibit softness, analysts believe there is still no major catalyst to drive the market into the positive territory.

“We have consistently highlighted the attractiveness of the prices of some of the counters and we believe at the new lows we saw today (Tuesday), investors can begin to cherry pick while they stagger their purchase,” said Lagos-based Vetiva research in their July 2 equity market note to investors.

In the absence of any positive news, the analysts expect the market to trade in a similar pattern in Wednesday’s session.

At the sound of trade closing gong on Tuesday, Nestle Nigeria Plc led the basket of 23 decliners after its share price moved down from N1390 to N1345, losing N45 or 3.24percent, while Cement Company of Northern Nigeria Plc topped advancers league of thirteen after its share price rose from N12.95 to N14, adding N1.05 or 8.11percent.

The volume of stocks traded increased by 86.79percent on July 2, from 107.439 million on July 1 to 200.687 million, while the total value of stock traded increased by 153.66percent, from N1.138 billion to N2.887 billion in 4,856 deals.

GTBank Plc, UBA Plc, Lafarge Africa Plc, Zenith Bank Plc and FBN Holdings Plc were actively traded stocks on the Bourse.

L – R: Olumide Bolumole, divisional head, Listing Business, The Nigerian Stock Exchange (NSE) presenting a replica of the closing gong to Olatokunbo Fagbem group managing director/CEO, NAHCO Plc during the Facts Behind the Figures presentation to the capital market stakeholders at the Exchange in Lagos.

NAHCO eyes N35bn turnover in new strategic growth plan

N

igerian Aviation Handling Company (NAHCO aviance) Plc plans to grow its profit by 323.3 per cent to N2.13 billion in 2019 as the management of the company assured that ongoing strategic initiatives would deliver significant growths over the next five years.

The management of the company presented the underlying facts behind the operations of the company to capital market stakeholders yesterday at the Nigerian Stock Exchange (NSE).

Group Managing Director, Nigerian Aviation Handling Company (NAHCO aviance) Plc, Olatokunbo Fagbemi, said new investment in ground support equip-

ment, strategic investments in infrastructure and human capital development and improving operational efficiency at the airports would drive considerable growths this year and the years ahead.

She outlined that the company would achieve a turnover of N13.27 billion in 2019 as against N9.88 billion in 2018 while profit before tax is expected to rise from N503 million in 2018 to N2.13 billion in 2019. Profit after tax is projected to rise to N1.81 billion.

Over the next five years, the company expects its revenue to rise steadily from N9.8 billion in 2018 to N13.269 in 2019. From 2020 to 2023, the company’s revenue projections stood at N16.916 billion,

N21.567 billion, N27.495 billion and N35.054 billion, respectively.

She assured the investing public that the company is confident of paying nothing less than 25 kobo dividend per share noting that the company expects to see significant impact of its transformation agenda on its performance as from the third quarter given the seasonal nature of the aviation business.

“We can assure you that we will achieve our targets in 2019. We believe we can achieve our forecasts. We had thought deeply about the figures and put everything in place to ensure we achieve the forecasts. We stand by the forecasts that we have and we believe we will achieve them,” Fagbemi said.

MAURICE OGU

E

xperts and stakeholders in the mining industry have identified good policies, regulation, public-private partnership, and collaboration among operators as key factors that will shape the future of gold in the West African sub-region.

The suggestions formed part of the discussions when experts and stakeholders met during a conference in Lagos, to discuss the future of the gold economy in West Africa, organised by Kian Smith Gold Refinery. The theme of the conference was “The future of African Gold – developing the West African Gold Economy.”

Abdulkadir Muazu, permanent secretary in Nigeria’s Ministry of Mines and Steel Development, said government-private partnership in the industry was a critical way of promoting and unlocking the potentials embedded in the gold mining value chain.

He added that healthy collaborations with the private sector that are supported with good policies and regulations would increase the nation’s revenue, more so as the country is aggressive about its plans to diversify the economy.

Acknowledging that mining venture takes a long maturation period which is coupled with high risk and dominated by informal miners, Muazu however, expressed optimism that if properly regulated, the sector was capable of creating employment in the value chain and lift people out of poverty.

“This action in the value chain will drive maximum benefit potentially available in core mining sector,” Muazu said.

Nere Teriba, vice chairman, Kian Smith Trade & Co., said people needed to realise that “gold is money” for Nigerians and for West Africans. He noted that for the region to benefit from the gold market rush, it was important to have a clear vision so that the region would become a trading partner in the world gold market.

While pleading with the Nigeria’s Economic

and Financial Crimes Commission (EFCC) to work alongside gold stakeholders in Nigeria and other regions in West Africa for anti-money laundry solutions, Teriba said everyone needed to focus on creating a policy where industries in the gold market could “come above ground.”

“It is more important to advocate and explain to the government as to why the policies set by the government are unfavourable,” she said.

Effa Okim, head, Special Control Unit Against Money Laundering (SCUML), EFCC, while defining money laundering as washing money and making it clean through a process, said everyone should be at alert to make sure companies are not used for money laundering activities.

According him, people had used money laundering activities in the past to fund crimes and terrorist activities, adding that the commission was now very much active to monitor the movement of money in a phenomenon he called “follow the money.”

Leveraging on the world global village, Okim said his commission was in collaboration with relevant agencies and authorities around the world to arrest, extradite, prosecute and punish anyone engaged in money laundering.

“Do not think Maidugri is far; do not think New York is far away. Wherever you are, the commission will come for you,” he reiterated.

Dauda Yakuba, director of operations, Standards Organisation of Nigeria (SON), advocated the need to strengthen the gold refinery, stressing that it is the critical stage in the gold value chain

which needs to play its roles accordingly.

He noted that whatever affects the gold refinery affects the entire gold value chain.

According to Yakubu, the standard regulatory body was willing to work with relevant authorities to harmonise standards that would facilitate community-traded goods for conformity assessment, across the West African region.

While noting that SON had adopted, trained and certified companies to meet up with international standards, Yakubu stressed on the need to train Artisanal and Small scale Miners (ASM) in order to strengthen the gold value chain in Nigeria and the West African region.

“We have a lot of work to do, especially in strengthening the value chain by training the ASM,” he stressed.

Ibrahim Garba, vice chancellor, Ahmadu Bello University, said West Africa was an emerging gold exploration investment hub due to its huge deposit of gold and other mineral resources that if well harnessed, would move the region to economic prosperity.

While giving the historical analysis of how early merchants in the region became wealthy through global gold market, the professor of geology said the West African region could still become richer through its gold deposits, if well harnessed.

West Africa currently loses the bulk of its mining revenue to illegal miners operating across the region, which experts at the conference estimated cost the region $2billion in 2017. Adopting these suggestions will reduce this loss, they said.

36

Wednesday 03 July 2019

BUSINESS DAY

INSIGHT

Strong men vs strong institutions: Strengthening democracy in Africa OLUFUNMBI KEHINDE

dependent, and they would not be subject to the whims and caprices of the executive. A strong and independent electoral commission would enable the citizenry trust in the government and enthusiastically participate in the political process, at the pre-election, election and post-election stages of the political process. Likewise, the rule of law thrives in a society with strong independent institutions.

T

he former President of the United States of America, Barack Obama, while addressing the Ghanaian Parliament during a courtesy visit to Ghana in 2009, remarked as follows: “No country is going to create wealth if its leaders exploit the economy to enrich themselves, or police can be bought off by drug traffickers. No business wants to invest in a place where the government skims 20 per cent off the top, or the head of the Port Authority is corrupt. No person wants to live in a society where the rule of law gives way to the rule of brutality and bribery. That is not democracy, that is tyranny, and now is the time for it to end. Africa doesn’t need strong men; it needs strong institutions.”

The above excerpt describes the socio-political climate prevalent in Africa. This article discusses the impact of strong men and strong institutions in the society and goes further to determine which one would help strengthen democracy in Africa.

The concept of democracy Democracy has been defined as a government by the people, either directly or through representatives elected by the people. Abraham Lincoln also described democracy as government of the people, by the people and for the people.

Precisely stated, democracy is rulership by the people.

The elements of a functional democracy should therefore include the following: participation of the people either directly or indirectly, independence of the judiciary, separation of powers, the rule of law, the respect for fundamental rights, free and fair elections, multi-party system, freedom of the press, accountability, transparency of government officials, to name a few.

Democracy in modern Africa According to the 2018 democracy index compiled by the Economist Intelligence Unit, based on the following democratic factors: electoral process and pluralism, the functioning of government, political participation, political culture and civil liberties, Mauritius is the only African country that qualifies as a full democracy.

According to the index, full democratic countries are nations where civil rights and basic political freedoms are not only respected, but also reinforced by a political culture conducive to the thriving of democratic principles. Such societies have a sound system of governmental checks and balances, an independent judiciary whose decisions are enforced, governments that function adequately, and diverse and independent media. These nations have only limited problems in democratic functioning.

Still using the index, the second tier of democracies following the full democracies are the flawed democracies. African countries listed in this category include South Africa, Botswana and Cape

Verde. The flawed democratic nations are nations where elections are free and fair; fundamental civil liberties are honoured, but there is limited freedom of the press.

These nations have significant faults in other democratic aspects, including an underdeveloped political culture, low levels of participation in politics and problems in the functioning of governance.

The third tier of the index are hybrid regimes. Countries such as Nigeria, Benin, Liberia, Uganda, Kenya, Sierra Leone, Burkina Faso, Gambia, Ivory Coast, and Niger fall under this category.

Hybrid regimes are nations where consequential irregularities exist during elections, thereby preventing elections from being free and fair. These nations commonly have governments that apply immense pressure on political opponents, have non-independent judiciaries, widespread corruption, constant harassment of the press and an anemic rule of law. These countries possess more pronounced vices than flawed democracies in the realms of underdeveloped political cultures, low levels of participation in politics, and issues in the functioning of governance.

According to the democracy index, the sub-Saharan Africa region is categorised as a hybrid regime while the Middle East and North Africa regions are described as authoritarian regimes. Authoritarian regimes are countries where political pluralism has vanished or is extremely limited. These nations are often absolute monarchies or dictatorships. They may have some conventional institutions of democracy but with meagre significance. Infringements and abuse of civil liberties are commonplace. Elections, if they do take place, are not free and fair, the media is often state-owned or controlled by groups associ-

ated with the ruling regime, the judiciary is not independent, and there are omnipresent censorship and suppression of governmental criticism.

From the analysis provided by the democracy index, we see that democracy in Africa is still a long way off mark. African democracies are currently characterised and threatened mainly by electoral abuse, ethnic divisions, corruption, poor management of natural resources and the collective effects of poverty, apathy, and economic insecurity.

What is the way forward for democracy in Africa: strong men or strong institutions?

Strong institutions The importance of strong institutions in a democracy cannot be over-emphasised. Institutions are the governmental systems entrusted with making and enforcing the rules of a society, as well as regulating relations with other societies. Democratic institutions are in essence, a set of arrangements for organising political competition, legitimating rulers and implementing rule. Institutions in a democratic government are necessarily the entities that will fulfil the elements of democracy that is: participation of the people either directly or indirectly, independence of the judiciary, separation of powers, rule of law, entrenchment of fundamental human rights, free and fair elections, enable freedom of the press, ensure accountability as well as transparency of government officials.

Strong institutions are the cornerstone of stable governments.

A democracy with strong institutions would be able to produce the essential elements of a fully democratic government through proper separation of powers thereby enabling a system which allows

for checks and balances of the various arms of government. For example, in a presidential system of democracy, it is essential that the judicial, legislative and executive arms of government work hand in hand. Furthermore, these three arms of government must be independent and function separately at all times. As a matter of fact, the stronger the judiciary and its inability to be influenced by the executive arm, the better the democracy. A credible instance is the South African example where the Constitutional Court of South Africa gave judgment against President Jacob Zuma, and the President accepted the judgment. The Court ruled that the National Assembly of Parliament had failed in its constitutional obligation to hold President Jacob Zuma accountable. The Court also ordered the erstwhile President and the National Assembly to pay the legal costs concerning the matter. This judgment was a laudable achievement for African democracy primarily because of the independence of the judiciary.

With strong institutions, it is easier for the press to be free because they can challenge any attempt of the executive to whittle down their freedom in the Courts of Law. South Africa’s institutions were also strong enough to investigate and indict the erstwhile President, who was put on trial for the allegations of corruption leveled against him, where he was accused of using public funds to finance nonsecurity upgrades to his ancestral home. The Constitutional Court therefore ordered the erstwhile President Jacob Zuma to return the funds.

Having strong institutions in Africa would help to deliver free and fair elections, because the electoral commission and the monitoring bodies would be in-

Strong men Strong men have been ruling Africa since the departure of the colonial masters and individual countries have varied results to show for it. An example of a popular strong man and the effects of his “strength” in ruling a nation would be the former president of Zimbabwe, Robert Mugabe, who strongly held on to power for almost four decades. The aftermath of his dictatorship included gross economic mismanagement leading to the country attaining two world records for hyperinflation.

The regime was further characterised by several human rights violations as well as anti-white racism. Some may argue that there can be no strong institutions without strong men, but the above example shows that strong men are capable of stifling democracy.

Rather than strong men, Africa needs visionary leaders.

Democratic institutions that would outlast generations can only be built by visionary leaders and not strong men. Africa is where it is today because strong men ruled its weak institutions, allocated unchecked power to themselves and largely depleted its resources. However, if Africa has leaders who build strong institutions, the democratic system will be strengthened and improve in spite of the weakness or strength of the person in authority.

A case for strong institutions In closing, Africa requires capable, reliable, and transparent institutions; strong and viable legislature; honest police forces; independent judges; an independent press; a vibrant private sector and a civil society to give life to our democracy. A quick observation shows that the economic prosperity and obedience to rule of law that exists in western countries can be attributed to functional strong institutions.

Huguette Labelle, former chair of the board of the anti-corruption outfit – Transparency International, notes that two of the biggest threats to democracy in Africa are poor management of natural resources and electoral abuse. These twin threats, she said, can only be overcome by having strong state institutions, a well-functioning justice system and a rule of law that works for everyone. It is therefore essential that African leaders implement legal instruments and standards that outlast them. Africa also needs leaders that would responsibly develop its resources and focus on poverty reduction.

KEHINDE is a senior associate at Aelex, a full service commercial and litigation law firm.

Wednesday 03 July 2019

BUSINESS DAY

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@Businessdayng

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38

Wednesday 03 July 2019

BUSINESS DAY

news Ruga initiative may hamper...

Continued from page 1

of all Nigerians without

fear or favour.

A Rural Grazing Area (RUGA) settlement, according to the Federal Government, seeks to settle migrant pastoral families. It means a rural settlement in which animal farmers, not just cattle herders, will be settled in an organised place with provision of necessary and adequate basic amenities, such as schools, hospitals, road networks, vet clinics, markets and manufacturing entities that will process and add value to meats and animal products.

“The owner of the cow is a businessman, the owner of the farm is also businessman, and it is the duty of government to ensure it protects each one from the other,” said Emmanuel Ijewere, vice president, Nigeria Agribusiness Group (NABG). “Government should create enabling environment for it to run as a business, but not get involved.”

Reactions were swift in condemning the announcement of the Ruga initiative by the Federal Government, which necessitated a state-

ment tweeted through @ NGRPresident, official handle for Nigeria’s president.

A user @kcnaija, responding to the statement released through the handle, wrote, inter alia, “If the herders cannot buy lands like any other Nigerian to run their livestock farming, they should quit and look for other businesses.”

This sentiment appears to be shared by millions of other Nigerians.

With an estimated 19 million heads of cattle valued at over N1.9 trillion, the cattle business has potential for significant growth if cattle owners can develop independent ranches where they can commit their own funds to invest and meet international standards.

At present, herdsmen, popularly of the Fulani extraction, move cattle across thousands of kilometres from the north to the south in search of pasture to graze. The northsouth movement, and later the south-north movement in search of pasture, consistently leads to losing whatever weight has been gained during grazing periods, according to experts.

“When your cow in Nigeria marches from Adamawa to Lagos, that is a little more than exercise. Therefore, we have to confine Nigerian cows in ranches,”saidAuduOgbeh,immediate past minister of agriculture and rural development, at last year’s BusinessDay Agribusiness and Food Security Summit.

Advocating what would be private sector-led and with full business intentions, Ogbeh explained that for a young person with just 20 milk cows behind the house, well secured, and fed with at least 10kg of fodder per day, and 40 litres of water, one can collect enough milk to be a very comfortable Nigerian without looking for a job.

The administration where the same minister served is, however, planning to allocate thousands of hectares of land to create settlements for herders at the expense of taxpayers. Curiously, in the heat of violent attacks, government officials have on some occasions said those carrying out the attacks are not Nigerian herdsmen. It, therefore, begs the question why the same government would use Nigerian funds to create settlements for herders who are very likely not Nigeri-

ans, going by claims from the same government.

“The entire RUGA thing or whatever name you call it is no longer agribusiness but a political contention,” said Ijewere. “Agribusiness is a private business. If the business is going to be profitable, you do it by yourself, and government should not be involved.”

The idea of a settlement follows several proposals that have either been aborted or put on hold, including the grazing reserves and cattle colonies.

While Nigeria has footdragged on taking decisive actions through security agencies to curb the excesses of herdsmen, in neighbouring Ghana, a taskforce set up by the government ensures herdsmen are kept on a short leash.

Called “Operation Cowleg”, the taskforce early last year was deployed to the country’s Ashanti Region to pursue herdsmen from the area in order to curtail their acts of destruction and carnage.

Operation Cow-leg has existed for over 17 years to solve conflicts between herders and farmers, but in Nigeria, this has never happened. If anything, herdsmen appear to have grown more daring and

bold with every passing year.

“Within the confines of the ranch, the animals can be sustained. You will be sure you can get feed and water for them, providing all these within the ranch. That then will minimise the movement outside the ranch in search of water and feed, in the course of which destruction of farmlands and communal clashes occur,” Chryss Onwuka, a professor of ruminant animal nutrition, told BusinessDay in a previous interview.

As Ijewere explained, just as there is poultry farming, piggery or aquaculture, the owners determine where they site their businesses, and there should be no difference with cows.

“If government has problems about the physical movement of cows, make the laws to ensure that those movements do not infringe on the rights of other people,” he said.

Soji Apampa, CEO, the Convention on Business Integrity, an organisation which says it introduced cultivation of Napier grass in the Laduga grazing reserve in Kaduna State where cattle owners are reporting significant improvements in their livestock, believes provision of fodder

Restructuring DisCos is first step in fixing...

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account of government

subsidies. This restructuring will require all stakeholders taking a haircut on their asset, instituting corporate governance and restoring best practice.

It starts with understanding that a loss of N713bn since privatisation has negative consequences for the sector and poses systemic risk to the economy as a whole and agreeing to return the sector to a sound commercial template. Furthermore, the Federal Government with a 40 percent stake in the DisCos that continues to bail out the sector needs to start taking requisite action to check the excesses of the investors.

The option is to either restructure or continue digging a hole in the form of subsidies which will eventually trigger a shutdown of the entire decrepit system.

The DisCos reported a combined loss of N446.85bn in 2017 which is 64 percent higher than the previous year.

Their total combined operating cost of N655.16 billion in the same period outstripped cumulative sales of N563.10

billion. Interest expense surged by 129.51 percent to N155.64 billion, indicating a balance sheet that’s unsustainable.

Restructuring the DisCos’ balance sheet will entail writing off at least half of their over N2 trillion exposure to the Nigerian Bulk Electricity Trading Company (NBET) and the Central Bank of Nigeria (CBN). The Federal government through NBET can convert the rest to convertible long-term debt.

This will give the balance sheet a new lease of life to present to new investors.

But the DisCos do not get a free pass. The CBN and other commercial banks of which the core investors have exposure of over N500 billion will treat the debt like any other commercial debt.

Banks can choose to convert their debt to stakes in the DisCos but the core investors will also be given the right to buy at the same share price.

DisCos’ current shareholding will be diluted and in exchange for government’s acquisition of their debt, a special agency can be created to professionally represent the stake of all investors including

Airtel raises N14bn from Nigerian market...

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the NSE, Airtel plans to

hold a pre-listing media interactive session on the NSE tomorrow, July 4, the first of its kind lately.

Details of the capital raise show that out of the $750 million (N270 billion) which the company targets to raise in the global offer assuming the overallotment option is exercised, $600 million (N216 billion) was meant to come from the

London Stock Exchange (LSE) while $150 million (N54 billion) was to come from the Nigerian Stock Exchange (NSE).

The Book Building for the planned Initial Public Offering (IPO) closed on Friday, June 28. Through the Book Building process, the underwriters attempted to determine the price at which the IPO will be offered.

In the Nigerian market, Airtel Africa plc raised only N14 billion which represents www.businessday.ng

and water is the solution to the crisis.

According to Apampa, the Ruga settlement for people who are not sedentary will not work.

“It is not settlement that they need, rather, fodder and water for their cattle. Even in a ranch, what still matters is fodder and water. If they can find water and fodder in one place, they will not move,” he said.

Theprospectofreadily-available grass to feed cows across the country has the potential to curb recurring violent clashes in different parts of the country between farmers and herdsmen.

It will also see the value of cattle improve as better feed implies improved beef and milk quality.

“That is the only thing we need if we want to improve cattle, dairy and beef production in Nigeria,” said Ayoka Adebambo, a professor of animal breeding and genetics at the Federal University of Agriculture, Abeokuta, in a previous phone interview with BusinessDay. “We have the land required and instead of going to places like Brazil to import grasses, many places in the north can be used to produce adequate high quality grass,” Adebambo explained.

L-R: Motunrayo Ajayi, head, hc digital transformation; Olanike Martins, head, hr business partnering; Temi Dalley, chief human resources officer (CHRO), all of Sterling Bank; Michael Tosin-Oni, CEO, People Productivity Solutions; Adesola Awofeso, culture and engagement lead, Sterling Bank, and Dipo Adebajo, head, organisation development and talent acquisition, Sterling Bank, at the 6th edition of Great Place To Work Institute Awards where Sterling Bank won three awards.

the government.

Analysts say tariff must represent the true cost of production but tariffs higher than N45-50 per Kw/hr may derail the plan. Embedded generation plants with gas as feedstock are offering industries tariff around N40 and N50 per kWH/hr and solar energy tariff are now lower than 10 cents. Higher tariff will shift the market to cheaper alternatives.

The DisCos have consistently said that a lack of cost-reflective tariff is the key reason for their losses. This is

worsened by electricity theft and debt by government ministries and departments.

“Electricity pricing must be reflective and NERC must step up action to check electricity theft,” said Ayodele Oni, energy lawyer and founder of Bloomfield law firm.

Oni also said that NERC must also enforce obligations in DisCos’ performance contracts and should maintain independence from the executive arm of government.

DisCos have to also raise collections as market infor-

mation from NBET indicates that they currently only collect 30 percent of market invoice from customers.

Restructuring the DisCos will make way for new investors who will inject fresh capital into the business. A sound management should be put in place to run the transition to new investors.

Chuks Nwani, energy lawyer and vice president of consultancy firm, PowerHouse International, proposes that the Federal Government create a debt instrument to cover

half of DisCos’ tariff.

Within the period, pressure on the DisCos’ balance sheet will ease off while they are compelled to make investments to improve their network, cut down on aggregate technical, collections and commercial losses (ATC&C) and if power distribution improves, they can then begin to recover through higher tariffs and at the same time repaying their debt.

26 percent of the targeted capital from this market, sources told BusinessDay. The under whelming amount raised from Nigeria, according to a market source, is a reflection of investors’ wariness of emerging market telecommunications firms for now.

“Investorapathy,theMTNN issue and the governance issues as a result of Oando/SEC crisis are among negative factors affecting new listings,” said a market operator who didn’t want his name on print.

All these factors, which ac-

cording to him are making investors to take a wait-and-see approach, come on the heels of confidence issues in the policies of the Buhari-led government.

Ahead of Airtel Africa admission for trading on the NSE, analysts at Lagos-based Meristem Securities Limited had in their investment recommendation advised investors to bid between the N363 and N375.53 price range.

The offer price (determined via Bookbuild) was at a range of N363-N454 (80-100 pence).

The number of shares offered

at the lower price range was 676.406 million units while at the top of the price range are 541.12 million units.

The proceeds from the issue of the ordinary shares will be directed towards the reduction of Airtel Africa’s debt. The market capitalisation of the company was about $3.46 billion as the stock rose 1.4 percent to 72 pence in London trading as at 2.30pm on Tuesday.

Meristem Securities analysts said they used a blend of various valuation methods and arrived at a fair value of N375.53

(83 pence) for the offer.

“Thecompanypossessesdecent growth prospects across its operatingmarkets,particularlyin Nigeriawhichisthesinglelargest contributortocompanyrevenue, at 35.9 percent, and is key to the company’s strategy of driving revenue growth. However, various operational risks existing in some of its markets may pose significant risks to the health of the overall business,” Meristem Securities analysts said.

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Wednesday 03 July 2019

BUSINESS DAY

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NEWS Platform to enable landlords, property managers vet tenants debuts in Nigeria Cynthia Egboboh, Abuja

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n o n l i n e v e r i f i ca tion platform that enables landlords and property managers vet prospective tenants, check property location, data and rental history, debuts in Nigeria.

Known as ‘ Vetenant,’ t h e re vo l u t i o na r y e l e ctronic landlord-tenantproperty devise management and accountability system, aims to curtail the monster of delinquent tenants, build confidence in investors and bridge the gap between supply and demand in the housing value chain.

In a statement issued in Abuja, Buconpro Technology Limited, the promoter of Vetenant, says the plat-

form is a “unique one-stop s o l u t i o n f o r L a n d l o rd s, Tenants property owners, managers and housing Professionals.”

Vetenant is a real-time, online verification platform for landlords, tenants, property managers to vet prospective tenants, check property location, data and rental history with instant feedback, the statement notes.

According to Buconpro, Vetenant aims to increase Nigeria’s overall housing stock and helps to track each current, past, delinquent, evicted, violent or non-paying tenant on any private or commercial property.

The statement notes Vetenant “helps build greater investor confidence in the Nigerian housing sector.”

W/Africa to be worst hit as global economy faces $2.4trn loss on rising temperature CYNTHIA EGBOBOH, Abuja

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n increase in heat stress at work linked to climate change is set to have a massive impact on global productivity and economic losses, especially in agriculture and construction, with regions like West Africa and South-East Asia projected to be worst hit.

The International Labour Organisation (ILO) highlighted that the world’s poorest countries would be worst affected, particularly in these regions, and warned that the lost output would be equivalent to 80 million full-time jobs or 2.2 percent of total working hours worldwide by 2030.

The heat stress caused by global warming as excess heat at work is an occupational health risk and in extreme cases could equally lead to heatstroke leading to a total annual loss of $2.4 trillion.

Other at-risk sectors include refuse collection, emergency services, transport, tourism and sports, with southern Asian and western African states suffering the biggest productivity losses, equivalent to approximately 5 percent of working hours by 2030.

Catherine Saget, chief of unit in the ILO’s Research Department, in a statement, noted that the impact of heat stress on labour productivity is

CHANGE OF NAME I, formerly known and addressed as Miss. Opeyemi Folasade Oyetunde now wish to be known and addressed as Mrs. Opeyemi Folasade Dasho. All Former documents remain valid. General public please take note.

a serious consequence of climate change which may lead to more inequality between low- and high-income countries and worsening working conditions for the most vulnerable as well as displacement of people.

“The impact of heat stress on labour productivity is a serious consequence of climate change, which adds to other adverse impacts such as changing rain patterns, raising sea levels and loss of biodiversity. Construction will also be severely impacted, with an estimated 19 percent of global working hours lost at the end of the next decade,” Saget explained.

She said communities in the world’s poorest regions would suffer the most significant economic losses because they often lack the resources to adapt to increased heat, adding that there is need for urgent measures by governments, employers and workers focusing on protecting the most vulnerable.

“The economic losses of heat stress will therefore reinforce already existing economic disadvantage, in particular the higher rates of working poverty, informal and vulnerable employment, subsistence agriculture, and a lack of social protection,” Saget said.

“Lack of adequate infrastructure and improved early warning systems for extreme weather events, and improved implementation of international labour standards in occupational safety and health to help tackle heat-related hazards, may lead to significant economic losses in these regions,” she said.

CHANGE OF NAME

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I, formerly known and addressed as Salimon Shukurat Kehinde now wish to be known and addressed as Salimon Shukrat Animasaun. All Former documents remain valid. General public please take note.

I, formerly known and addressed as Miss Taiwo Bukola Ibiyemi now wish to be known and addressed as Mrs Olukanni Roselyn Bukola. All Former documents remain valid. General public please take note. www.businessday.ng

Citibank, SunTrust Bank CEOs, others for FMDA Lagos seminar HOPE MOSES-ASHIKE

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anaging director/ CEO, Citibank Nigeria Limited, Akinsowon Dawodu; managing director/CEO, SunTrust Bank, Ayo Babatunde, and director, Financial Markets Department, Central Bank of Nigeria (CBN), Angela Sere-Ejembi, have all confirmed attendance at the Money Market seminar of the Financial Markets Dealers Association (FMDA) holding in Lagos.

The participants will be sharing their experiences and thoughts towards building a vibrant and liquid money market.

The event, organised by the Money Market Workgroup of the FMDA, is scheduled to hold at the Federal Palace Hotels, on July 18, 2019, from 8am to 2pm.

It will focus on the theme: “Developing a vibrant and liquid Money Market as an effective catalyst to spur Economic Growth: Focus on the Interbank Market.”

The seminar, supported by the FMDQ OTC Securities Exchange, will provide a forum for financial markets partici-

pants and other stakeholders to deliberate on perspectives for developing a thriving and liquid Money Market to spur Economic growth.

The opening remarks at the event will be delivered by the FMDA Vice President, Adetoun Dosunmu.

In a statement, Mary Gbegbaje, acting executive secretary, FMDA, says the welcome address will be delivered by SereEjembi, while Dawodu will be speaking on Role of Money Market in Financial Market Development.

According to Gbegbaje, the Impact of Money Market on Optimal Balance Sheet Management will be handled by Babatunde while the Chairman, Money Market Workgroup, Olufemi Adaramola will speak on Liquid Money Market and Impact on Derivative Products Pricing and Development.

The FMDA is an association of licensed Deposit Money Banks (DMBs) operating within the Nigerian Financial Market, with emphasis on regulatory policy engagement/advocacy and professional ethics in the financial markets.

‘SchoolMe Lottery’ offers education opportunity to six financially challenged persons HARRISON EDEH, Abuja

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choolMe Scholarship Lottery on Monday gave out scholarship to the tune of N1.3 million to six persons who were having difficulties in financing their education.

Speaking during the cheque presentation to winners of its maiden scholarship draw on Monday in Abuja, Karrim Olusegun, general manager SchoolMe Lottery, noted that the social intervention programme was aimed at addressing the issues of inadequate, qualitative and responsive education in the country.

He expressed further concern that the high deficit in the education sector was responsible for the increasing rate of youths embracing social vices and being used as tools by politicians to perpetrate violence in order to disrupt what he described as the “whole essence of our living as individuals and as Nigerians.”

According to Olusegun, the organisation has used the programme to rescue many youths from the streets, and helped

students having financial troubles to concentrate more on their studies.

“Majority of those who have been in this programme with us has won on several occasions and have been able to stay put in school and see their dreams come to passes.

“Education must be given to as many that desire to have it. It shouldn’t be just for the rich, high and mighty but for as many that desires it,” he said.

Head of Operations of the organisation, Nsikan Ekaette, noted that SchoolMe had assisted many students in tertiary institutions in their educational pursuits, and also helped candidates to register for Unified Tertiary Matriculation Examinations (UTME).

“On 28th June, our maiden scholarship draw was held live on WAZOBIA FM Abuja under the supervision of auditors from the National Lottery Regulatory Commission. Four winners won N100,000 project money, one winner each grabbed N200,000 and N700,000 public and private school fee, respectively,” he said.

L-R: Abioye Omoseni, treasurer, IADC Nigeria; Ote Enaibe, chairman, IADC Nigeria; Chu Maoming, consul general, Chinese Consulate in Nigeria; Tokunbo Akinuli, secretary general, IADC Nigeria, and Chuks Enwereji, vice chairman IADC Nigeria, during the annual health, safety and environment award/1st 2019 technical session.

Norway’s example shows lessons for Nigeria’s weak performing oil, gas sector … UK lists four steps to set sector in right path Olusola Bello, Frank Uzuegbunam & Harrison Edeh

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orway, a leading country in global oil and gas technology and production, has offered huge lessons on the kind of regulatory reforms Nigeria needs to pursue to ensure it maintains competitive edge in the global dynamic oil market.

Nigeria’s oil sector, the main driver of the economy, has failed to lift millions of Nigerians out of poverty within over 50 years of oil exploration in Nigeria’s oil rich Niger Delta, due largely to poor sectoralreformsandweakgovernance in the sector.

This could have been solved by the Petroleum Industry GovernanceBill(PIGB),andhadinadvertently shifted investors’ interest

into other African countries that had just discovered oil.

Norwegian Ambassador to Nigeria, Jens Petter Kjemprud, says at the ongoing Nigeria’s Oil and Gas Conference in Abuja that Nigeria’s leadership could lift so many people out of poverty if the Nigeria oil sector operates with a better governance framework, while advising it to gradually evolve policies to ensure Nigeria playsitsroleastheworldgradually goesintocleanenergyproduction.

The Ambassador notes, “Norway is a leading country in gas and oil technology and production.

Governance in the sector shows that petroleum belongs to the people, and everyone has a stake.

Norway, therefore, has a transpar-

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ent and democratic system and enabling laws that enable steady and predictable development in the oil sector.

“Instead of putting so much money in developing the domestic oil company, we have decided to set up a special funding that brings in some income in oil and gas production through high yielding stocks and shares in global firms.”

According to the ambassador, “Based on series of reform that we have embarked upon, we have about biggest investments in the sovereign wealth globally, and we also have about $100 million worth of investments in Nigeria stocks.

“We also invested in shares worth about 1.5 percent of the global shares in a company from @Businessdayng

the proceeds of our oil and gas.

All these accumulate funds for thefuturegenerationsinNorway.”

The diplomat, who acknowledged that oil and gas would still play a role in few decades, however, noted: “We are now in the middle of shifting from fossil to renewable energy resources globally. Nigeria has to start the process from oil to gas and gas to renewable energy resources.”

In terms of ensuring proper transition from fossil energy to renewable to provide electricity, he said, “Norway has started the process and we have electricity production, which constitutes about 99 percent of hydro-carbons and we produce 36 000 megawatts for 5 million people, while Nigeria has over 200 million people with less than 5,000 megawatts of electricity.”

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Wednesday 03 July 2019

FT

BUSINESS DAY

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FINANCIAL TIMES

World Business Newspaper

ALEX BARKER, MICHAEL PEEL, JIM BRUNSDEN AND MEHREEN KHAN

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uropean leaders are closing in on a deal to place two women in the EU’s most important jobs, backing Ursula von der Leyen to be president of the European Commission and Christine Lagarde to lead the European Central Bank.

On the third day of a gruelling summit in Brussels, France and Germany secured broad support for a package based around Ms von der Leyen, Germany’s defence minister, and Ms Lagarde, the former French finance minister who is now head of the IMF. The suggested deal remains under intense negotiation and could unravel over the coming hours. Some centre-left leaders remain unconvinced — both Ms Lagarde and Ms von der Leyen are from the EU’s centre-right party grouping — and there are doubts over who should take the presidency of the European Parliament, according to several senior diplomats involved in talks.

Ms Lagarde’s formal nomination is expected to be deferred until other elements of the package are confirmed by the European Parliament.

The idea to propose Ms von der Leyen came from Emmanuel Macron, France’s president, during a chaotic period of the negotiation on Monday when several combinations of names failed to secure support.

Ms von der Leyen is a longstanding ally of Angela Merkel and the only minister to have served in every cabinet since Germany’s chancellor took office more than 13 years ago.

Her nomination to replace

EU leaders closing in on deal for top jobs at Commission and ECB Agreement over Ursula von der Leyen and Christine Lagarde could still unravel Jean-Claude Juncker at the Commission would ensure the centreright European People’s party would retain the most coveted post in Brussels. Ms von der Leyen would be the first German to head the institution in half a century.

Arriving at the summit on Tuesday morning, Ms Merkel said it was time for “new creativity”. “Everyone has to understand that they have to move a little bit. And I say everyone.

Then there is indeed a chance,” she said.

Several senior officials attending the summit said Ms Lagarde, the IMF’s managing director, was linked to Ms von der Leyen as part of the deal between Paris and Berlin.

But the replacement for Mario Draghi at the ECB is not expected to be formally announced at the same time, even if a deal is reached at Tuesday’s summit. One diplomat said the ECB nomination would be deferred until the European Parliament had voted to approve the proposed nominee for the Commission.

Other parts of the compromise envisaged are more open to negotiation. Charles Michel, Belgium’s liberal prime minister, is under consideration as the next European Council president, while Josep Borrell, Spain’s foreign minister, is

Leaders are backing Christine Lagarde, left, to lead the European Central Bank and Ursula von der Leyen to take up the presidency of the European Commission

tipped to become the EU’s foreign policy chief. However, both roles are still contested.

Promises are also being sought regarding Ms von der Leyen’s deputies at the commission. Frans Timmermans and Margrethe Vestager, the lead candidates for the socialists and liberals in May’s election, are expected to be rewarded with jobs as vicepresidents.

The position of European Par-

liament president would be a separate but related part of the compromise, which needs the approval of political groups in Strasbourg.

Names under consideration include Sergei Stanishev, the Bulgarian socialist; Manfred Weber, the German MEP who led the EPP election campaign; and Ska Keller, the German Green.

One senior EU diplomat said that Ms von der Leyen’s appoint-

ment was a “way out” for Ms Merkel, who had come in for criticism from within her own party for considering handing the commission presidency to the centre-left.

Her failure to win backing for Mr Weber as Commission president had left her with “domestic problems”, the diplomat said, noting this would be transformed by securing the position for Ms von der Leyen and potentially also a senior post for Mr Weber.

US economic expansion becomes longest in history US considers extra $4bn of tariffs in EU aircraft subsidies spat July is 121st month since end of the last recession, eclipsing Nineties boom the original run of Seinfeld on ROBIN WIGGLESWORTH network TV. It’s older than Inshe US economy is enjoying tagram,” observed Brian Levitt, a its longest uninterrupted strategist at Invesco. stretch of expansion since Gauging recessions is tricky, at least 1854, leaping over hurdles even when one is in the middle of including the eurozone crisis, tur- one, so it is at least theoretically bulence in the developing world possible that the US economy and now trade wars to surpass the might already be in a funk. The 1990s economic boom — at least NBER did not declare that the US in duration. was in a recession until December Recessions are typically de- 2008, a year after it decided the fined as two consecutive quar- economy had begun to shrink, ters of shrinking gross domestic and did not announce that it had product, but the National Bureau officially ended in June 2009 until of Economic Research — the September 2010. semi-official arbiter of US booms This year, the US economy and busts — uses a broader, more expanded at an annualised rate qualitative definition, and reck- of 3.2 per cent in the first quarter ons that the current expansion and is still growing by about 1.5 started in June 2009. per cent, according to the “nowThat means that this month casting” model of the Atlanta Fed, the US expansion has now hit its making it likely that the record has 121st month, making it longer in fact been broken. than the golden era enjoyed by Yet the new record comes at a the economy from March 1991 to time when some economists and March 2001, and more than twice investors fear that the next downas long as the average post-WWII turn is looming. Global economic expansion. data has been mixed, and a recent “This cycle has now been going truce between the US and China on for longer than The Beatles on trade has done little to allay were together. It has persisted concerns that the end of the postfor a more extended stretch than crisis recovery may be nigh.

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Trade concerns mount as Washington targets cheeses, coffee, pasta and olives SIDDARTH SHRIKANTH AND JIM BRUNSDEN

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he US on Monday said it was considering imposing additional tariffs on goods from the EU in response to aircraft subsidies, potentially worsening trade friction with the bloc just as it agreed a truce with China.

The Office of the US Trade Representative said in a statement that it was proposing a list of “additional products for tariff countermeasures in response to harm caused by EU aircraft subsidies” with an approximate trade value of $4bn, in addition to the list published on April 12 accounting for $21bn worth of trade.

The USTR added that it was seeking public comments on the proposed list for higher tariffs, which included a variety of cheeses from Parmesan to Gouda and coffee, olives and pasta.

The US’s new proposal comes as President Donald Trump has repeatedly threatened to impose punitive tariffs on the EU as a

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way to address what he views as unfair trading relationships.

The US last year imposed additional tariffs on EU steel imports, prompting retaliatory duties.

More recently, the US has taken issue with subsidies to Airbus, the European aerospace and defence group, which were judged illegal by the World Trade Organization.

In April, US trade representative Robert Lighthizer said the company had benefited from illegal “launch aid” to the detriment of its main competitor, Boeing, which has its headquarters in the US. The US and EU have a 15-year running dispute over the subsidies that each side provides to its dominant aircraft manufacturers. Washington and Brussels have won cases at the WTO against tax breaks and other aid to Airbus and Boeing, and have drawn up lengthy retaliation lists.

In practice, the amount of retaliation that both sides are allowed to take will be determined @Businessdayng

by arbitrators at the WTO, with a decision on the US complaint against Airbus expected this summer. The EU case against Boeing is running six to nine months behind.

EU trade officials have said the final retaliation amounts, for both sides, will be significantly less than the long lists that each side has assembled.

“The figures quoted by the USTR are based on US internal estimates that have not been awarded by the WTO,” a commission spokesman said on Tuesday.

However, the latest threat could damp hopes that the US is starting to scale back its trade disputes, which are being fought on multiple fronts, after Donald Trump and Chinese president Xi Jinping agreed to resume trade talks at the G20 summit in Osaka, Japan, over the weekend.

Global markets had responded to the conciliatory rhetoric on trade by rallying strongly, with the S&P 500 hitting a record high on Monday.

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FT Amazon introduces computer vision into warehouses

Machine learning technology tracking the movement of products is intended to increase efficiency SHANNON BOND

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nside Amazon’s warehouses, the myriad products stocked by the online retailer sit jumbled together in yellow bins, toothbrushes next to electric fans next to school textbooks.

Until now, Amazon’s workers have scanned the barcodes on each product and on each bin so that the goods can be tracked inside the warehouse and easily retrieved by the squat orange robots that traverse the floor, moving tall racks of bins.

But in dozens of US warehouses the process is being automated.

Instead of clunky handheld scanners, that often get in the way as workers grapple with bigger items, AI cameras and scanners watch the process and automatically track which products go into which bins.

It might seem like a small change, but it has had a significant impact on efficiency, said Brad Porter, Amazon’s vice-president of robotics, at the company’s re:MARS artificial intelligence and robotics conference in June. He added that the cameras would not replace human workers, but would change how they do their jobs.

“We wanted to get to a point where associates [the title Amazon gives to its warehouse workers] could do what we would call a hands-free stow,” he said. That made it easier to handle bulky items with two hands and eliminated the chances that a worker might drop the handheld scanner in the path of the robots, causing delays.

The system is running in more than 20 US fulfilment centres after being launched in a Milwaukee warehouse last year ahead of the peak November holiday shopping season. Amazon operates more than 175 fulfilment centres around the world, employing 250,000 fulltime workers.

Beyond the warehouse Warehouses are just one of the places where Amazon is developing computer vision systems that allow computers to see and understand the world around them. That includes delivery drones, internetconnected doorbells and an AIpowered fashion tool — reflecting the sprawl of Amazon’s businesses.

Recent advances in computer vision have been made possible by higher-quality cameras and more sophisticated machinelearning programs, which use large amounts of data to train computers to recognise patterns and make inferences. “[Computer vision] is a science that has existed for decades, but it’s exciting now because of deep learning. When you have a visual problem or an auditory problem or speech, deep learning has automated a lot of these processes,” said Tuong Nguyen, an analyst at Gartner.

The most visible example of

Amazon’s computer vision push is in its 13 Go stores, where customers scan their smartphones on the way in, pick up whatever items they want, and walk out.

Cameras and sensors track what they buy and send an electronic receipt a few moments later.

The warehouse scanning system “is kind of the inverse of that,” Mr Porter said. “In the same way that Go is trying to detect when you grab something, it’s [detecting] where you’re putting it.”

When Amazon first began working on teaching computers to understand where workers were putting items, “we thought we could use very simple vision techniques,” Mr Porter said. It turned out to be a complicated challenge for a computer to distinguish when a worker started to put something in one bin but found it too full or adjusted objects bulging out of a bin.

But the team did not have to figure out everything from scratch. They brought in colleagues working on other computer vision projects, including drones and Go, to review their approach.

“Some of the cameras that we’ve built are also being explored by the fulfilment centres,” confirmed Dilip Kumar, the Amazon executive in charge of Go stores.

These efforts are built on the backbone of Amazon Web Services, the cloud unit that sells computing and storage services to customers from Netflix to the US government.

“We enable the individual lines of business to focus on inventing new computer vision algorithms that are relevant for them, instead of having to focus on building the core infrastructure and optimisation,” said Swami Sivasubramanian, AWS vice-president of machine learning.

AWS in turn benefits from what it learns from how Amazon uses its products, he added.

“Amazon is a leading indicator” of the demand for services that might prove marketable to outside customers, he said.

AI at home Computer vision is also making inroads in the home, thanks to Amazon devices such as Ring video doorbells, Blink security cameras and the Echo Look, a voice-controlled camera that gives fashion advice.

The doorbells and security cameras can “detect advanced presence” — comprehending the difference between a person bringing a package to the door and a deer wandering through the garden and notifying residents of the first while ignoring the second, said Dave Limp, senior vice-president of devices and services. They do not use facial recognition so cannot distinguish between individuals. www.businessday.ng

Ren Zhengfei said Huawei would continue to ‘focus on doing our own job right’ © Bloomberg

Huawei founder plays down effect of promised Trump reprieve Ren Zhengfei tells FT the US’s softening stance on Chinese company will have limited impact JAMES KYNGE AND KIRAN STACEY

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en Z hengfei, Huawei’s founder, said US president Donald Trump’s move to relax a ban on the Chinese telecoms company’s equipment will not have “much impact” on its business as it adjusts to a new era of American hostility.

Responding to Mr Trump’s decision to soften a ban on US companies selling Huawei the chips, software and other inputs it needs, Mr Ren said his company would continue to “focus on doing our own job right”.

“President Trump’s statements are good for American companies.

Huawei is also willing to continue to buy products from American companies,” Mr Ren said in a statement to the Financial Times. “But we don’t see much impact on what we are currently doing. We will still focus on doing our own job right.”

His remarks followed an FT interview, conducted before Mr Trump gave Huawei a partial re-

prieve, in which Mr Ren stressed his company’s doctrine of selfreliance.

“The US is helping us in a great way by giving us these difficulties.

Under external pressure, we have become more united than ever,” Mr Ren said in the interview. “If we aren’t allowed to use US components, we are very confident in our ability to use components made in China and other countries.”

Mr Trump surprised many in both Washington and Beijing over the weekend by agreeing to reverse a decision that had, in effect, imposed a ban on US groups selling software and equipment to Huawei.

The move came as part of a more general truce in the longrunning US-China trade war.

Mr Trump will meet senior US security officials over the coming days to discuss how far to go in easing pressure on Huawei, but he is facing conflicting domestic pressures.

On one side, US technology companies are lobbying heavily

for a significant relaxation of the Huawei ban. On the other, many China hawks want Mr Trump to restrict Huawei even further because of the threat they say it poses to national security.

One person familiar with the situation said: “The NSC [National Security Council] will be meeting on this as soon as possible, and it is likely to take some time for the administration to figure out how exactly it is going to keep everyone on board here — from Beijing, to US industry, to the China hawks in his own party.”

Mr Trump’s comments over the weekend were a big concession to China, which has insisted that the fate of Huawei should be settled as part of the trade talks between the two countries.

The US argues that Huawei poses a threat because its equipment for 5G superfast broadband networks could be used by Beijing for spying. It has also accused the company of stealing US technology and breaking sanctions against Iran.

Patent panic gives green light to mega pharma deals Pressure drugmakers face over expiries means big takeovers can lack scrutiny SARAH NEVILLE

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S drugmaker AbbVie began the year with a lesson in the perils of dealmaking, as it wrote down the value of its 2016 acquisition of cancer therapy developer Stemcentrx.

The $4bn impairment charge on Stemcentrx, though, was not enough to deter AbbVie from last week announcing a $63bn takeover of Botox maker Allergan.

While AbbVie shares have been under pressure since the deal was announced, analysts say that the industry’s quest for the next moneyspinning medicine as patent protections expire — and the risk of not finding one — means that any setbacks are quickly consigned to history.

Indeed, AbbVie’s tilt at Allergan is the latest in a wave of blockbuster pharma deals this year that BristolMyers Squibb kicked off in January with a $74bn bid for Celgene. About

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$92bn was spent in the first quarter alone, the biggest quarterly total since 2014, according to EvaluatePharma.

The imperative to rebuild its medicine cabinet is especially pressing for AbbVie, which will lose exclusivity on Humira, the arthritis drug that is the world’s best-selling prescription medicine, in the US within the next four years.

Continuing to boost top-line growth when patents are expiring on key drugs is “very difficult to achieve . . . but it will not stop companies from trying”, notes John Rountree, a partner in Novasecta, a pharmaceuticals consultancy. It is a dynamic that means the merits of such megadeals do not always receive adequate scrutiny.

Anthony Hartley, Europe, the Middle East and Africa head of healthcare investment banking at Citi, pointed out that the phenomenon of pharma “mega-mergers” is a relatively recent one.

Until the 1990s, pharma compa@Businessdayng

nies had tended to be smaller “and very few of them had what we now refer to as blockbuster drugs”, he said.

Only when patents began to run out on the first generation of such drugs a decade ago did the first concerted wave of large-scale M&A emerge.

There were several massive deals in 2009, including Pfizer’s purchase of Wyeth; Merck’s of Schering-Plough; and Roche’s of Genentech. Overall, pharma made up 7.6 per cent of global M&A, in part because the sector proved more immune than most to the general downturn, a figure that has yet to be bettered, with 2014 the next strongest year, at 6.4 per cent, according to data supplied by Dealogic.

By one metric, at least, these deals have proved negative for the companies concerned, however. Michael Levesque, senior vice-president at rating agency Moody’s, pointed out that, in each case, the mergers led to downgrades in the acquiring companies’ credit rating, from which none has fully recovered.

Wednesday 03 July 2019

BUSINESS DAY

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FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Study finds link between sovereign debt risk and ESG score Countries that perform well on ESG metrics are viewed by investors as less likely to default

BILLY NAUMAN

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ountries that perform well on environmental, social and governance metrics are viewed by investors as less likely to default, a new study that examined credit default swap spreads on sovereign bonds has found.

In an analysis of 59 countries between 2009 and 2018, Hermes Investment Management found that countries with the best ESG scores tend to have the lowest CDS spreads and vice versa, suggesting a link between credit risk and ESG performance.

This research is likely to intensify the debate about the degree to which investors should pay attention to ESG factors when building their portfolios.

Mitch Reznick, head of research and sustainable fixed income at Hermes, argues that the study’s findings show ESG factors can be closely linked to financial performance. A comparable analysis on corporate credit by the investment manager in 2017 came to a similar conclusion, he noted.

“Integrating ESG factors in sovereign risk analysis is just as strong an imperative as it is when analysing credit risk for corporates,” Mr Reznick wrote in the study.

The study focused on CDS spreads rather than spreads on physical bonds because the former provide the “purest reflection of credit risk”, said Mr Reznick. CDS are much more liquid than the underlying bonds and are “essentially immune” to interest rate changes, said Mr Reznick.

Hermes’ findings contradict research conducted by Renaissance Capital last year, which found “virtually zero correlation” between sovereign bond pricing and ESG. The difference may highlight the various ways ESG is measured in this fledgling sector. While Renaissance Capital’s Charles Robertson used a proprietary scoring system, Hermes received its ESG scores from Beyond Ratings, a recently acquired subsidiary of the London Stock Exchange Group.

The Hermes study determined that out of the three factors — “E”, “S” and “G” — it was governance that correlated most closely with CDS spreads. Environmental scores, by contrast, had the least linear relationship, which may reflect the difficulty in accurately measuring climate risk, Hermes said. “‘E’ risks are challenging. They’re of a longer-term nature,” said Mr Reznick. “The timing of the impact can be unknown so it’s difficult to price it right away.”

Part of the correlation between ESG and CDS spreads can also be attributed to rating agencies factoring ESG into their sovereign credit analyses, although Hermes identified a number of countries that hold good credit ratings despite having a low ESG ranking.

Mr Reznick said the group now plans to investigate whether some sovereign bonds are being mispriced.

But he added that ESG should only be one of “multiple factors in your investment decision”. The job now is to see “what do the ESG risks — and how those are priced — say about where we want to be.”

AB InBev prepares largest IPO of the year Budweiser maker aims to raise up to $9.8bn through listing of Asia business HUDSON LOCKETT AND LEILA ABBOUD

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udweiser maker AnheuserBusch InBev is seeking to raise as much as $9.8bn from listing a minority stake in its Asia business, in what would be the world’s biggest initial public offering this year.

The share sale will help the world’s largest brewer reduce its heavy debt load and chief executive Carlos Brito has signalled that it could also pave the way for acquisitions in the region.

Budweiser Brewing Company APAC, which markets 50 brands including Budweiser and Stella Artois in China, Australia, South Korea and Vietnam, is selling 1.6bn primary shares at between HK$40-HK$47 ($5.13 to $6.02) apiece, according to a deal term sheet.

Depending on investor demand, the listing could value the company’s operations in Asia at between $54.2bn and $63.7bn.

This is higher than valuations set by analysts not involved in the IPO. Jefferies and Bernstein Research

have estimated the business is worth $45bn to $55bn.

Although two-thirds of Budweiser APAC’s sales and half of its profit comes from the mature markets of Australia and Korea, China is expected to be the main source of growth in the coming years. The growing middle class there gravitates towards foreign brands, which are marketed as premium products.

“ABI has built a brilliant business in China in recent years as they shifted consumption from cheaper local beers to Budweiser,” said Tristan van Strien, analyst at Redburn Securities.

One analyst who declined to be named said the implied valuation multiples were “quite punchy” at 16 to 18 times earnings before interest, tax, depreciation and amortisation. In contrast, AB InBev itself trades at about 12 times ebitda, while the largest Chinese brewer, China Resources Beer, trades at almost 22 times. Another Chinese rival, Tsingtao Brewery, trades at 15 times, according to Capital IQ data. www.businessday.ng

An analysis by Hermes Investment Management found that countries with the best ESG scores tend to have the lowest CDS spreads and vice versa © FT montage; Reuters; Getty Images

Opec is stuck in a production-cutting cycle it cannot get out of Cartel has propped up the oil price but has done so at the expense of market share ANJLI RAVAL AND DAVID SHEPPARD

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audi Arabia’s energy minister delivered only one message that mattered at the meeting of Opec and its allies this week: together we believe we can outlast the US shale industry.

Khalid al-Falih, fresh from striking an agreement that will see the cartel extend price-supporting production cuts for another nine months, assured reporters that one day shale would go the same way as every other oil basin in history. It will “peak, plateau and then decline”, Mr Falih said.

“Until it does I think it’s prudent . . . to keep adjusting to it,” he added.

The problem for Opec is it may face a very long wait.

Five years after oil prices last traded above $100 a barrel, the cartel is stuck in a cycle it cannot get out of. The group has succeeded in propping up the oil price near $60 a barrel, but only through endless rounds of production cuts that have seen its share of the global oil market sink to the lowest in almost three decades.

In the meantime, the US shale industry has expanded at a rate that once again threatens to overwhelm the group’s efforts, swamping the global oil market.

Further down the road also lies the prospect that demand for oil could very soon start to fade, complicating Opec’s long-term plans even if the shale industry does start to tail off.

“There’s no limit on the horizon for shale growth at the price Saudi Arabia wants,” said Derek Brower, director at RS Energy Group, a research firm. “Opec is going to keep inadvertently subsiding shale.”

The cartel’s lack of good options was apparent in Vienna this week, as its 14 members sat down with Russia and other producers from outside the group to try to map a way forward.

Since 2016, Opec has been operating tactically en masse, doing what it can to support the oil price, but with little long-term strategy aside from hope and patience. This week Opec even moved to create a permanent framework for co-operation with

Russia.

Saudi Arabia and global energy agencies have long warned that a slowdown in investments into traditional oil projects since the 2014 crash in the oil price could create a major shortage in supply.

Instead, spending on more flexible US shale developments has filled the gap and is expected to account for two-thirds of the total increase in global production capacity out to 2024.

“Shale has defied expectations,” said Helima Croft, global head of commodity strategy at RBC Capital Markets in New York. “[Saudi Arabia’s] strategy is to do whatever they can to keep prices as high as possible . . . At best they’re going to try manage it to $60-$80 [a barrel].”

The next 12 months may pose challenges for even this shortterm goal. More US oil is expected to come on to the market as new pipelines connecting shale fields to export hubs open up. The world economy has also stuttered in the face of a threat from the US-China trade war, and any slowdown in output is likely to drag on oil demand.

FCA regulator warns cryptocurrency groups to ‘get it right’ CAROLINE BINHAM

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he UK’s financial markets watchdog has warned Facebook and other issuers of digital currencies against the tech giant’s traditional motto of “move fast and break things”, putting them on notice that providers of financial services must “get it right the first time round.”

Christopher Woolard, a senior regulator at the Financial Conduct Authority, said on Tuesday it would not tolerate cutting corners when bringing innovations to the market, or tech companies trying to test a product “in beta for a few million people and see what happens”.

The comments by Mr Woolard come two weeks after Facebook unveiled plans to launch a digital

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coin, dubbed Libra, with ambitions to upend the delivery of financial services around the world. The FCA has already had discussions with Facebook about the plans, and has also held talks with the Bank of England and the Treasury about the implications of Libra.

“We need to ensure that innovation works in the interests of consumers [ . . .] We need to consider whether consumers understand and actively consent to the trade-offs inherent in those business models.

“And we need to consider the wider impact on market integrity and stability,” said Mr Woolard at a speech in London on Tuesday.

“We need to bring new technology, jargon and marketing back to first principles before we can answer tricky policy questions on topics @Businessdayng

such as consumer protection, market integrity or competition.”

While Mr Woolard said his comments were not targeted at Facebook alone, he referenced Facebook’s well-known mantra of “move fast and break things”.

Facebook said last month that Libra would be backed by hard assets, a basket of currencies and securities to ensure trust and a stable value. Users would be able to make instant and nearly free international money transfers from their mobile phones.

The tech giant’s plans drew a swift response from regulators, politicians and policymakers around the world, who are concerned on a range of issues from tax evasion and money-laundering risks through to monetary policy.

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BUSINESS DAY

ANALYSIS FT How to mobilise millions: Lessons from Hong Kong The Russian leader believes he is back at the top table with history on his side NICOLLE LIU AND SUE-LIN WONG

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hat began as a protest against an extradition bill has grown into a battle over the future of Hong Kong — and a rare instance of popular defiance against President Xi Jinping’s increasingly authoritarian China.

On July 1, the anniversary of the handover of Hong Kong from British to Chinese rule, protesters stormed the city’s legislature, smashing through windows and ransacking the heart of government in unprecedented scenes that were broadcast around the world. They blame the shift in tone both on chief executive Carrie Lam’s botched handling of the proposed law and an aggressive police response in recent weeks.

After the leaders of Hong Kong’s 2014 pro-democracy Umbrella Movement — the last time the city was hit by major demonstrations — were locked up, today’s protesters have drawn inspiration from Hong Kong actor Bruce Lee’s famous quote: “Be water, my friend.”

It is an allusion to a nimble, leaderless way of organising that has echoes in other movements around the world including France’s gilets jaunes, protests in Sudan, Occupy Wall Street and the Arab Spring.

We look at how Hong Kong’s protesters have organised.

DECENTRALISED LEADERSHIP In contrast to the Umbrella Movement which had clear leaders such as student activistturned-politician Joshua Wong, figureheads have not emerged this time.

This is a tactical decision, organisers say. It means Beijing cannot go after any particular individual. “We’ve learnt our lessons from the Umbrella Movement,” Mr Wong told the Financial Times after he was released from jail for his involvement in the 2014 protests on June 17. “ This organic movement means the government now faces even more uncertainty about what we will do next,” he added.

Groups such as the Civil Human Rights Front, which has long organised annual rallies in Hong Kong, have received widespread media coverage, though they emphasise that their role is to ensure actions are legal and safe rather than spearheading the recent protests.

“When some people suggest, for example, more radical things, we can neither encourage nor dis-

courage them,” said Bonnie Leung, the group’s vice-convener.

Wayne Chan, the 29-year-old convener of the small, pro-Hong Kong independence Students Independence Union, supports the lack of leaders in the movement even as he acknowledges it can slow decision making.

For the authorities, however, it is a source of frustration. “Even if the government wants to make a deal with the protesters, they can’t because no one can represent all the protesters to strike [one],” said Jasper Tsang, the pro-Beijing former president of Hong Kong’s Legislative Council.

At a 4am press conference on Tuesday, Ms Lam said the government had already suspended the proposed law indefinitely but added she had “good reasons” not to respond to the protesters’ every

demand.

“The bill will expire or the bill will die in July 2020 when the current [legislative council] term expires,” she said.

TECHNOLOGY FIRST Rather than deferring to a figurehead, protesters organise using online platforms.

“Through these interactions, we vet and figure out who really has [found] the best strategies, who has the best people skills, who is really competent and then the culture and leadership flows from there,” said Janet Lui, who researches Hong Kong’s social movements.

While the Civil Human Rights Front uses Facebook posts and mainstream media to advertise weekend rallies, most protesters turn to anonymous online platforms. The two most popular apps are messaging service Telegram and online forum LIHKG, Hong Kong’s answer to Reddit, which was used to send out alerts to users on Monday night warning the police were about to storm the legislative building.

Telegram, like WhatsApp, provides a basic messaging service.

It also has channels to which thousands can subscribe in order to get instant updates from other members. The channels allow protesters to conduct polls and to co-ordinate in smaller groups about logistics, first aid, legal aid, design and strategy.

Telegram also has a self-destruct timer for messages. “You can ensure your conversation isn’t leaked and you can hide your phone number, which is different from WhatsApp,” said the administrator of one Telegram channel for protesters with 35,000 subscribers, who spoke on condition of anonymity. www.businessday.ng

WeWork: the ‘hypothetical’ company at the heart of the property market

The shared office space provider sees itself as a technology, not a real estate group ERIC PLATT AND ANDREW EDGECLIFFE-JOHNSON

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asayoshi Son, the Japanese billionaire, left an indelible mark on California’s property market when he spent a reported $117m on a nine-acre estate in the hills above Palo Alto. It was one of the largest sums ever paid for a home in the US at the time.

But it pales in comparison to the impact the SoftBank boss has had on the commercial real estate world with his $10bn-plus investment in WeWork. In less than a decade, the lossmaking provider of office space has grown from renting a single building in New York’s Soho district to become one of the largest tenants in cities across the globe.

Its rapid growth is down to the unbridled optimism of two men: Adam Neumann, the 40-year old entrepreneur and founder of WeWork, and Mr Son, who has egged on his protege’s lofty visions. He has also pumped more money into the younger man’s company than any other investor, effectively setting its valuation, which at $47bn now eclipses all but a handful of publicly traded property groups.

“What he brought to the table was a bigger thinker, which we thought was hard to find because we thought we were quite big thinkers,” Mr Neumann told the FT in an interview in May. “He came in and said, ‘Woah, woah, woah, wait. Why [target] only a million members when you can have 5m?’”

Such conversations between the two men capture both the potential and perils of WeWork as the company prepares for an initial public offering that will test whether other investors share their rosy view of the group’s potential.

Like the SoftBank boss, Mr Neumann is considered by supporters to be a visionary who is applying the disruptive instincts and dynamism of the technology sector to a much more staid industry. But to their critics, both are salesmen who have been able to hype their businesses in an era of endless cheap money but who will be found out when circumstances are less favourable. In Mr Neumann’s phrasing of its mission, WeWork is “elevating the world’s consciousness”. To his detractors, it is an overvalued property company.

The question of who is right is of pressing importance to both the global property sector and the US equity market after WeWork secretly filed paperwork with US securities regulators to go public late last

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year. WeWork is now the largest tenant in New York and one of the biggest in London. If the company can continue to expand, reduce its losses and convince investors that it has a powerful, long-term business built around technology, WeWork will help to underpin the market for office space in many of the world’s main cities.

But if investors doubt the company’s model — which combines longterm leases on office buildings with shorter-term contracts with clients — then the impact will be felt across property markets. Co-working, after all, has grown far beyond WeWork’s 485 offices. At least 350 other venture capital-backed companies have leased thousands of buildings for the same purpose, according to Andrea Chegut, a research scientist at the Massachusetts Institute of Technology.

“Adam Neumann is getting in a room and telling investors a story along with his financials. That story he is telling . . . it is something,” she says. “Real estate always had a subscription model, it was a rent contract. [WeWork] just changed the time period of the subscription and gave you a really easy way to access this. They allowed you to click to buy.”

The question hanging over the IPO is, as analysts at CB Insights put it two months ago: “Is WeWork’s business model just a ‘house of cards’ fuelled by ‘Silicon Valley pixie dust,’ as critics have claimed? Or do millions of square feet of office space, hundreds of thousands of members, and an ever-expanding repository of data add up to more than the sum of its parts?”

Their conclusion was that the company may yet live up to its valuation, but it needs time that it may not have for its model to gain traction, as well as further infusions of cash.

“So much about the company,” the analysts wrote, “is still hypothetical”.

Mr Neumann, who walks round WeWork’s Chelsea headquarters in gold-speckled Nike training shoes and logo-embossed T-shirts, was not the first to try to profit from coworking spaces. But the scale of his vision and unabashed hunger to succeed initially attracted employees, and then investors like Fidelity and T Rowe Price which soon followed.

While his earlier ventures failed, including a company that sold women’s shoes with collapsible heels and another that made baby clothes with knee pads, WeWork has turned the kibbutz-raised Israeli into a paper billionaire. He is, however, known to be unpredictable, bending the company to his own interests as when he banned employees from expensing meals containing meat or bought a manufacturer of wave-making ma@Businessdayng

chines. It is a trait that has raised tensions for some investors who hope to soon sell their holdings.

His management style is likely to be a focus for other shareholders weighing whether to buy in to WeWork’s IPO, according to David Erickson, a University of Pennsylvania fellow and former Lehman Brothers and Barclays banker. “When investors buy IPOs they invest in companies that have strategies that can be executed by strong management,” he says. “The more and more I hear about the team here . . . the more uncomfortable I would be as a potential public investor.”

Mr Neumann has added more experienced executives, his defenders note. Internally, some employees refer to Jen Berrent and Artie Minson, the company’s co-president and chief financial officer as Mum and Dad, according to several people who spoke on the condition of anonymity. They are seen, one added, as responsible for keeping Mr Neumann focused on the core business and for intercepting off-beam projects that interest him, though WeWork contests this characterisation.

More conventional Wall Street investors seem unconvinced by talk of elevating consciousness, but when asked whether he would change his messaging to persuade his new audience, Mr Neumann replied with a smile: “Are you asking am I going to sell out? No, we’re not going to sell out.”

“The only thing I’ll do differently, I will take a pause before I communicate,” he said. “I will be more thoughtful about how it comes out, and I will ensure to come with data to the table.”

Bankers have for weeks been pitching their services for the upcoming IPO. The critical question they will confront is whether the institutional investors who can make or break a new offering agree with WeWork’s characterisation of itself as a tech company or measure it against the far more lowly-rated real estate sector.

Even the research analyst covering WeWork for JPMorgan Chase, one of the banks angling for the mandate, has purview over property, not tech.

That distinction has already proven a thorn to some early investors trying to sell down their stakes. Mr Son’s latest investment, which raised the headline valuation to $47bn in January, included $1bn to buy out existing investors at a $20bn price.

Broker documents seen by the FT showed institutional investors were willing to trade the company’s stock at a heavy discount to the higher of those valuations, with $23bn marking the midpoint of the range for some investors.

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ENERGY intelligence oil

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Wednesday 03 July 2019

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BUSINESS DAY

OIL

East Africa: Tullow Oil’s Kenyan, Ugandan projects timelines slip Page 46 GAS

Algeria: Enel agrees extension of gas supply deal with Sonatrach to 2028 Page 47 Market Insight

Debrief

How Nigeria’s oil export benefitted from North Sea outages FRANK UZUEGBUNAM

Oil jumps over 2 percent as Saudi Arabia, Russia back supply cuts Page 51 OPEC weekly basket price DAY

PRICE

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65.60

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65.61

26/6/19

65.60

25/6/19

64.79

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65.05 Source: OPEC

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arlier in May this year, unplanned outages at Oseberg and Flotta in the North Sea restricted a total of 160,000 bpd of North Sea production, Rystad, said.

In addition, scheduled maintenance at Ekofisk, North Sea oil production slumped to 2.28 million bpd in June after a total of about 462,000 bpd were lost to the outages, the energy research firm estimated.

Turnaround activity at the oil fields feeding Ekofisk was the primary driver for the lower North Sea production, accounting for 230,000 bpd of the total outage in June 2019.

There was also a threat of labour unrest. However, Norwegian labour unions and oil rig owners agreed a wage deal only last week, averting the

outbreak of a strike that would have halted some of the Nordic country’s crude production and paralyse exploration activity for new resources, the unions said.

Almost 1,600 workers had been scheduled to go on strike if the talks had broken down. Oil companies, including Equinor, Eni, Aker BP, Shell and Lundin Petroleum were among the firms that could have been hit, directly or indirectly, by a strike.

But the earlier outages recorded at North Sea oilfields helped put competing Nigerian oil on pace to arrive in Europe at the highest levels in seven months in June, according to Refinitiv Eikon data and traders.

Nigeria exported about 905,000 barrels per day (bpd) to Europe in June 2019, the most since a roughly five-year high of about 1 million bpd in November 2018.

Norwegian and UK offshore fields in the North Sea normal-

ly provide a steady supply of lighter crude to refineries feeding northern Europe’s major economies and are traditionally more competitive than Nigerian grades due to their proximity.

Supply of the five North Sea crude grades that underpin the dated Brent benchmark fell to around 720,000 bpd in June, from 948,000 bpd the month before. Also the contamination of a pipeline carrying Russian Urals crude in April interrupted flows to Central and Eastern Europe for a month and left stocks in need of replenishment.

“Nigerian grades are normally middle-distillate-rich and with Ekofisk having undergone maintenance, Nigeria is meeting European demand for this type of crude,” said Ehsan Ul-Haq, lead analyst for oil research and forecasts at Refinitiv.

Higher volumes to Europe,

thus, provided an unexpected boon, with Nigerian exports to the United States on the wane for a decade due to increased US shale oil production, and demand relatively steady in Nigeria’s key markets India and Indonesia.

Though European gasoline margins have been middling and especially poor among southern European refiners, several factors may mesh in coming months to support Nigerian differentials, which stand near multi-year highs.

Egina, heavy sweet crude from Nigeria’s new offshore field, has proved consistently popular among refiners in northwest Europe.

“Exports of the grade primarily go to Europe, specifically the Netherlands and France, which combined took around 155,000 bpd in May, or 83 percent of the grade’s exports,” said Mercedes McKay, analyst at energy consultancy FGE.

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oil

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Outlook

East Africa: Tullow Oil’s Kenyan, Ugandan projects timelines slip

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ritain’s Tullow Oil has delayed the final investment decision (FID) for its Kenya project to 2020 and has not yet sealed a tax deal in Uganda that is needed for the progress of its plans there with Total.

The company had aimed to give the final go-ahead by the end of 2019 for its onshore Kenyan oilfields, which are ex-

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outh Sudan has suspended all pre-sales oil contracts to boost competition in its petroleum sector and drive up prices, Michael Makuei Lueth, the information minister said.

The country gets almost all of its revenue from oil and has been boosting production as it struggles to rebuild its shattered economy from the wreckage of a five-year civil war.

“The president directed that all presales contract should be suspended.

These pre-sales contracts are not healthy and they are actually destroying the economy,” Lueth said.

The move was expected to boost the price of South Sudan’s oil in the market, he said, without saying which companies have secured pre-sales contracts.

“When you sell to a specific company without competition, definitely you agree on certain rates but when it is free competition you give to the highest bidder,” he said.

South Sudan’s total oil production is nearly 180,000 barrels per day (bpd), official figures show. But the government is keen to reach pre-war levels of 350,000 to 400,000 bpd by mid-2020.

pected to produce up to 100,000 barrels per day.

The Kenya delay was due to authorities asking for additional community consultations which Tullow expects to be submitted in the second half of the year - later than anticipated, the company said in a trading statement.

“The partners and the government of Kenya are reviewing the most likely

timeline to FID which Tullow now expects in 2020,” Tullow said.

Recently, Tullow and its partners Total and Africa Oil signed commercial agreements with the Kenyan government, but it still needs to lock in financing for a $1.1 billion pipeline to bring the oil to the coast.

In Uganda, progress is also slower than expected. A tax deal needed to close the $900 million sale of a stake in its Ugandan fields to Total is pending.

As recently as April Tullow said the Uganda talks were expected to conclude shortly.

“We continue to work constructively with our Joint Venture Partners and the government of Uganda to agree a way forward and the consequent timing of FID. Nevertheless, although negotiations continue, Tullow is currently considering all options in pursuing the sale of its interests in Uganda,” it said.

Barclays said in a note the likelihood of a final decision on Uganda to come in as planned this year was declining.

“Tullow’s comment indicates the potential for a fresh approach/structure to the deal that can be acceptable to all stakeholders, but increases uncertainty around the timing of the development,” Barclays said.

Tullow expects its first-half gross profit to be $500 million, yielding predividend free cash flow of about $100 million that would rise to $450 million for the full year, excluding $200 million due to be paid on closure of the Uganda deal.

Tullow’s much-watched net debt is expected to be at $3 billion in June compared with $3.1 billion in December.

South Sudan: South Sudan suspends all pre-sales oil contracts

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Brief

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Angola: Sonangol working with Iraq oil ministry on Mosul complex refinery

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ngola’s state-owned oil company, Sonangol, is working “seriously” with Iraq’s ministry of oil to build a complex refinery in Mosul, an area which has recently been liberated from Islamic State militants, a company official said.

“We have expressed interest in building a complex refinery to process heavy crude,” Sonangol’s head of Iraq operations, Richard Wadsworth, told delegates at an Iraq oil conference in London. “We are working seriously with the ministry on this.”

The ministry of oil put out a tender for a refinery in Gyarah last year. The discussions between Sonangol and the ministry are for a refinery with a capacity for 100,000 - 150,000 b/d of complex products, Wadsworth told Platts.

Sonangol operates the Qayara oil field in Mosul, which produces around 30,000 b/d.

Restarting and continuing activity in liberated areas of Iraq is not without difficulty and security remains a latent concern.

“It’s important to note that in some of these areas which we call liberated, they are liberated during the day but not in the night,” Michael Knights, head of the Iraq and Kurdistan programme at the Washington Institute for Near East Policy told delegates. “That’s important because IOCs will need to operate all day and all night.”

A high rate of localization has been crucial for Sonangol’s ability to operate in Mosul, Wadsworth said, and around 90 percent of workers on operations in this area are local. Logistics continue to be a difficult concern, as much of the infrastructure in Mosul requires rebuilding.

@Businessdayng

Wednesday 03 July 2019

BUSINESS DAY

gas Brief

EU rules set to boost LNG in new trucks could apply in July

WEST AFRICA

ENERGY intelligence

Algeria: Enel agrees extension of gas supply deal with Sonatrach to 2028

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taly’s biggest utility Enel has agreed with Algeria’s Sonatrach to extend a gas supply contract by eight years to 2028 with the possibility of a further two years if both sides agree.

In a statement, Enel said the new contract period will kick in on January 1. Enel’s existing long-term gas im-

port deal with Sonatrach from 1997 -which was originally for some 6 Bcm/ year -- was due to expire at the end of 2019.

Sonatrach has moved to renew a number of its export deals with European buyers in recent months as it looks to lock in long-term supplies to the end of the next decade amid an increasingly

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U rules setting binding limits on CO2 emissions from new heavyduty trucks could enter into force this month, paving the way for LNG demand from such trucks to reach an estimated 1.1 million mt of oil equivalent by 2025.

The European Parliament’s website showed the final act of the draft rules was signed on June 20. Publication in the Official Journal usually follows within weeks, and they enter into force 20 days after that.

The rules require new trucks to emit 15 percent less CO2 on average by 2025, and 30 percent less from 2030.

The European Commission has estimated the curbs could more than double LNG demand from trucks by 2025 compared with 500,000 mtoe in a baseline scenario.

By 2030, the curbs could more than triple LNG demand from trucks to 4.4 million mtoe, up from 1.3 million mtoe in a baseline scenario, according to EC estimates.

Diesel would still dominate the truck market in 2030 however, with estimated demand of 64.5 million mtoe.

But the EC estimated that would be nearly 10 percent lower than the 71.4 million mtoe projected in a baseline scenario without emission curbs.

Overall, the curbs could save 170 million mt, or 1.24 billion barrels, of oil over the next two decades, according to the EC. The new rules, first proposed by the EC in May 2018, are part of the EU’s wider efforts to decarbonize its economy by 2050.

Separate CO2 limits on power plants receiving capacity payments enter into force on July 4 as part of the EU’s power market design regulation, boosting prospects for gas-fired plants over coal.

All power plants starting commercial production on or after July 4 face an immediate CO2 limit of 550 g CO2/kWh for taking part in capacity remuneration schemes, unless they have commitments or contracts with governments concluded before the end of this year.

Existing plants emitting more than 550 g CO2/kWh can continue to receive capacity payments until June 30, 2025, and even after that if they emit less than 350 kg CO2, on average, per year per installed kW. These limits mean existing coal and lignite plants will have to reduce their operating hours significantly from July 1, 2025, to continue to receive capacity payments.

EU energy regulatory agency ACER has to provide technical guidance on how to calculate power plant emissions by January 5, 2020.

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competitive European market.

Earlier this month, Portugal’s Galp agreed to buy 2.5 Bcm/year of Algerian gas from Sonatrach for a period of up to 10 years, replacing a previous 23-year deal for 2.3 Bcm/year set to expire at the end of this year.

That deal followed another new longterm contract Sonatrach agreed with a European buyer, Italy’s Eni, in mid-May. That new agreement is for the import of Algerian gas through 2027 with an option to be extended by a further two years to 2029.

The deals come at a critical juncture for Algeria, whose president, Abdelaziz Bouteflika, resigned in April after almost 20 years in power, amid regular civilian protests against the ruling administration.

Enel said its new agreement, whose volume were not disclosed, with Sonatrach consolidated the relationship between the two companies.

“The new contract terms enable Enel to make its gas supply portfolio more diversified, competitive and flexible, providing security of supply to the Italian system,” Enel said.

It said it also reflected the evolution of the Italian gas market since the first supply contracts were signed in 1991.

Petrobras hopes to exit gas distribution

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razil’s state-controlled oil company Petrobras will leave the gas distribution business in Brazil, disposing of all of its assets in the area, Roberto Castello Branco, Chief Executive said.

At a Sao Paulo stock exchange event, Castello Branco also said Petrobras planned to sell at least one refinery this year and was expecting to receive binding offers for its liquefied petroleum gas (LPG) distribution unit as soon as August.

Petrobras, which is selling tens of billions of dollars of assets to cut debt and refocus on deepwater offshore exploration and production, has already completed some major sales in gas distribution.

In 2016, Petrobras sold its NTS gas pipeline unit in southern Brazil to a consortium led by Brookfield Asset Management SA for $5.2 billion. In April it sold its TAG unit in northern Brazil to France’s Engie SA for $8.6 billion.

“We are going to open up space, selling companies, getting out of transportation. We have already started this process, selling NTS and TAG,” Castello Branco said. “We are going deeper with pipeline sales. We are getting out of gas www.businessday.ng

distribution.”

Regarding the company’s LPG distribution unit Liquigas, Castello Branco said Petrobras had already begun making a short-list from the non-binding offers it has received. The company had agreed to sell the unit in 2016 to Brazil’s Ultrapar Participacoes SA, but the deal

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was blocked by Cade, Brazil’s antitrust body.

“We hope to receive binding offers at the beginning of August,” he said.

The company in April presented a plan to sell off eight refineries, in what is likely to be one of its largest ever divestments.

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Wednesday 03 July 2019

BUSINESS DAY

power

WEST AFRICA

ENERGY intelligence

Southern Africa: GE, PowerChina set to build $4 billion Zambia-Zimbabwe Plant

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imbabwe and Zambia chose General Electric Co. and Power Construction Corp. of China to build a $4 billion hydropower project straddling their border, Emmerson Mnangagwa, Zimbabwean President said.

The 2,400-megawatt Batoka Gorge plant has been planned for years by the two southern African nations, both of which are struggling with electricity shortages after a drought curbed hydropower output. General Electric and Power China are in a consortium that was shortlisted in February to build the facility.

“Zambia and Zimbabwe have agreed on this project. We have all agreed that we give it to GE, and China Power together,” Mnangagwa said in Maputo, Mozambique’s capital, where he attended US-Africa Business Summit. “It is critical that we move fast on that front because it is necessary that as we industrialize that we need electricity.”

While the project will address electricity shortages, it is on the same river, the Zambezi, that has left the downstream Kariba hydropower dam at less than 30 percent storage capacity and producing less than half its intended electricity. The Zambezi’s water flows

in 2019 are near the lowest in half a century, and even worse than during the last severe drought in 2014-15.

Because Batoka Gorge will have a much smaller storage capacity than Kariba, which is the world’s biggest manmade freshwater reservoir, droughts could pose greater risks to the planned project.

While a formal contract has not been signed, GE said that the Zambezi River Authority, which manages power plants on the river, has said it would appoint a final developer for the project by September. As part of the consortium, GE would have a “material role in the development and execution of the project,” including the design and supply of hydropower technologies, it said by email.

The project will be based on a buildoperate-transfer financing model and will not put any fiscal strain on the two nations’ governments, Matthew Nkhuwa, Zambian Energy Minister said in February.

The $4 billion cost of the project includes amounts for civil works, construction and power turbines, among other things, GE said. The contract would be split among the companies in the consortium. The African Development Bank said in September it has begun mobilizingfunds for the plant.

Other bidders that had been shortlisted included Salini Impregilo SpA of Italy and a joint venture comprising China Three Gorges Corp., China International Water & Electric Corp. and China Gezhouba Group Co., according to Nkhuwa.

Zambia: Zambia directs state power firm to take cost-cutting measures

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ambia’s Zesco Ltd should freeze staff hiring, merge some of its departments and take other steps to cut costs and make the state power utility more efficient, a government body said.

The government said in November it had started implementing measures to transform Zesco, which does not have enough capacity to meet the African nation’s power demand.

The Industrial Development Corporation (IDC), which oversees stateowned enterprises, said that Zesco should quickly implement measures to turn the company around.

Zesco Ltd should suspend the employment of new staff, freeze all vacant positions and abolish or merge some of the company’s functions or departments, it said.

“In addition, IDC expects a comprehensive review and restructuring of conditions of service particularly for those in management such as travel on com-

pany business,” it said.

IDC also said Zesco should suspend any investments in projects or programmes not directly aligned to the efficient and effective delivery of electricity.

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IDC said Zesco Ltd should take a lead in encouraging power generation through renewable energy sources to help Zambia plug its 300 megawatt (MW) power deficit.

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West Africa: West Africa will begin crossborder sale of electricity in 2020

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rom 2020, West Africa will commence cross-border sale and distribution of electricity among member states of ECOWAS. This is according to Honoré Bogler, Chairman of Regulatory Council of the ECOWAS Regional Electricity Regulatory Authority (ERERA), who confirmed the development.

Bogler revealed this while he was in Abuja, Nigeria after the swearing in of the three-man regional regulatory council.

The chairman assured that his council would reposition the power sector of the West Africa region.

“No country in the sub-region has the necessary funding to get electricity to every home in every country. That is why the heads of states and government decided to create a market power pool so that all the potentialities we have in the region, in terms oil, gas, sun, wind could be harnessed for the benefit of the people.

“The only limitation we face to harness these potentialities has been lacking of funds to get these resources working for the population,” Bogler noted: Bogler further reiterated the mandate of ERERA, which he said it to provide the link between all the interest groups, supervise the effective functioning of the electricity market, by arbitrating on any dispute arising from the arrangement between the operators.

“The aim is to have a power market in the region, working with commercial rules and regulations that will be sustainable. We think people will have the best price of electricity if we use the regional resources that are cheaper to feed our network. ERERA will monitor and supervise all these to get it running in an organised manner.

“By 2020, the region will be ready for the transmission of power from one country to the other,” he said.

“Once that is achieved, we will go into the phase of the plan whereby all the countries in the region would have the opportunity of buying electricity from the market through the regional lines,” he added.

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Wednesday 03 July 2019

BUSINESS DAY

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POLICY

WEST AFRICA

ENERGY intelligence

Capital cost of Mini-Grids to continue on downward trend till 2030 – World Bank report

DIPO OLADEHINDE

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recently technical report released by World Bank has revealed the capital cost of Mini-grids is declining and also expected to continue on a downtrend through 2030.

“The costs of key mini-grid components, such as solar panels, inverters, batteries, and smart meters, have decreased by 62–85 per cent as a result of innovations and economies of scale in

utility-scale solar projects, the booming rooftop solar industry, and the growing electric vehicle market,” says World Bank’s 2019 report titled “Mini-Grids for Half a Billion People.”

The detailed World Bank’s Energy Sector Management Assistance Program (ESMAP) showed survey of mini-grids in Africa and Asia showed capital cost have decreased down from more than $8,000 per kilowatt of firm power output (kWfirm) in 2010 to $3,900/kWfirm in 2018.

ESMAP analysis further indicates that if costs continue to decline, there are stronger indications investment cost of

Snapshot

In Africa and South Asia only, investment figure drops to $5 billion for 11,000 minigrids covering 31 million people while another over 7,500 mini-grids are planned to go online over the next couple of years, mostly in Africa, connecting more than 27 million people for an investment cost of $12 billion

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solar and solar-hybrid mini-grids could drop below $3,000/kW firm by 2030.

“Other mini-grids based on renewable energy have seen cost reductions as well, however not as dramatically as the solar-battery–based systems. Furthermore, with the market potential for these solar systems significantly less restricted by the location of the available resources—such as hydro or wind—it is expected that most new mini-grids will be based on solar,” World Bank said in its report.

ESMAP analysis noted that a well-designed solar-battery-diesel hybrid minigrid serving more than 1,500 people have a Levelized Cost of Energy (LCOE) of about $0.55/kWh when it serves household customers, giving it a load factor of about 22 percent.

“As the cost of efficient incomegenerating machines and equipment decreases and developers increase demand for income-generating uses of electricity during the daytime, minigrids can increase their load factor to more than 40 percent,” World Bank report said.

The World Bank report released in June explained that when combined with reducing soft costs by using remote-controlled management systems and smart meters as well as geospatial portfolio planning tools, which reduce pre-site preparation costs by an order of magnitude from around $30,000 per site to $2,300, the LCOE of these “third-generation” mini-grids can be reduced by up to 25 percent ($0.41/kWh) by 2020.

“The combination of falling costs,

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new technologies, and favourable enabling environments have made thirdgeneration mini-grids an option to connect 490 million people, complementing grid extension and solar home systems to reach universal electrification by 2030,” World Bank report said.

Figures from World Bank revealed 47 million people are connected to 19,000 mini-grids, mostly hydro and dieselpowered, at an investment cost of $28 billion. “Plus: 7,500 mini-grids planned, mostly in Africa, mostly solar-hybrid, connecting more than 27 million people at an investment cost of $12 billion.”

The report which was funded by the World Bank’s Energy Sector Management Assistance Program (ESMAP) noted there are more than 26,000 installed and planned mini-grid projects around the world while globally, at least 19,000 mini grids are already installed in 134 countries and territories, representing a total investment of $28 billion, providing electricity to around 47 million people.

“Most of these mini-grids are dieselfueled, followed by hydro-powered and solar-hybrid systems. Between 2014 and 2018, twice as many solar-hybrid minigrids were built compared with the period between 2009 and 2013,” World Bank said.

In Africa and South Asia only, investment figure drops to $5 billion for 11,000 mini-grids covering 31 million people while another over 7,500 mini-grids are planned to go online over the next couple of years, mostly in Africa, connecting more than 27 million people for an investment cost of $12 billion.

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Wednesday 03 July 2019

BUSINESS DAY

finance people appointments

WEST AFRICA

ENERGYintelligence

Shell, Exxon eye return to Somalia ahead of oil block round

Brief

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Senegal President’s brother resigns after energy fraud claims

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he brother of Senegal’s President Macky Sall has resigned from his government post after allegations of fraud relating to natural gas contracts, he said.

An investigation by the British Broadcasting Corporation (BBC) this month alleged that a company run by Aliou Sall received a secret payment of $250,000 in 2014 from Frank Timis, a businessman whose company, Timis Corporation, that year secured licences to two major offshore gas blocks.

The affair has dominated the airwaves in Senegal, overshadowing the beginning of President Sall’s second term. Protesters have taken to the streets of the capital Dakar in recent weeks and the country’s top prosecutor has launched an investigation.

It also has international implications: London-based BP in 2017 agreed to pay Timis Corp $250 million for a stake in the licences, plus about $10 billion in royalty payments over the coming decades, the BBC said.

BP says the royalty payments are nowhere close to $10 billion and that it carried out ample due diligence before signing the deal. Timis has denied wrongdoing.

Aliou Sall, who is mayor of a Dakar suburb, said he was resigning from his position in a body linked to the national

treasury, but denied that he received a payment from Timis. In a statement he said the allegations were part of a campaign to “dehumanise” him and make him “public enemy number one”.

Senegal’s offshore blocks hold some of the largest untapped reserves of natural gas in the world and are set to propel economic growth from early next decade.

But they have caused controversy ever since they were first awarded in January 2012 to a company called Petro-Tim that had no experience in the energy industry and only a few thousand dollars to its name, according to company records seen by Reuters.

An investigation in May 2012 by the state auditor found that the deal should be annulled because the petroleum code states that all companies given licences must have a proven track record.

Petro-Tim was formally established only after it won the deal, the company records show, and was unknown in the industry.

Macky Sall approved the deal anyway. Later that year, Aliou Sall was given a job running Petro-Tim’s Senegal arm, prompting outrage in Senegal.

The blocks were sold to Timis Corp in 2014 before Kosmos Energy and BP bought in. www.businessday.ng

oyal Dutch Shell and ExxonMobil are looking to return to Somalia ahead of an oil block bid round later this year, the East African country’s oil ministry said.

Shell and Exxon Mobil had a joint venture on five offshore blocks in Somalia prior to the toppling of dictator, Mohamed Siad Barre in the early 1990s.

The country has experienced instability since Barre left and is battling al Shabaab, an Islamist group that frequently carries out bombings in the capital, Mogadishu, and elsewhere in the country.

The exploration and development of the five offshore blocks was suspended in 1990 under what is known as a “force majeure”, but Shell and Exxon have accrued rentals to the government since then, Shell said in a statement.

The country currently does not produce any oil but production could transform the economy as early stage seismic data has shown there could be significant oil reserves offshore.

“An agreement was signed in Amsterdam on June 21st 2019

and settles issues relating to surface rentals and other incurred obligations on offshore blocks,” the ministry said.

The force majeure remains in place, regardless of the recent development, Shell added.

The parties have also agreed to hold talks to convert their old contracts in line with a new petroleum bill that was passed earlier this year.

Somalia hopes to allocate 15

offshore blocks with a potential bid date schedule for November. A road show is being organised in Houston, Texas in late September or early October.

Somalia has also passed a revenue sharing agreement, splitting revenue with oil producing states but has not yet decided on the share the government will keep in the blocks it awards.

SDX Energy brings on stream more heavy oil from Egyptian concession

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orth Africa-focused SDX Energy has brought on stream more heavy oil from its latest development well at Egypt’s Meseda field near the Gulf of Suez, supporting its annual production target, it said.

The Rabul-7 well at the West

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Gharib Concession encountered 134 feet of net heavy oil pay with an average porosity of 18 percent, the company said.

The deposit has been connected to the processing facilities at the nearby Meseda field at a production rate of 415 b/d, it added.

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“The well was brought online in a timely and cost-efficient manner and will provide further support to our FY 2019 production guidance for this asset of gross 4,000-4,200 b/d,” CEO Mark Reid said in a statement.

SDX said another development well is planned for the concession in the second half of 2019. SDX holds 50 percent working interest in the block, with Dublin International Petroleum holding the remaining operated 50 percent stake.

Egypt’s heavy oil is mostly processed by domestic refiners, including around the port of Suez, while lighter oil from the Western Desert is often exported.

SDX, which was previously called Sea Dragon Energy and was listed on the London Stock Exchange in 2015, has a number of oil assets in the Gulf of Suez area as well as developing the large South Disouq gas development onshore in the Nile Delta.

Wednesday 03 July 2019

BUSINESS DAY

marketinsight

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WEST AFRICA

ENERGY intelligence OPEC Flakes Iraq committed to OPEC cut deal, but ready to meet any oil demand growth

I Oil jumps over 2 percent as Saudi Arabia, Russia back supply cuts

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il prices rose more than $1 a barrel after Saudi Arabia, Russia and Iraq backed an extension of supply cuts for another six to nine months ahead of an OPEC meeting in Vienna.

Front-month Brent crude futures for September touched an intraday high of $66.44 a barrel and were up $1.57, or 2.4 percent, at $66.31 a barrel. US crude futures for August rose $1.36, or 2.3 percent to $59.83 a barrel after earlier hitting a peak of $60.10, the highest in over five weeks.

The Organization of the Pe-

troleum Exporting Countries (OPEC) and its allies look set to extend oil supply cuts until the end of 2019 after top producers on Sunday endorsed a policy aimed at propping up the price of crude.

The group has been reducing oil output since 2017 to prevent prices from sliding amid a weakening global economy and soaring US output.

Russian President Vladimir Putin said he had agreed with Saudi Arabia to extend existing output cuts of 1.2 million barrels per day (bpd) by six to nine months. Saudi Energy Minis-

ter Khalid al-Falih said the deal would most likely be extended by nine months and no deeper reductions were needed.

“While this needs to be ratified by the remaining members of the OPEC+ group, this appears to be a fait accompli,” ANZ analysts said in a note.

Oil prices have come under renewed pressure in recent months from rising US supplies and a slowing global economy.

US crude oil output in April rose to a fresh monthly record of 12.16 million bpd, the US Energy Information Administration said in a monthly report.

US pledges to ensure steady crude supplies to India

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he United States will ensure steady supply of crude oil to India at right prices, Michael Pompeo, US Secretary of State said, as both New Delhi and Washington look to strengthen energy ties amid mounting geopolitical tensions in the Middle East.

“For us, it is important that global energy remains predictable and affordable,” Pompeo told a press conference, jointly addressed with India’s foreign minister S. Jaishankar, during his one-day visit to the Indian capital.

Later in a television interview, Pompeo added: “So for India’s energy needs, we are working diligently to make sure that India is fully supplied with crude oil at a good price.”

Pompeo also met Indian Prime Minister Narendra Modi

and conveyed US President Donald Trump’s administration’s continued interest in building stronger relations with India.

A series of recent attacks on oil tankers in the Gulf of Oman, including one on a UAE-flagged ship, has put the oil market on

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alert and triggered concerns over possible supply disruptions.

Iran has denied involvement in the incidents. However, it has repeatedly threatened to close the narrow Strait of Hormuz, if its oil exports are squeezed by the US sanctions, which are supported by Saudi Arabia and the UAE. About 21 million b/d, more than one-fifth of global oil supply, transits through Strait of Hormuz.

“The world needs to join together to ensure that there’s free and open navigation in that waterway,” Pompeo said.

India’s appetite for US crude is steadily rising. Figures from the US Energy Information Administration showed that India imported 263,000 b/d of US crude in Q1, an eightfold jump from as low as 33,000 b/d in Q1 2018. Inflows so far this year have also been more than double the 2018 average of 131,000 b/d.

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raq, which has surpassed its oil output quota under the most recent OPEC/nonOPEC supply cut accord, is committed to the deal, but stands ready to meet any global demand growth, its oil minister said.

“Iraq as the second-largest producer in OPEC confirms its commitment to the cut agreement,” oil minister Thamir alGhadhban said at an Iraq oil conference in London. “However, the ministry stays ready to satisfy any growth in global oil demand when the overhang of stocks disappears by maintaining the production capacity and by improving export infrastructure.”

The comments come ahead of an OPEC meeting in Vienna to discuss the future of the agreement, which is scheduled on June 30. Russia and nine other non-OPEC participants in the 1.2 million b/d cut agreement will join the talks.

Iraq’s oil ministry reported

earlier this month that the country’s May crude production rose to 4.595 million b/d, its highest since January 2017 and in excess of its quota of 4.512 million b/d.

Analysts and independent estimates have put Iraqi production at even higher levels than those reported by the ministry.

S&P Global Platts’ latest survey of OPEC output pegged Iraq’s May production at 4.82 million b/d.

Russia agrees with Saudi Arabia to extend OPEC+ oil output deal

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ussia has agreed with Saudi Arabia to extend by six to nine months a deal with OPEC on reducing oil output, Russian President Vladimir Putin said, as oil prices come under renewed pressure from rising US supplies and a slowing global economy.

Saudi Energy Minister Khalid al-Falih said that the deal would most likely be extended by nine months and no deeper reductions were needed.

Putin, speaking after talks with Saudi Crown Prince Mohammed bin Salman, told a news conference the deal would be extended in its current form and with the same volumes.

The United States, the world’s largest oil producer ahead of Russia and Saudi Arabia, is not participating in the pact.

“We will support the extension, both Russia and Saudi Arabia. As far as the length of the extension is concerned, we have yet to decide whether it will be six or nine months.

Maybe it will be nine months,” said Putin, who met the crown prince on the sidelines of a G20 summit in Japan.

“Demand is softening a little bit but I think it’s still healthy,” the Saudi minister said, adding that he expected the market to balance in the next six to nine months.

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A nine-month extension would mean the deal runs out in March 2020. Russia’s consent means the OPEC+ group may have a smooth meeting if OPEC’s third-largest producer Iran also endorses the arrangement.

New US sanctions on Iran have reduced its exports to a trickle as Washington seeks to change what it calls a “corrupt” regime in Tehran. Iran has denounced the sanctions as illegal and says the White House is run by “mentally retarded” people.

Kirill Dmitriev, chief executive of the Russian Direct Investment Fund who helped design the OPEC-Russia deal, said the pact in place since 2017 had lifted Russian budget revenues by more than 7 trillion roubles ($110 billion).

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Wednesday 03 July 2019

BUSINESS DAY

WEST AFRICA

talking points

ENERGY intelligence

OCDS and lessons from OPL 245 that could cost Nigeria billions STEPHEN ONYEKWELU

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here has been sustained global effort to make public, oil and gas contracts involving governments of oil-rich nations and oil companies through the open contracting data standards (OCDS), in order to drive accountability and transparency, preventing OPL-245-type situations.

Governments around the world spend an estimated US$9.5 trillion through contracts every year. Yet, contracting information is often unavailable for public scrutiny.

The OCDS enables disclosure of data and documents at all stages of the contracting process by defining a common data model. It was created to support organisations to increase contracting transparency, and allow deeper analysis of contracting data by a wide range of users.

As Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Emmanuel Ibe Kachikwu, former minister of state for petroleum resources, announced: “contracts will be made open to the public.” In 2017, Nigeria formally joined the Open Government Partnership, a multilateral initiative to strengthen governance. But in

President Muhammadu Buhari’s first four years in office, Nigeria was yet to publish its petroleum contracts. This is a critical requirement to promote transparency and end corruption in the sector.

In Nigeria, the rules governing petroleum projects are contained in a range of official documents including the constitution, legislation, regulations, and contracts. But while the constitution and laws are publicly available, petroleum contracts and some regulations are not.

Petroleum contracts are fundamental documents that set out the legal framework for oil and gas projects. Rob Pitman and Anne Chinweze, analysts at the Natural Resource Governance Institute’s review of 23 upstream and downstream contracts in Nigeria, including 10 model contracts, shows that contracts in Nigeria contain several terms for which a strong public interest case can be made for disclosure.

To drive the point home, oil prospecting licence (OPL) 245 has attracted contentious attention in the last three years after the Milan Public Prosecutor office notified Shell, Eni, 11 other defendants and the Federal Republic of Nigeria, the victim as to the completion of its investigations and possible charges thereof. This resurfaced June 25 as parties to the case re-appeared in court, in Milan, Italy.

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Italian prosecutors allege that the $1.1bn paid by Shell and Eni for the OPL 245 licence was used to pay former Nigerian oil minister Dan Etete and “intended for payment to President Jonathan, members of the government, and other Nigerian public officials.” Shell, Eni and some of their senior managers are now standing trial, charged with international corruption, with prosecution pending in other countries.

The Nigerian Department of Petroleum Resources currently lists the OPL 245 license as a Sole Risk type contract in its annual report. Sole risk contracts are another alternative to the PSC in Nigeria. Under these arrangements, the government and company involved do not share physical production according to an agreed formula. Rather, the company assumes all the risk of exploration and production, keeps all of the oil produced for itself and is responsible for making statutory payments, including royalties and taxes to the government in cash.

Nigeria’s most senior civil servant in the DPR objected strongly to the terms of the deal at the time, calling it “highly prejudicial to the interests of the Federal Government”, but Nigerian ministers appeared to have ignored or overruled these concerns. Shell managers had been briefed that the ministers who overruled civil servants to approve the

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deal were likely to receive bribes.

An analysis carried out by Resources for Development and expert oil consultancy firm commissioned by non-governmental organisations Global Witness, HEDA, Re:Common and The Corner House using publicly available documents including Shell and Eni’s valuations of the oil block has shown that the terms of the contract could reduce the Nigerian Government’s revenue from the fields by $5.86bn over the lifetime of the project when compared to the standard Production Sharing Contract (PSC) terms in place in Nigeria since 2005, assuming an oil price of $70 per barrel.

The International Monetary Fund (IMF) recommends that mature oil producing countries should receive 65 percent to 85 percent of oil revenues with the remainder going to oil companies.

The current OPL 245 deal is projected to result in Nigeria receiving just 41 percent of revenues, while Nigeria’s standard PSC terms or the terms Shell agreed with Nigeria in 2003 would earn Nigeria 65 or 60 percent of revenues respectively.

Publishing these contracts will create space for rigorous public scrutiny of deals that can be worth billions of dollars to the people of Nigeria. It also provides an important opportunity for the government and companies to build public trust in the petroleum industry.

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BUSINESS DAY

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Wednesday 03 July 2019

BUSINESS DAY

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Live @ The STOCK Exchanges Prices for Securities Traded as of Tuesday 02 July 2019

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 231,043.97 6.50 -2.26 126 2,002,206 UNITED BANK FOR AFRICA PLC 213,746.38 6.25 -0.80 227 23,347,793 ZENITH BANK PLC 610,661.80 19.45 -0.77 376 22,339,462 729 47,689,461 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 231,524.64 6.45 -2.27 216 18,517,547 216 18,517,547 945 66,207,008 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,626,749.91 129.05 -0.35 103 541,387 103 541,387 103 541,387 BUILDING MATERIALS DANGOTE CEMENT PLC 3,065,587.28 179.90 -0.61 76 375,959 LAFARGE AFRICA PLC. 201,347.44 12.50 1.63 124 22,732,648 200 23,108,607 200 23,108,607 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 311,875.62 530.00 - 5 6,674 5 6,674 5 6,674 1,253 89,863,676 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 0 0 0 0 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 61,050.24 64.00 - 24 228,077 PRESCO PLC 52,000.00 52.00 - 11 19,789 35 247,866 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 2 360 2 360 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,530.00 0.51 -3.77 26 2,225,614 26 2,225,614 63 2,473,840 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 794.19 0.30 - 5 28,798 JOHN HOLT PLC. 182.90 0.47 - 3 2,033 S C O A NIG. PLC. 1,903.99 2.93 - 1 669 TRANSNATIONAL CORPORATION OF NIGERIA PLC 44,306.31 1.09 6.86 137 15,413,808 U A C N PLC. 18,872.49 6.55 - 68 1,207,843 214 16,653,151 214 16,653,151 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 1 30 1 30 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 28,908.00 21.90 - 9 11,953 ROADS NIG PLC. 165.00 6.60 - 0 0 9 11,953 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,637.75 1.40 -9.68 4 128,855 4 128,855 14 140,838 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 13,231.85 1.69 - 3 25,050 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 104,700.30 47.80 - 30 915,241 INTERNATIONAL BREWERIES PLC. 146,559.45 17.05 -6.83 25 328,470 NIGERIAN BREW. PLC. 483,812.57 60.50 0.83 59 3,036,689 117 4,305,450 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 87,000.00 17.40 0.29 87 1,586,968 DANGOTE SUGAR REFINERY PLC 128,400.00 10.70 -5.73 69 746,548 FLOUR MILLS NIG. PLC. 57,405.31 14.00 -3.21 52 418,949 HONEYWELL FLOUR MILL PLC 8,009.50 1.01 1.00 46 2,559,878 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 38,681.80 14.60 - 28 296,328 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 282 5,608,671 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 20,096.76 10.70 1.90 40 471,874 NESTLE NIGERIA PLC. 1,066,122.66 1,345.00 -3.24 30 266,918 70 738,792 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,803.24 3.84 - 28 401,070 28 401,070 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 26,800.72 6.75 - 65 369,076 UNILEVER NIGERIA PLC. 176,371.67 30.70 - 26 177,502 91 546,578 588 11,600,561 BANKING ECOBANK TRANSNATIONAL INCORPORATED 189,000.38 10.30 3.00 69 6,754,373 FIDELITY BANK PLC 48,098.16 1.66 -7.26 100 6,275,507 GUARANTY TRUST BANK PLC. 882,935.38 30.00 -1.96 345 24,429,808 JAIZ BANK PLC 14,142.84 0.48 2.13 10 661,516 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 66,217.96 2.30 -1.29 1,036 10,978,490 UNION BANK NIG.PLC. 203,845.27 7.00 2.19 51 1,046,197 UNITY BANK PLC 7,598.07 0.65 - 2 19,200 WEMA BANK PLC. 25,073.40 0.65 -1.52 26 584,911 1,639 50,750,002 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,573.93 0.66 - 22 340,295 AXAMANSARD INSURANCE PLC 21,000.00 2.00 - 2 2,641 CONSOLIDATED HALLMARK INSURANCE PLC 2,276.40 0.28 - 15 436,200 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 3,093.20 0.21 -4.55 10 2,288,703 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,123.80 0.29 - 0 0 LAW UNION AND ROCK INS. PLC. 2,320.02 0.54 - 1 1,000 LINKAGE ASSURANCE PLC 5,680.00 0.71 - 3 4,100 MUTUAL BENEFITS ASSURANCE PLC. 2,458.00 0.22 -8.33 10 1,945,834 NEM INSURANCE PLC 11,986.74 2.27 - 15 228,759 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,691.28 0.50 - 6 55,508 REGENCY ASSURANCE PLC 1,333.75 0.20 - 7 1,456,932 SOVEREIGN TRUST INSURANCE PLC 1,918.39 0.23 - 12 520,010 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 18 335,135 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 2 893,180 WAPIC INSURANCE PLC 5,754.58 0.43 - 20 488,606 143 8,996,903

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MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 2,469.57 1.08 -5.26 20 804,521 20 804,521 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 3 1,200 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 3 1,200 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,140.00 3.57 2.29 48 624,483 CUSTODIAN INVESTMENT PLC 35,585.28 6.05 - 7 8,155 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 31,684.34 1.60 - 52 1,162,786 ROYAL EXCHANGE PLC. 1,131.98 0.22 - 0 0 STANBIC IBTC HOLDINGS PLC 412,182.26 40.25 - 31 904,055 UNITED CAPITAL PLC 13,800.00 2.30 -0.43 64 2,045,274 202 4,744,753 2,007 65,297,379

HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 852.75 0.24 - 0 0 0 0 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 593.50 0.60 - 1 23 1 23 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 10,536.12 5.05 - 1 500 GLAXO SMITHKLINE CONSUMER NIG. PLC. 12,197.94 10.20 - 9 123,837 MAY & BAKER NIGERIA PLC. 4,123.31 2.39 - 6 151,050 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 987.56 0.52 - 1 3,630 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 17 279,017 18 279,040 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 745.92 0.21 -8.70 9 3,326,000 9 3,326,000 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 1 50 648.00 6.00 - 0 0 NCR (NIGERIA) PLC. TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 0 0 1 50 PROCESSING SYSTEMS CHAMS PLC 1,314.90 0.28 -9.68 28 1,978,214 9,996.00 2.38 - 1 200 E-TRANZACT INTERNATIONAL PLC 29 1,978,414 39 5,304,464 BUILDING MATERIALS BERGER PAINTS PLC 2,028.76 7.00 - 10 29,066 19,250.00 27.50 - 18 26,356 CAP PLC CEMENT CO. OF NORTH.NIG. PLC 184,009.01 14.00 8.11 76 2,908,020 FIRST ALUMINIUM NIGERIA PLC 844.14 0.40 - 0 0 MEYER PLC. 313.43 0.59 - 1 18,242 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 0 0 1,156.20 9.40 - 0 0 PREMIER PAINTS PLC. 105 2,981,684 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,465.85 1.40 - 17 490,213 17 490,213 PACKAGING/CONTAINERS BETA GLASS PLC. 33,173.14 66.35 - 3 3,517 GREIF NIGERIA PLC 388.02 9.10 - 0 0 3 3,517 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 125 3,475,414 CHEMICALS B.O.C. GASES PLC. 1,719.09 4.13 - 5 1,688 5 1,688 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 92.40 0.42 - 0 0 0 0 5 1,688 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,440.42 0.23 - 47 1,364,939 47 1,364,939 INTEGRATED OIL AND GAS SERVICES OANDO PLC 45,374.66 3.65 -8.75 60 717,983 60 717,983 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 63,104.17 175.00 -0.57 17 429,706 CONOIL PLC 15,024.06 21.65 - 0 0 ETERNA PLC. 4,760.13 3.65 -7.59 8 125,975 FORTE OIL PLC. 35,166.99 27.00 - 89 823,625 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 111 1,423 TOTAL NIGERIA PLC. 50,928.28 150.00 - 37 22,816 262 1,403,545 369 3,486,467 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 2 300 2 300 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,918.01 4.95 - 13 8,138 TRANS-NATIONWIDE EXPRESS PLC. 342.26 0.73 - 0 0 13 8,138 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 0 0 IKEJA HOTEL PLC 2,972.68 1.43 - 31 14,150 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 3 1,280 41,042.18 5.40 - 0 0 TRANSCORP HOTELS PLC 34 15,430 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 187.49 0.31 6.90 6 177,200 LEARN AFRICA PLC 1,041.46 1.35 0.75 26 536,928 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 798.11 1.85 - 4 5,181 36 719,309 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 497.31 0.30 - 1 22,000

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Wednesday 03 July 2019

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NEWS Platform to enable landlords, property managers vet tenants debuts in Nigeria Cynthia Egboboh, Abuja

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n o n l i n e v e r i f i ca tion platform that enables landlords and property managers vet prospective tenants, check property location, data and rental history, debuts in Nigeria.

Known as ‘ Vetenant,’ t h e re vo l u t i o na r y e l e ctronic landlord-tenantproperty devise management and accountability system, aims to curtail the monster of delinquent tenants, build confidence in investors and bridge the gap between supply and demand in the housing value chain.

In a statement issued in Abuja, Buconpro Technology Limited, the promoter of Vetenant, says the plat-

form is a “unique one-stop s o l u t i o n f o r L a n d l o rd s, Tenants property owners, managers and housing Professionals.”

Vetenant is a real-time, online verification platform for landlords, tenants, property managers to vet prospective tenants, check property location, data and rental history with instant feedback, the statement notes.

According to Buconpro, Vetenant aims to increase Nigeria’s overall housing stock and helps to track each current, past, delinquent, evicted, violent or non-paying tenant on any private or commercial property.

The statement notes Vetenant “helps build greater investor confidence in the Nigerian housing sector.”

W/Africa to be worst hit as global economy faces $2.4trn loss on rising temperature CYNTHIA EGBOBOH, Abuja

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n increase in heat stress at work linked to climate change is set to have a massive impact on global productivity and economic losses, especially in agriculture and construction, with regions like West Africa and South-East Asia projected to be worst hit.

The International Labour Organisation (ILO) highlighted that the world’s poorest countries would be worst affected, particularly in these regions, and warned that the lost output would be equivalent to 80 million full-time jobs or 2.2 percent of total working hours worldwide by 2030.

The heat stress caused by global warming as excess heat at work is an occupational health risk and in extreme cases could equally lead to heatstroke leading to a total annual loss of $2.4 trillion.

Other at-risk sectors include refuse collection, emergency services, transport, tourism and sports, with southern Asian and western African states suffering the biggest productivity losses, equivalent to approximately 5 percent of working hours by 2030.

Catherine Saget, chief of unit in the ILO’s Research Department, in a statement, noted that the impact of heat stress on labour productivity is

CHANGE OF NAME I, formerly known and addressed as Miss. Opeyemi Folasade Oyetunde now wish to be known and addressed as Mrs. Opeyemi Folasade Dasho. All Former documents remain valid. General public please take note.

a serious consequence of climate change which may lead to more inequality between low- and high-income countries and worsening working conditions for the most vulnerable as well as displacement of people.

“The impact of heat stress on labour productivity is a serious consequence of climate change, which adds to other adverse impacts such as changing rain patterns, raising sea levels and loss of biodiversity. Construction will also be severely impacted, with an estimated 19 percent of global working hours lost at the end of the next decade,” Saget explained.

She said communities in the world’s poorest regions would suffer the most significant economic losses because they often lack the resources to adapt to increased heat, adding that there is need for urgent measures by governments, employers and workers focusing on protecting the most vulnerable.

“The economic losses of heat stress will therefore reinforce already existing economic disadvantage, in particular the higher rates of working poverty, informal and vulnerable employment, subsistence agriculture, and a lack of social protection,” Saget said.

“Lack of adequate infrastructure and improved early warning systems for extreme weather events, and improved implementation of international labour standards in occupational safety and health to help tackle heat-related hazards, may lead to significant economic losses in these regions,” she said.

CHANGE OF NAME

CHANGE OF NAME

I, formerly known and addressed as Salimon Shukurat Kehinde now wish to be known and addressed as Salimon Shukrat Animasaun. All Former documents remain valid. General public please take note.

I, formerly known and addressed as Miss Taiwo Bukola Ibiyemi now wish to be known and addressed as Mrs Olukanni Roselyn Bukola. All Former documents remain valid. General public please take note. www.businessday.ng

Citibank, SunTrust Bank CEOs, others for FMDA Lagos seminar HOPE MOSES-ASHIKE

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anaging director/ CEO, Citibank Nigeria Limited, Akinsowon Dawodu; managing director/CEO, SunTrust Bank, Ayo Babatunde, and director, Financial Markets Department, Central Bank of Nigeria (CBN), Angela Sere-Ejembi, have all confirmed attendance at the Money Market seminar of the Financial Markets Dealers Association (FMDA) holding in Lagos.

The participants will be sharing their experiences and thoughts towards building a vibrant and liquid money market.

The event, organised by the Money Market Workgroup of the FMDA, is scheduled to hold at the Federal Palace Hotels, on July 18, 2019, from 8am to 2pm.

It will focus on the theme: “Developing a vibrant and liquid Money Market as an effective catalyst to spur Economic Growth: Focus on the Interbank Market.”

The seminar, supported by the FMDQ OTC Securities Exchange, will provide a forum for financial markets partici-

pants and other stakeholders to deliberate on perspectives for developing a thriving and liquid Money Market to spur Economic growth.

The opening remarks at the event will be delivered by the FMDA Vice President, Adetoun Dosunmu.

In a statement, Mary Gbegbaje, acting executive secretary, FMDA, says the welcome address will be delivered by SereEjembi, while Dawodu will be speaking on Role of Money Market in Financial Market Development.

According to Gbegbaje, the Impact of Money Market on Optimal Balance Sheet Management will be handled by Babatunde while the Chairman, Money Market Workgroup, Olufemi Adaramola will speak on Liquid Money Market and Impact on Derivative Products Pricing and Development.

The FMDA is an association of licensed Deposit Money Banks (DMBs) operating within the Nigerian Financial Market, with emphasis on regulatory policy engagement/advocacy and professional ethics in the financial markets.

‘SchoolMe Lottery’ offers education opportunity to six financially challenged persons HARRISON EDEH, Abuja

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choolMe Scholarship Lottery on Monday gave out scholarship to the tune of N1.3 million to six persons who were having difficulties in financing their education.

Speaking during the cheque presentation to winners of its maiden scholarship draw on Monday in Abuja, Karrim Olusegun, general manager SchoolMe Lottery, noted that the social intervention programme was aimed at addressing the issues of inadequate, qualitative and responsive education in the country.

He expressed further concern that the high deficit in the education sector was responsible for the increasing rate of youths embracing social vices and being used as tools by politicians to perpetrate violence in order to disrupt what he described as the “whole essence of our living as individuals and as Nigerians.”

According to Olusegun, the organisation has used the programme to rescue many youths from the streets, and helped

students having financial troubles to concentrate more on their studies.

“Majority of those who have been in this programme with us has won on several occasions and have been able to stay put in school and see their dreams come to passes.

“Education must be given to as many that desire to have it. It shouldn’t be just for the rich, high and mighty but for as many that desires it,” he said.

Head of Operations of the organisation, Nsikan Ekaette, noted that SchoolMe had assisted many students in tertiary institutions in their educational pursuits, and also helped candidates to register for Unified Tertiary Matriculation Examinations (UTME).

“On 28th June, our maiden scholarship draw was held live on WAZOBIA FM Abuja under the supervision of auditors from the National Lottery Regulatory Commission. Four winners won N100,000 project money, one winner each grabbed N200,000 and N700,000 public and private school fee, respectively,” he said.

L-R: Abioye Omoseni, treasurer, IADC Nigeria; Ote Enaibe, chairman, IADC Nigeria; Chu Maoming, consul general, Chinese Consulate in Nigeria; Tokunbo Akinuli, secretary general, IADC Nigeria, and Chuks Enwereji, vice chairman IADC Nigeria, during the annual health, safety and environment award/1st 2019 technical session.

Norway’s example shows lessons for Nigeria’s weak performing oil, gas sector … UK lists four steps to set sector in right path Olusola Bello, Frank Uzuegbunam & Harrison Edeh

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orway, a leading country in global oil and gas technology and production, has offered huge lessons on the kind of regulatory reforms Nigeria needs to pursue to ensure it maintains competitive edge in the global dynamic oil market.

Nigeria’s oil sector, the main driver of the economy, has failed to lift millions of Nigerians out of poverty within over 50 years of oil exploration in Nigeria’s oil rich Niger Delta, due largely to poor sectoralreformsandweakgovernance in the sector.

This could have been solved by the Petroleum Industry GovernanceBill(PIGB),andhadinadvertently shifted investors’ interest

into other African countries that had just discovered oil.

Norwegian Ambassador to Nigeria, Jens Petter Kjemprud, says at the ongoing Nigeria’s Oil and Gas Conference in Abuja that Nigeria’s leadership could lift so many people out of poverty if the Nigeria oil sector operates with a better governance framework, while advising it to gradually evolve policies to ensure Nigeria playsitsroleastheworldgradually goesintocleanenergyproduction.

The Ambassador notes, “Norway is a leading country in gas and oil technology and production.

Governance in the sector shows that petroleum belongs to the people, and everyone has a stake.

Norway, therefore, has a transpar-

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ent and democratic system and enabling laws that enable steady and predictable development in the oil sector.

“Instead of putting so much money in developing the domestic oil company, we have decided to set up a special funding that brings in some income in oil and gas production through high yielding stocks and shares in global firms.”

According to the ambassador, “Based on series of reform that we have embarked upon, we have about biggest investments in the sovereign wealth globally, and we also have about $100 million worth of investments in Nigeria stocks.

“We also invested in shares worth about 1.5 percent of the global shares in a company from @Businessdayng

the proceeds of our oil and gas.

All these accumulate funds for thefuturegenerationsinNorway.”

The diplomat, who acknowledged that oil and gas would still play a role in few decades, however, noted: “We are now in the middle of shifting from fossil to renewable energy resources globally. Nigeria has to start the process from oil to gas and gas to renewable energy resources.”

In terms of ensuring proper transition from fossil energy to renewable to provide electricity, he said, “Norway has started the process and we have electricity production, which constitutes about 99 percent of hydro-carbons and we produce 36 000 megawatts for 5 million people, while Nigeria has over 200 million people with less than 5,000 megawatts of electricity.”

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BUSINESS DAY Wednesday 03 July 2019 www.businessday.ng

African fashion at tipping point if trade agreement delivers The deal aims to remove tariffs just as region is poised to win jobs from China Tom Wilson

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mbitious entrepreneurs, optimistic policymakers and supportive lenders are reviving the African fashion industry — a sector that has been constrained for decades by decaying infrastructure and cheap imports.

From Casablanca to Cape Town, designers, manufacturers and investors are increasingly positive about the potential of fashion and textiles to create jobs and integrate the continent.

“There is real momentum and a huge amount of interest,” says Emanuela Gregorio of the African Development Bank.

Traditionally a funder of infrastructure and industrial projects, the ADB set up the Fashionomics Africa Initiative in 2015 to support the growth of cultural and creative industries. According to Ms Gregorio, the initiative reached a tipping point in the past year, with new investors hungry for information and exposure.

“Fashion has often been seen as frivolous or superficial but now, after all these years, you have a lot of momentum at different layers among people that would never have looked at the sector before,” she says.

The African fashion industry is currently valued at $3bn, and the ADB is seeking to use targeted investments to unlock a fivefold growth in its output, in partnership with the African Union (AU) and other organisations.

The potential of the entire value chain — from raw inputs such as cotton all the way to the final product — is much greater.

“That could easily reach $1tn,” says Frannie Léautier, the chief operating officer of the Eastern and Southern African Trade and Development Bank, a keen advocate of the African fashion industry.

“People are feeling proud to be African and they are consuming African,” Ms Léautier says, referring to one of the drivers of what she calls Africa’s “fashion renaissance”.

The blockbuster global success of the Hollywood film Black Panther, which brought African styles to screens around the world, has also helped to raise the profile of the sector, she adds.

The opportunity to capitalise on this new interest is twofold, say industry insiders. The first is the development of African markets as locations to outsource manufacturing.

After three decades leading global garment production,

The headquarters of the African Union in Addis Ababa © AFP

China is in the process of shedding 85m manufacturing jobs as its workers seek better paid, more highly skilled employment. Helen Hai, founder of the Made in Africa Initiative, has been working to get more of the world’s clothing made on the continent.

“If Africa can take a significant proportion of those jobs, this would transform the future of the continent in the next 30 years,” says Ms Hai, who has already advised 10 African heads of state on how to attract investment from clothing manufacturers.

The second opportunity is the development of vertically integrated African fashion houses, selling products to the continent’s consumers first and then to the rest of the world.

Some African brands have achieved continental and global recognition, such as South Africa’s Kisua, which garnered international attention in 2014 when American singer Beyoncé was photographed in a Kisua coat.

But achieving scale within the continent, where domestic markets are small and intraAfrican trade is costly, can be difficult.

“The infrastructure backbone that we need to take the cotton out of Benin and move it to the looms of South Africa isn’t there,” says Edem Adzogenu, an adviser of the AfroChampions Initiative that collaborates with the AU on a pan-African fashion strategy.

A key component of that pro-

gramme is to ensure the swift and effective implementation of the African Continental Free Trade Agreement, which came

into force in May. The landmark agreement promises to eliminate tariffs on trade between member states

Beyoncé wearing a coat by South Africa’s Kisua at a movie premiere in 2014 © Dave Allocca/Starpix/Shutterstock

on 90 per cent of goods. However, it has faced scepticism from businesses that have watched the AU sign other co-operation agreements before, only to later fail to fully implement them.

“We have all the raw materials that we need,” says Mr Adzogenu, who believes that the fashion and creative industries can be the “proof of concept” for the entire trade zone, although it will require a major regulatory push in addition to significant investments in the continent’s infrastructure.

One important component will be robust rules for the origin of goods traded within the free trade area, so that only genuine African products benefit from the zero tariff market. The AU’s trade commissioner, Albert Muchanga, maintains that these are coming.

“It will not just be a case of getting something from a third party, removing it from a package and adding a ‘Made in Africa’ label,” Mr Muchanga tells the FT at the AU headquarters in Addis Ababa, Ethiopia.

If the agreement achieves its aims, trade in textiles, leather, clothing, art and cosmetics, supported by online sales platforms, could provide Africa’s abundance of creative talent with the market it needs to achieve scale, says Ms Léautier of the Eastern and Southern African Trade and Development Bank.

“The price brands can get from selling their product in the US or elsewhere can be higher, but the volume will come from selling it in Africa,” she says.

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.