BusinessDay 03 Jun 2019 by BusinessDay

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FG unlikely to meet revenue projections in 2019 budget MICHAEL ANI & DIPO OLADEHINDE he year 2013 was the last time Nigeria, Africa’s biggest oil producer, hit its projected revenue in the annual budget. The country has failed to meet its revenue target since 2014. This scenario is likely to continue in 2019 as the price of Brent crude, the global

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APAPA GRIDLOCK

55 Governor Babajide Sanwo-Olu’s promise: “I will rid Apapa of gridlock in the first 60 days of my government.”

How Kachikwu strove to fulfil oil sector promises STEPHEN ONYEKWELU & DIPO OLADEHINDE

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Inside Oando calls on SEC for engagement

P. 2

The Nigerian Energy Report Disruptors: How off-grid energy companies are closing Nigeria’s energy access gap

fter four years as Nigeria’s minister of state for Petroleum Resources, Ibe Kachikwu is counting among

L-R: Nonso Okpala, group managing director/CEO; Olatunde Busari, chairman; Gbeminiyi Shoda, company secretary, and Samuel Onyishi, independent non-executive director, all of VFD Group plc, at the 3rd annual general meeting of the company, weekend.

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news Half way into 2019, oil price slump rains on Nigeria’s budget projections ...JV assets restructuring appears only buffer standing ISAAC ANYAOGU

rude oil prices on Friday fell the lowest since November 2018 to $65 per barrel from nearly $70 seven months ago, indicating that Nigeria’s budget assumptions of an average price of $60 may be unrealistic and could threaten revenue projections. Oil prices have remained volatile since last year buffeted by geopolitical upheavals and trade tensions. “Worries about the negative impact of trade war escalation on global growth, and thereby demand, coupled with disappointing inventory flow data appeared to be the latest catalysts,” said Ilya Spivak, a senior currency analyst at Daily FX, a currency market resource. Sanctions on Venezuela and Iran have shut in over 2 million barrels but pressure from the United States President has seen countries like Saudi Arabia pump more crude which has helped to keep prices low. The United States has also cut on inventories helping to keep prices low. But a weak Nigerian economy is impacted negatively both from a rise and fall in

prices. Fall in oil prices leads to depressed earnings and rising oil prices lead to higher spend on fuel subsidy. If oil prices fall lower than the budget benchmark, the economy will go into shocks that will see the Central Bank apply emergency measures to keep the economy stable. When oil prices found a floor around $40 in the first quarter of 2016, the Nigerian economy slid into a recession and the CBN began restricting scarce forex for what it considers important items and began to artificially prop the naira to maintain exchange rate stability. The long-term effect of these controls is an economy with a weak growth. In the 2019 budget, oil was projected to sell at an average price of $60 and national production was projected to grow to 2.3 million barrels. The proposed Federal Government budget estimates N6.97 trillion revenue for the 2019 fiscal year. The oil sector is expected to contribute around N3.73 trillion, while N710 billion will come from the proceeds of government equity in Joint Ventures.

•Continues online at www.businessday.ng

Why Nigeria struggles to produce enough food for 200m people ... Africa also facing similar challenges ODINAKA ANUDU, Washington DC

igeria’s population is growing at 2.6 percent annually but its food production is not following the same pattern, sparking rising crop prices and fears of food insecurity among the majorly impoverished 200 million people. Apart from rice, almost all the crops grown in Nigeria have remained stagnant at their 2014 levels, with little changes on their level of investments, technology and models. “The only two ways of doubling food production are through investment and science,” Scott Angle, director, National Institute of Food and Agriculture in the United States and former CEO of International Fertilizer Development Center (IFDC), said in Washington DC at the Global Entrepreneurship Summit’s international reporting tour last Wednesday. “You will need to move from small-scale subsistence agriculture to more commercial agriculture,” he said, while addressing Nigeria and Africa’s food production model.

In 2019, only approximately N138 billion ($383 million) was allocated to agriculture in Nigeria’sbudget,representingjust1.5 percent of the total budget and lower than N173 billion (480.5 million) the previous year. The 2019 figure represents N690 ($1.9) per Nigerian each year. South Africa, a country almost four times less Nigeria’s population, allocated $2.097 billion ($30.7 billion) to agriculture and rural development, and another $1.26 billion (R18.4 billion) to land reforms. South Africa’s represents $59 per citizen. Nigeria has seen investments in flour, poultry and rice, but key investments are still lacking in Nigeria’s flagship crops. Cocoa players complain that there have not been major private investments in the last six to seven years. “Nigeria’scocoaaverageyield per hectare is among the lowest in the world and this is due to old age of most cocoa plantations,” said Anna Muyiwa, plant biotechnologist,CocoaResearch Institute of Nigeria (CAN). “We need to rehabilitate our old cocoa trees in all cocoa

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

L-R: Abdulmalik Shehu, general manager, human asset management/administration, Dangote Cement plc, Ibese Plant; Funmi Coker, deputy director/area manager, industrial training fund, Abeokuta area office; Armando Martinez, plant director, Dangote Cement plc, Ibese Plant, and Joseph Alabi, head, external relations, Dangote Cement plc, Ibese Plant, during the opening ceremony of the training held at Ibese cement plant at the weekend.

Oando calls on SEC for engagement ...says not given fair hearing in audit process Iheanyi Nwachukwu

he long-awaited results from the forensic audit into Oando plc was finally released on Friday, May 31, 2019 on the website of the Securities and Exchange Commission (SEC) indicating weighty infractions with attendant sanctions levelled against the company. In a response to the SEC’s report, Oando plc said it “is of the view that these alleged infractions and penalties are unsubstantiated, ultra vires, invalid and calculated to prejudice the business of the company”. “The company has not been given the opportunity to see, review and respond to the forensic audit report and so is unable to ascertain what findings (if any) were made in relation to the alleged infractions and defend itself accordingly before the SEC. The company reserves its rights to take all legal steps to

protect its business and assets whilst remaining committed to act in the best interests of all its shareholders,” Oando said in a press statement issued on its website. The severity of the penalties and the timing of the release of the report have roused public curiosityas to the motive and the basis for the penalties. Ainojie ‘Alex’ Irune, chief operating officer, Oando Energy Resource, at a press conference at the company’s head office, said Oando was “not given a chance to review and respond to the outcome of the report”. “You do not sentence a person to death without giving him or her a chance to defend him or herself. In this instance, we have been sentenced to death without knowing what our crime is or being given a chance to defend ourselves. At the barest minimum, best practice requires that you give the person

a chance of a fair hearing. We have not been accorded this opportunity,” he said. Irune explained that when the company made the decision to drop its court case challenging the SEC’s decision to carry out a forensic audit, it was assured that they could trust the system for an independent investigation that would be fair and follow due process. He reiterated that it was in the spirit of transparency, cooperation and full disclosure that they agreed to the forensic audit. Echoes of Oando’s sentiments are resounding across the country with everyone, including business personalities, wanting to know what exactly the Oando management team did to warrant such steep penalties. On social media, Atedo Peterside, founder, Stanbic IBTC Bank, asked the SEC why it would not share the findings of the forensic audit

with Oando and offer the company an opportunity to defend itself. He challenged the SEC to share the forensic audit findings and Oando’s response with the general public so that everyone can judge for themselves. According to a media source at the Oando press briefing, the forensic audit report was ready and submitted by Deloitte and Touche as far back as December 2018. Why the SEC then decided to sit on the report for six months without engaging Oando where necessary remains a mystery. “Regulatory authorities in this age, as we have seen with the Debt Management Office (DMO) under Dr. Abraham Nwankwo and sustained under a new leadership, understand that their ultimate responsibility is to build businesses to be viable entities, stronger and not destroy value.

•Continues online at www.businessday.ng

Buhari’s desire for inputs from new governors delays ministerial list …Ahmed, Sirika, Onyeama, Udoma, Enelamah may return …Older generation of ministers no longer desirable Tony Ailemen, Abuja

resident Muhammadu Buhari’s decision to wait for inputs from the newly sworn-in governors is one of the major reasons why he has continued to delay action on appointing his ‘Next Level’ cabinet. A top Presidency source disclosed to BusinessDay at the weekend that the President’s decision to wait for inputs from the governors may be a way of avoiding such mistakes as threw

the All Progressives Congress (APC) into its current quagmire. “Thisisnotnecessarilyaconstitutional requirement though, butMr.Presidentmayjustfeellike doing this in order to strengthen working relationships with state governors, who as you know are alsomembersofhisownpolitical partyandwhoarealsomembers of the National Economic Council headed by the Vice President,” our source said. Section 142, subsections (1) and (2) of the 1999 Constitution of Nigeria (as amended) give

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the President powers to create ministries and to nominate (respectively) persons for the post of a minister of the government of the federation, who in turn have to be confirmed by the Senate. Subsection (3) of the constitution makes it mandatory, however, that every state should have a minister. Twenty-nine governors were sworn in on May 29. Out of the 29, 12 are new – seven belong to the APC while five belong to the People’s Democratic Party (PDP). @Businessdayng

Information trickling in from the states indicates preferences for nomination of younger generation of Nigerians for the ministerial positions. There are also indications that the President will this time around expand his cabinet to accommodate more hands. The President had, in response to complaints of abandoning those that worked for his election in 2015, promised members of the APC working

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Fulani radio seen as betrayal to FG’s stance on pruning cost of governance OWEDE AGBAJILEKE, Abuja

he acquisition of an Amplitude Modulation radio broadcast licence by the Federal Government to reach herdsmen across various locations in the country is as a betrayal of the present administration’s stance on reducing the cost of governance, those in the know say. Those who spoke with BusinessDay on the matter submitted that the move would not only increase the already high recurrent expenditure of government, but could also cause agitations by different ethnic groups for similar gesture in country that had over 250 ethnic groups. The Federal Government recently announced that it had acquired an Amplitude Modulation radio broadcast licence to reach herdsmen across various locations in Nigeria. The immediate past education minister, Adamu Adamu, had explained that the establishment of the radio frequency was to end the perennial farmersherders clashes in the country. According to Adamu, the radio service would operate

on frequency of 720KHz, and would air in Fulani language, as government believed the radio medium was one of the viable means to reach the herdsmen. Eze Onyekpere, lead director, Centre for Social Justice, disagrees that setting a specialised radio station will be the best to reach herdsmen across the country. He believes that this is needless and will certainly raise the already high cost of governance, which has affected development, especially at a time of slow, fragile economic growth and high poverty and unemployment levels. Commenting on the matter, Onyekpere suggests that the Federal Government should have considered a better option of using its existing broadcasting structures and stations like Radio Nigeria, Voice of Nigeria (VON) and so on to achieve whatever aim if necessary. He warns that such a specialised broadcast station should not be used to promote hate speech, saying, “Well, you have to look at the cost of governance within the context of what the radio station is supposed to achieve. “But the only thing is to ensure that the radio station does

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not become an opportunity for promoting hate and divisiveness. And it should be an opportunity for promoting the unity of Nigeria and also empowering people. “So, if there are already existing radio stations from which this could be done, I think that this could possibly be a better option rather than having exclusive radio station dedicated to them. If there are existing radio stations in the states, that could be used so that we reduce the cost of governance.” The development is coming at a time analysts are calling on the Muhammadu Buhari-led government to implement the report of the Presidential Committee on the Rationalisation and Restructuring of Federal Government Parastatals, Commissions and Agencies. The committee headed by a former head of the Civil Service of the Federation, Steve Orosanye, had recommended that some parastatals and agencies should, either be scrapped, commercialised, privatised or merged to reduce the cost of governance. Specifically, it called for the reduction of statutory agencies of government from 263 to 161.

Besides, the government had explained that the reduction of cost of governance was the main reason for streamlining federal ministries from 42 to 24 in Buhari’s first term in office. Another legal practitioner, Goke Abisoye, accuses the government of double standard. He wondered why the government would use taxpayers’ money to fund the radio station when the same administration had earlier declined some bills passed by the National Assembly due to duplication of functions with existing agencies. He states: “The President had rejected over 40 bills passed by the National Assembly while over 130 bills are still in his shelf without any form of communication with the Legislature. “It is therefore curious to me that the same President who declined assent to bills passed by the National Assembly on grounds of duplication of functions with existing federal agencies, has turned around 360 degrees to acquire a broadcast licence when it has the Federal Radio Corporation of Nigeria spread across the 36 states and the FCT that could be used for similar transmission on a weekly basis.”

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Magu calls for inter-agency collaboration to combat corruption, terrorism Innocent Odoh, Abuja

cting chairman, Economic and Financial Crimes Commission (EFCC), Ibrahim Magu, has called for the strengthening of inter-agency collaboration as an essential ingredient needed in effectively combating corruption and terrorist financing in Nigeria. He made the call at the InterAgency Cooperation and Coordination Seminar held at the Army War College, Abuja, last week, as part of the eight-month study programme for 66 senior officers of the Nigerian Army. “Synergy among agencies will no doubt go a long way in ensuring that our country is safe, and there is need for more efforts in the investigation of where funds are gotten from,” he said. According to a statement issued on Friday by the acting head of media and publicity of the EFCC, Tony Orilade, Magu, who was represented by Chidi Chukwuka Boniface, a director with the EFCC, further called on other agencies and bodies such as theCentralBankofNigeriatocurb inflow of foreign currency. “The Central Bank of Nigeria and other relevant agencies should be able to supervise these inflows and should find ways to track monies used in these insurgency,” he said.

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He further stressed the need for all agencies in the country to salvage the country from the grips of corruption, stressing, “There is the need to fight corruption with totalcommitmentanddedication as this is the only viable alternative availabletoustomovefromwhere we are to a stable society.” Director general, Services, National Emergency Management Agency (NEMA), James Akujobi, said inter-agency collaboration was essential to enhance joint efforts and cooperation among independentagencieswithshared responsibilities and overlapping jurisdictions. “Collaboration builds synergy and creates oneness to meet the commongoals,”Akujobisaid,notingthatinter-agencycollaboration also helps to address capability shortfalls. The Commandant of the Army War College, Major General Charles Ofoche commended participants for a robust and rewarding session, he said, “we all are instruments of the state, regardless of the colour of the uniforms we wear.” Other agencies represented were: Nigerian Police Force, Nigerian Immigration Service, Department of States Service, Nigerian Customs Service, Nigerian Prison Service, Federal Road Safety Corps, and Nigerian Civil DefenseCorps,thestatementsaid.

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Memo to the president

May 29TH 2019 and June 12th 2019: Forging ahead regardless of turbulence

Bashorun J.K Randle Your Excellency,

he two dates mentioned above signify your appointment with the defining moments of the sublime destiny of our beloved nation and its loyal citizens who number almost two hundred million. Whatever you say (or fail to say) on these two auspicious occasions would almost certainly determine the future of our country not only for the next four years of your second term but for all eternity. Fortunately, you have already served notice that you belong to nobody (and belong to everybody) hence you cannot be held hostage. That was four years ago. Last week, you advertised your heartfelt concern regarding the widespread abject poverty all over the country. That provides us with the assurance that your heart is in the right place – to forge ahead regardless of turbulence.

Added to this is your campaign slogan which emphasised the journey to the “Next Level”. The resonance has not subsided. On the contrary, it provides evidence that the full text and significance of the message to Nigeria (and Nigerians) is: “Without you, there is no us”. We share a common destiny. It serves to emphasise the centrality of the people as you embark on the next lap of your leadership. The vital and critical mission is self-evident – to heal our nation and engender hope, particularly for the youths having regard to the imminent population explosion and the awesome dimensions of the projected demography whereby the dominant segment would be under thirty-five years old but jobless, homeless and helpless. It is only exceptional leadership and uncommon statesmanship that can intervene meaningfully to redefine the economic landscape along with the political horizon where fragmentation looms large. Fortunately, as a General you are entitled to place our nation on warfooting while addressing the trust deficit which has infiltrated and contaminated all three arms of Government – Executive, Legislative and the Judiciary. On account of fake news, perhaps we should add the Press. The task is endless, to wit (as components/drivers): E = Endless

N = New Era D = Detailed (Engaged) L = Legacy E = Electricity S = Security S = Service Delivery We are willing to assist with the details/methodology that would enable your officials to address each and every component. In any case, the issues are well known to you; and you have addressed them separately in the course of the last four years. However, what is required is a fresh Strategic Document which would inspire hope and commitment by all stakeholders. We would caution that those who may have given up or are sceptical should not be dismissed as false alarmists when they wave the flag of despair or insist that what lurks on the horizon is chaos as the precursor of the breakdown of Law and Order. Our patriotic duty is to disappoint them even though history compels us to draw the right lessons from the prolonged civil wars in Liberia; Ivory Coast; Sierra Leone; Democratic republic of Congo; Rwanda etc. which inflicted humongous direct and indirect casualties on the Nigerian military and Treasury. The challenge is to ignite hope and sustain the zeal by setting clear goals along with independent periodic measurement /appraisal mechanisms based on the models adopted by Singapore; Malaysia; South Korea and

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The vital and critical mission is self-evident – to heal our nation and engender hope, particularly for the youths having regard to the imminent population explosion

Indonesia, to mention a few. These two epochal events present you with an excellent opportunity to debunk the image of a detached President and deliver a powerful counterpunch to perceived/alleged disconnect between the government and the governed. The hot button issues have remained unyielding: • Corruption • Health • Education • Ease of doing Business • Railways • Roads • Fuel Subsidy • Report of the Auditor-General of the Federation Whichever reset button you press will flash the same red flags. Indeed, to ignore them is to book a seat on the conveyor belt to doom. Providence has offered our nation a last chance for salvation and redemption. This is the time to restore confidence inour future prosperity and enduring success as a nation bound in unity and faith. Hope springs eternal. Warmest regards. Yours sincerely, For: J.K. Randle Professional Services Bashorun J.K. Randle, FCA; OFR Chairman/Chief Executive Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

Nigeria: Under siege and on the brink

Emmanuel Nwachukwu

e have not been here before. There is a palpable sense of foreboding that we may indeed have passed the point of no return. An ominous wind is blowing from the Northand in danger of engulfing the whole country. Everywhere you look, the story is the same - hunger, fear, insecurity and an economy in comatose. No facet of society is spared. Bandits, herdsmen, and kidnappers have laid siege to the country and the police and security agents seem unable to stop their match. Having attained the unenviable position of the poverty capital of the world we are on course to do the double by becoming the kidnapping capital of the world. With a president seemingly oblivious of the nation’s plight and fast asleep at the wheel, we are in for a very long bumpy ride. At the root of Nigeria’s security and socioeconomic challenges is a population growth that has literally gone out of control, compounded by decades of inept leadership. Unfortunately, the boom in population has not been matched by a commensurate development or wealth creation. At the time of independence in 1960, Nigeria’s population was 45million, less than the population of the United Kingdom, with a population then of 52 million people. Since 1960, the UK’s population has increase by 15 million, to 67million, whilst Nigeria’s population has more than quadrupled to 200 million;

an increase of 155m. In the ten years between 2009 and 2019, Nigeria added nearly 50 million people to its headcount. Not even the world’s richest economies will be able to cope with such an increase in population! Large family sizes are the single most important driver of Nigeria’s population growth rate, especially in some parts of the country, where it is not uncommon for men to have over twenty children, with no plans or means of fending for them. A recent paper by the Washington based Brookings Institute estimates that the number of destitute in Nigeria is growing by six people a minute. Once upon a time, Nigeria had only six universities and these public universities compared with the best in the world in terms of facilities, research, and student welfare. That was in the 1970s when the then Head of State, General Yakubu Gowon declared to the world that ‘money is not our problem, but how to spend it’. How times have changed! Nigeria’s population then in 1973 was only 60 million and there was less pressure on the country’s resources compared to now. Nigeria is on track to be the third most populous country in the world by 2050, behind India and China; countries with considerably larger land masses. This population explosion poses a security risk, not just to Nigeria, but the entire sub-continent and beyond, if unchecked. We are already seeing a manifestation of this in the spate of crime in the country. There are simply far too many idle people with no job, no money, no roof over their heads and no hope. With nothing to lose, the underclass who once were content to forage for crumbs that fell from the oppressor’s table are now exchanging their begging bowls for AK47s; and in a country where crime pays, they are finding kidnapping a very lucrative enterprise. With a police establishment that is poorly resourced, poorly paid and poorly motivated, Nigerians will be at the mercy of criminals for a www.businessday.ng

very long time until this situation is addressed. Although we like to believe the contrary, Nigeria is one of the poorest countries in the world, with over 90million of its citizens in extreme poverty. The UK’s budget for health services alone, for a population of 67million, is £152bn - eight times the entire federal government budget of N18.9trillion (£19bn), for a population of 200 million. South Africa’s budget for defense/ security alone, for a population of 58million is £11.4bn - more than half the federal budget. These examples put in context the funding challenges we face as a country. We simply do not have the money to meet our deep challenges, and sadly, even the little resources we have are shared between the political elite. With a burgeoning population, rampant poverty, and a country under siege from criminals and herdsmen, difficult times await Nigerians. Addressing these challenges would require courage and competent leadership with a good understanding of our current state and a clear vision and plan how to move the country forward. It would require a line by line critical review of our budget to address the enormous waste and profligacy in the system so that money can be released to resource our police services and create jobs for the unemployed. If just half the nation’s income was spent judiciously, Nigeria would be in a far better place today. The country is believed to have over 800 parastatals and agencies, constituting a huge drain on the economy. Many have become conduits for corruption and money laundering. Allegations abound of legislators perpetuating these agencies by demanding kickbacks to approve their budgets. Billions of naira could be saved from a drastic reduction in the current number of agencies and parastatals. Nigerian legislators should not be collecting hundreds of millions of naira annually in salaries and allowances when the economy can barely afford N30,000 minimum wage. In many countries,

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citizens would have taken up residence outside the National Assembly, until these less than honorable characters are forced to do the right thing. They will not do so otherwise. Their peers in the UK, the world’s fifth largest economy are paid just £79,468 a year – about N37m. The government must address the issue of non-remittance of revenues to government coffers by revenue generating agencies. The president has the carrot and the stick and must learn to use the latter. Some have alleged a criminal conspiracy between these agencies and public officials to defraud the country. It is time to address the perennial issue of petrol subsidy or ‘under recovery’ as the Government now call it. Recent reports indicate that subsidy payments for 2018 could be as high as $5bn, above the Minister of State, Ibe Kachikwu’s projection of $3.5bn. This figure is more than the combined budgets for Education, Health, Transport, Power, Works and Housing! It is madness that a country where hospitals have become where people go to die, due to lack of drugs and basic medical equipment, should be spending about half its entire non-debt recurrent expenditure subsidizing petrol alone; a country that can barely generate4,000MW of electricity in the 21st Century! Whether Nigeria is able to address the current spate of insecurity in the country would depend critically on the leadership of the president and those he appoints as ministers and advisers. It would require public investment in job creating infrastructure and a doubling of the current police establishment and their budget to make the institution fit for purpose. Northern Nigeria have become killing fields and the wind is blowing South. The president must wake up. The urgency for action is now! Nwachukwu is London based Business Consultant. He can be reached on emmanuel@pssolutions-ltd.com Twitter: @emmanwach17

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A chance to reset economic policy

Patrick Atuanya

igerian President Muhammadu Buhari was sworn in for a second and final four-year term last week after being re-elected in February. After the tensions that characterised the general elections period and euphoria that followed winners being announced and subsequent swearing in of State Governors and the President, it is probably time for sober heads to begin to come to terms with the difficult task ahead. Between 2015 and 2019 in the first term of President Buhari, the economy entered a recession for the first time in 25 years, while Nigerians are on average poorer than they were four years ago. A population explosion, amid dwindling fiscal resources available for the 3-tiers of government means the government is largely unable to make a dent in the numerous infrastructure and social issues (education, health) facing most Nigerians. The barely growing economy has also led to a surge in unemployment (now 23%) or opportunities which in turn has brought about a new brain drain, with

Canada, Australia, The United States, The U.K, Europe, South Africa, U.A.E, Malaysia and even Brazil now major destinations for disenchanted Nigerians who see no hope for a brighter future if they remain in the country. Anyone making an objective analysis of the President’s economic scorecard in his first term would be hard pressed to give a pass mark, in light of the woeful outcomes. However therein lies an opportunity for the President to take stock and reset his economic policy for a more positive outcome in his second term. S ome early signs and pronouncements have been encouraging such as acknowledgement by the federal government of its poor fiscal position and statements about possibly selling down stakes in Joint Venture (JV) oil assets. My advice for the President would be to narrow his economic focus in the second term to 4 - 5 areas, which would be 1) energy sector reform (oil, gas, power), 2) Public Private Partnerships (PPPs) to unleash infrastructure investments, 3) an export led growth model 4) education reforms and 5) healthcare reforms. These five areas would then feed into other sectors. For instance getting a working PPP model in place that can attract billions of dollars in investments would immediately positively affect aviation (if a concession agreement is signed with private investors for the airports) and the

railways. Better rail connections will help open up the rural areas and impact farmers who could more efficiently transport agric produce with fewer losses. A comprehensive reform of the energy sector, to make it more attractive for dollars to flow into exploration and production of oil and gas, would impact the nation’s economy and treasury. An increase in Nigeria’s oil production to 3 million barrels a day (a long sought but unachievable target), will have impact of FX inflows to the economy, while investments that improve gas output will impact the power sector and gas for industries across Nigeria, especially where there are shortages today, such as in the North. Solving the liquidity crises in the electricity sector, possibly through a movement in tariffs, will help improve supply and reliability for consumers and industries. Total reform of the energy sector would also probably not be complete without a look at how to get out of the fuel subsidy mess. The Asian tigers (South Korea, Taiwan, Hong Kong and Singapore) from the early 1970s began to grow rich through an export led growth model, which entailed further openness to international trade in the form of export promotion strategies. The belief was that greater openness would encourage greater spread of productive technology and technical know-how and adopting foreign technology to

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My advice for the President would be to narrow his economic focus in the second term to 4 - 5 areas

build out their own domestic technological infrastructure, which some say was a case of just copying from the West. Whatever the case, Nigeria’s 200 million plus population cannot grow rich by just exporting oil to the rest of the world, without embracing value added manufacturing and being integrated into the global supply chain of multinational companies. This is particularly a once in a lifetime opportunity as wages rise in China, Vietnam, and other parts of Asia. In that sense Nigeria’s hostility to the Africa Continental Free Trade Agreement (AfCFTA) looks absurd. Education and Health care reforms are no brainers because no nation on earth can get rich by being poorly educated and sick. Nigeria’s overall health care spend estimated at N2 trillion, has government spending about N600 billion, health insurance funding put at N100 billion while the larger chunk of N1.3 trillion is mostly paid out of pocket by up to 80 percent of the population. Looking at these issues one thing is clear, the President needs to take some tough decisions as well be decisive in the coming days and months. A small team of core, competent Ministers is also needed to make any progress on the listed reform items. In the end Nigerians need this President to succeed, for the good of all. Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

Mega-projects can transform economies but managing them is complex!

Uyiosa Omoregie

ega-projects have been defined in the Project Management Institute (PMI) journal as “largescale, complex ventures that typically cost $1 billion dollars or more, take many years to develop and build, involve multiple public and private stakeholders, are transformational, and impact millions of people.” The need for basic infrastructure for economic development made the megaproject a popular policy prescription. Mega-projects can be very important to the host country: the Nigeria Liquefied Natural Gas (NLNG) Project was estimated to have contributed about four percent of Nigeria’s Gross Domestic Product (GDP). Mega-projects have been executed for thousands of years: The Great Wall of China and the Pyramids of Egypt are two famous ancient examples. A more modern famous example of a mega-project is the U.S. Na-

tional Aeronautics and Space Administration (NASA) project that, in 1969, successfully put a man on the moon. The decade 2000-2010 produced more large and complex projects than any other comparable period in history. Low oil prices in the 1970s and 1980s seemed to have discouraged the execution of mega-projects in some parts of the world. Most mega-projects in the 1980s that reached the planning stage were terminated as commodity prices fell in that decade. However, the industrialization of China and India, with the increased demand for commodities (within the context of global economic growth) created more demand for mega-projects. Also, to satisfy increasing demand for such commodities as crude oil, international oil and gas companies (IOCs) were given access to difficult terrain in Brazil, Venezuela, the Capsian and Russia, for exploration and production mega-projects. In such difficult terrain, IOCs differentiated themselves from national oil companies (NOCs), with their technical expertise, as a larger portion of easily accessible exploitable natural resources were held by NOCs. As projects increase in size, and become more complex, managing these projects becomes more challenging. Schedule slippage and cost overruns are familiar occurrences in mega-projects. One study discovered that the most important correlate of cost growth and schedule slippage for industrial megawww.businessday.ng

projects was the interface challenges between the projects and the host governments. Challenges imposed by host governments include: health, safety and environmental (HSE) regulations, labour laws and opposition, procurement and local content restrictions. From a project economics point of view, mega-projects frequently end up with a negative net present value (NPV). Due to the large capital expenditure involved in these projects, investment decisions usually take longer, and require more thorough analysis. Mega-projects have been found to end up over budget 90 percent of the time. Bent Flyvbjerg, professor of management at University of Oxford, studied 70 years of mega-projects data and concluded: “Cost overrun for the Channel Tunnel (the longest underwater rail tunnel in Europe, connecting the UK and France) was 80 percent in real terms. For Denver International Airport, 200 percent. Boston’s BigDig, 220 percent. The UK National Health Service IT system, 400700 percent. The Sydney Opera House, 1,400 percent. Overrun is a problem in private as well as public sector projects, and things are not improving; overruns have stayed high and constant for the70-year period for which comparable data exist. Geography also does not seem to matter; all countries and continents for which data are available suffer from overrun. Similarly, benefit shortfalls of up to50 percent are also common, and above 50

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percent not uncommon, again with no signs of improvements over time and geography.” Flyvbjerg then concludes that there is an Iron Law for megaprojects: they are always likely to be over budget and not delivered in time (schedule slippage) over and over again! Flyvbjerg estimated total annual global megaproject spend to be about $ 7.5 trillion: approximately eight percent of total global GDP, which denotes the biggest investment boom in human history. Oil and gas megaprojects have been found to have poor project execution record, in recent years. Upstream oil and gas megaprojects, particularly, perform poorly compared to midstream and downstream megaprojects. The yardstick for success defined by how well these projects perform, compared with expectations when final investment decisions (FID) were taken. It was found that project failure was positively correlated with project size. Oil and gas megaprojects usually created schedule targets that were too optimistic, and often missed. One reason for the poor performance of these megaprojects could be their complex nature. The management of complex systems, like megaprojects, requires a shift in perspective away from ‘linear thinking’ to ‘systems thinking’. Uyiosa Omoregie is a petroleum economist and management analyst. He can be contacted at uyiosaomoregie@ yahoo.co.uk

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Monday 03 June 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 ASSIST. SUBSCRIPTIONS MANAGER Florence Kadiri

Rigid and difficult land laws obstruct economic growth

wenty-first century Nigeria is yet to come to terms with the need for land reform for economic growth and shared prosperity. But the consequence of this sad situation is as grave as it is unimaginable in a country that prides itself as the largest economy in Africa. The land tenure system in Nigeria is redolent of feudal times. It is rigid. Getting a certificate of ownership is onerous. Thus many are excluded from formal land ownership. This hampers full scale economic activities such as real estate in which land is a major part of the transaction. Past attempts to reform land and property ownership have failed. Late President Musa Yar’Adua’s administration attempted land reform, but that ended in the middle of no-where. Th e a dministration of Goodluck Jonathan also tried to carry out an audit and inventory of government’s landed property to free same

for both housing and other economic activities, but that also failed. It is estimated that only 5 percent of the country’s housing stock, which is about 13 million units, is in formal mortgage, meaning that 95 percent of these houses are dead assets. They are neither tradable nor bankable. Only land and property ownership reforms can unlock the values in these dead assets estimated at N307 billion or 81 percent of all goods and services produced in the country. Raghuram Rajan and Luigi Zingales in their book, “Saving Capitalism from the Capitalists”, identify the respect for and guarantee of property rights, even of the “weakest and most defenceless citizen”, as the basic condition for competitive markets. They note that it’s a characteristic of transparent, responsive and accountable governments. Owners of the land are more engaged with it. Whether they farm, lease or develop it, they seek to generate the most out of it. In turn, they pay taxes to the government to protect and

guarantee their rights. Land accounts for 20 percent of the earth’s surface, and consequently, every economy, particularly Nigeria, requires comprehensive land regulations and policies or reforms to guarantee the effective usage of its land and the maximisation of resources attached to it. From traditional, economic and industrial perspectives, land is very unique and strategic. Its availability plays a pivotal role in the development of any economy as it increases investment inflow. Industrialisation, housing development, agriculture, mining, oil exploration and other economic and productive activities that lead to improved standard of living, job creation, economic growth, among others, are possible only when land is available and harnessed for such purposes. A World Bank Report on ‘How Africa Can Transform Land Tenure, Revolutionise Agriculture and End Poverty’ notes that sub-Saharan Africa is home to nearly half of the world’s usable, uncultivated land but, so far, Africa

as a whole has not been able to develop these unused tracts to dramatically reduce poverty and boost growth, jobs, and shared prosperity. In another report, ‘Securing Africa’s Land for Shared Prosperity’, the World Bank argues that if African countries and their communities could effectively end land grabs and modernize the complex governance procedures that govern land ownership and management it would bring about improved wellbeing and standard of living of their people. Real estate, more than any other sector, will benefit from land reform. It is estimated that real estate makes up 60 percent of the world’s global assets and in developed countries, real estate buttresses the financial sector, enabling the creation of asset-backed loans and securities. Nigeria needs to reform its land laws. Urgently. It will remove all encumbrances that limit access to land and boost industrial activity, generate jobs, engender shared prosperity and alleviate poverty.

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Monday 03 June 2019

BUSINESS DAY

COMMENT

Buhari has made history, but can he leave an enduring legacy? global Perspectives

OLU FASAN

resident Muhammadu Buhari was sworn in for his second and final term in office last week, on May 29. He is a man of history. In his political life, he has achieved many things that no other Nigerian has. The first presidential candidate to defeat an incumbent; the first politician to become president after three failed attempts; the oldest person to become president in Nigeria, at 72 in 2015, and, by the time he leaves office in 2023 at the age of 80, almost certainly the oldest Nigerian president ever! Earlier this year, during the presidential election campaign, I wrote a piece entitled “Buhari proposes, can Obasanjo dispose?” (BusinessDay, 19 February 2019). The context was that former President Olusegun Obasanjo had chosen or influenced the choice of every civilian president in this country since 1979. The common view was that no Nigerian could become president without Obasanjo’s approval. Indeed, former President Jonathan called Obasanjo“the boss of bosses” and warned presidential candidates: “Ignore him at your peril”! But the theory of Obasanjo’s indispensability was tested in this year’s election. Obasanjo was opposed to Buhari re-election bid. In a stinging open letter, he citedBuhari’s “poor performance”, “impaired health” and the “strain of age” as reasons why “he needs a dignified and honourable dismount from the horse”, i.e., abandon his second term ambition. Instead, Obasanjo threw his weight behind his estranged former vice president Atiku Abubakar, mobilising support across the country for his election. It promised to be an epic battle. Would Obasanjo win and retain his reputation as Nigeria’s Svengali and ultimate political

godfather? Or would Buhari defy the law of gravity and shatter Obasanjo’s reputation by securing his re-election? I wrote in that piece that one of the two retired generals and former military heads of state would have his ego either boosted or busted. Well, as it turned out, it was Buhari who triumphed. He bucked the trend and secured re-election against Obasanjo’s strong opposition. Indeed, Buhari defeated Atiku in Obasanjo’s own polling unit, even by a wide margin, 87 to 18 votes! So, you could say, from the above personal victories, that Buhari is a historymaker. But what kind of history? The Oxford Dictionary defines a history-maker as “a person who influences the course of history or does something spectacular or worthy of remembrance”. Surely, merely winning elections, even in unusual circumstances, would hardly qualify anyone for that. A leader would need to leave a truly enduring legacy! So far, however, while President Buhari has“made history”with his personal electoral victories, he has done littlepositively to change the course of Nigeria’s history. If Buhari had lost this year’s election, he would have left no worthy legacy behind. Think of it: the economy remains moribund; political and social divisions and tensionsare rife; insecurity and systemic violence are widespread; state capacity and institutions remain extremely weak, verging on state failure; corruption and abuse of office haven’t gone away; and, of course, poverty isspreading and deepening, with sad stories of suicides across the country. No leader, despite his or her electoral successes, would leave an enduring legacy, and be a true history-maker, in those circumstances. Of course, Buhari’s loyalists would disagree with that assessment of his first term. Last week, ahead of the president’s inauguration, several sponsored articles were published in the newspapers trumpeting his first-term achievements. For instance, we were told that his government invested heavily in infrastructureand that it gave agriculture a huge boost to the extent that Nigeria had almost achieved self-sufficiency in food production, and that over 2.5 million directly and indirectly were employed through the Anchor Borrower’s Programme. And, of course, we were told that the social investment

programme (SIP)“reduced unemployment and depression”, even though Buhari’s wife, Aisha, recently said the programme “has failed woefully”! George Orwell’s famously said that political language “is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind”. Anyone who says that Buhari’s first-term performance has had any significant positive impact on this country socially, economically, politically and institutionally is guilty of using political language in the way Orwell described. Nigeria is probably the only country where government is credited for developing physical infrastructure almost wholly through borrowing andgovernment revenue with virtually no private investment. Private investment in infrastructureis a sign that the private sector has confidence in an economy because investors won’t invest in public infrastructure unless the economic conditions are right. But when a government is borrowing heavily and using limited state resources to fund major infrastructure projects,it is nothing to celebrate becauseit shows, one, that its economic and business environments are not conducive enough to attract private money, and, two, that the government is not focusing oncritical human capital, such as education and health, as it’s spending much of its limited resourceson hard infrastructure, roads, rails, airports etc, at the expense of soft infrastructure. What about the so-called boost to agriculture? Of course, every countrywants to be self-sufficient in food production, but hardly any achieves it. The UK, which has an efficient agricultural industry, still imports 50% of its total food consumption. Of course, a country can achieve “self-sufficiency” in food production if it hasa protected and inefficient agricultural sector that produces all its food requirements. But that would be at great costs to consumers through high food prices and poorfood quality. Nigeria wants to achieve self-sufficiency in food production through subsidies and trade protection, but that’s a recipe for an inefficient agricultural sector, with huge adverse impact on people’s food bills. Mis-guided self-sufficiency policies will neither benefit farmers or consumers. Unfortunately, the Buhari government is driven by such economic illiteracy. In an

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if Buhari wants to leave an enduring legacy, he must be a radical reformist president in his second term. He must radically pursue economic, political, institutional and bureaucratic reforms

interview with this newspaper, published last week, President Buhari’s special adviser on media and publicity, Femi Adesina, who described himself as “a Buharist for life” said “the economic direction of this administration is for self-sufficiency”. He also said that President Buhari refused to take certain economic decisions “that should have been taken” because of“the impact that will have on the lives of the poor”. But it is precisely such mis-guided mindset that has deepened the Nigeria’s economic deterioration. Buhari’s fixation with self-sufficiency has led to protectionist and interventionist policies that have made the Nigerian economy highly uncompetitive. His refusal to sign the agreement establishing the African Continental Free Trade Area (AfCFTA) and the EU-ECOWAS Economic Partnership Agreement (EPA) and to liberalise foreign exchange market is also linked to his “concern” about their impacts on the poor. The sad thing is that Buhari doesn’t know that he is harming the poor, who returned him to power with their massive votes, by pursuing these socialist, antitrade, anti-market, illiberal policies. Yet, Nigeria can only succeed as a dynamic, open and competitive economy. Furthermore, Nigeria will only succeed as a stable polity, with an enduring political settlement. Recently, President Buhari was hailed when he told APC governors that “true federalism is necessary at this juncture of our political and democratic evolution”. That was like a Damascene conversion for a president who has long been lukewarm about political restructuring. But the devil is in the detail. What does he men by “true federalism”? Unfortunately, he didn’t give an inauguration speech; perhaps that’s for June 12! But if Buhari wants to leave an enduring legacy, he must be a radical reformist president in his second term. He must radically pursue economic, political, institutional and bureaucratic reforms. Otherwise, he would just be remembered for his electoral victories and nothing more! Sadly, that would be a wasted opportunity!

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

Hoping the next level is not more difficult than the last one ECONOMIST

NONSO OBIKILI

he first level of the democratic Buhari administration ended last week. To say it was difficult will be putting it lightly. We saw real economic growth drop from 3.6 percent a year into recession, shrinking by over two percent at its worst. The economy has somewhat recovered from those depths, but the current two percent growth is nothing to write home about. Especially given that our population is growing at around 2.7 percent a year implying that on average, Nigerians have been getting poorer since 2015. This is even before you start to talk about inequality. The unemployment numbers have been even worse. The unemployment rate increased from just over eight percent when Buhari took to over 23 percent the last time we measured it in 2018. The result is that more people

have probably been thrown into poverty, but we can’t say for sure because we haven’t officially measured it in over a decade. Maybe we are scared of what we may find. On the macroeconomic stability front things haven’t been good either. No one needs a reminder of the foreign exchange crisis that gripped the nation while the central bank was playing demand management games. Inflation shot up from under nine percent in mid-2015 to a peak of over 18 percent before dropping to the 11 percent range it is now. Still some way from the central bank’s target of a single digit inflation rate. Many other problems persist. Bank lending has refused to grow. Foreign direct investment has not recovered back to what it was in 2014. The federal government’s finances are in a big mess and debt has piled up so high that servicing the debt now takes up roughly 60 percent of all federal government revenue. As a result, the federal government has leaned on the Central Bank for indirect financing, risking even more macroeconomic instability in the near future. I won’t attempt to give the admin a grade on the economy but if this was university, they would be repeating the course. To be fair the Buhari administration inherited a difficult situation. The price of oil crashed to $30 a barrel in the early www.businessday.ng

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In video games the next level is typically much harder than the last one. We hope that won’t be the case this time around

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months of the administration and oil production was also hit by militant activities in the Niger Delta. The fiscal buffers were also not there. The excess crude account was already very low, and the foreign reserves were already heading towards a precarious point. Still, the decisions made given what was an emergency economic situation were baffling and played just as big a part as the oil crisis itself. Not to mention the irony that we are right back where we were in terms of our exposure to oil prices. Four years later and after at least two years of relatively high oil prices (yes $70 a barrel is high) we are perhaps in worse shape than before the 2014 crash. The excess crude account is virtually empty, the sovereign wealth fund is still tiny, and the Central Bank is also hopelessly exposed. If the oil price crashes to $40 a barrel next month we will back in crisis faster than you can say abracadabra. But perhaps the biggest disappointment is what did not happen. In the last four years there was no significant reform of the country’s security architecture despite calls from almost all parts of the country for “restructuring”. There was no significant judicial reform. The judiciary is still mostly exactly how it was in 2015 except for some public media trials. There was no significant tax reform despite the obvious need to @Businessdayng

improve general government revenue. And you must be wearing rose tinted glasses to say that there is a significant improvement to infrastructure. Power has marginally improved, but the sector is a quarter to collapsing. The less said about the seaports the better. The airport terminals that were almost completed in 2015 were launched with much fanfare. And you still can’t drive from Lagos to Ibadan or Benin to Abuja or Enugu to Jos without wondering if there is something wrong with Nigeria. Not to say that there are no improvements, but if infrastructure is the poster child for the last four years then that poster isn’t very good. All that being said, past performance is not always an indicator of future performance. In video games the next level is typically much harder than the last one. We hope that won’t be the case this time around. We hope that the Buhari government can turn things around and deliver on his mandate for a better Nigeria. I don’t think there are many who will doubt his intentions, but intentions are not enough. Let’s also not forget the governors, who combined are just as powerful and influential as the presidency. But I will save that discussion for next week. Dr. Nonso Obikili is Chief Economist at Business Day.

Monday 03 June 2019

BUSINESS DAY

In Association With

The next to blow

Too manyproblem challengers Calibration

Britain’s constitutional time-bomb

How central banks should prepare for the next recession

Brexit is already a political crisis. Sooner or later it will become a constitutional crisis, too

They must change their targets and find new tools—while avoiding a populist takeover

T HAS BEEN a decade since America’s latest recession, and it has taken that long for the Federal Reserve to ask itself whether it is ready for the next one. On June 4th officials and scholars will gather in Chicago to debate how monetary policy should work in a world of low interest rates. The benchmark rate is 2.25-2.5%, which gives the Fed little room to cut before hitting zero—and less than half as much as it has needed in past downturns. As if to remind policymakers that rock-bottom rates are here to stay, the ten-year Treasury yield fell below 2.3% this week. Other central banks, many of which preside over still lower rates and weaker economies, are looking

RITONS PRIDE themselves on their “unwritten” constitution. America, France and Germany need rules to be set down in black and white. In the Mother of Parliaments democracy has blossomed for over 300 years without coups, revolution or civil war, Irish independence aside. Its politics are governed by an evolving set of traditions, conventions and laws under a sovereign Parliament. Thanks to its stability, Britain convinced the world that its style of government was built on solid foundations laid down over centuries of commonsense adaptation. That view is out of date. The remorseless logic of Brexit has shoved a stick of constitutional dynamite beneath the United Kingdom—and, given the difficulty of constitutional reform in a country at loggerheads, there is little that can be done to defuse it. The chances are high that Britons will soon discover that the constitution they counted on to be adaptable and robust can in fact amplify chaos, division and the threat to the union. On June 10th, three days after Theresa May steps down as Conservative leader, the race to succeed her will formally begin (see article). Some of the runners, including the favourite, Boris Johnson, vow that, unless the European Union gives them what they want (which it won’t), they will pull out of the EU on October 31st without a deal. The 124,000 members of the Conservative Party who will choose the next prime minister, an unrepresentative sample, to put it mildly, will thus take it upon themselves to resolve the question that has split the nation down the middle. Worse, Britain’s supposedly sovereign Parliament has voted against just such a no-deal Brexit on the ground that it would do the country grave harm. There will doubtless be more parliamentary machinations to stop a no-deal Brexit or force one through. The

constitution is unclear on whether the executive or Parliament should prevail. It is unclear how to even choose between them. Behind this uncertainty lies the fact that Britain’s constitution is a jumble of contradictions scattered across countless laws, conventions and rules. As our Briefing this week describes, these can easily be amended, by a vote in Parliament or merely on the say-so of the controversial Speaker of the House of Commons—who this week vowed to stay in office in order to ensure that Parliament’s voice is heard. There was a time when most British lawmakers were mindful that playing fast and loose with the rules could undermine democracy. Perhaps that is why they used to practise self-restraint. But in recent decades, when liberal democracy seemed unshakable, Britain’s leaders forgot their caution. Instead, in a fit of absent-mindedness, they set about reinventing the constitution wholesale. Under Tony Blair and David Cameron, the Westminster Parliament ceded power to assemblies in Scotland, Wales and Northern Ireland and to the people directly through referendums. These innovations were often well-meant and, in themselves, desirable. But nobody gave much thought to the consequences for the constitution as a whole. The resulting mess has already stamped its mark on Brexit. The

referendum endorsed leaving the EU but left the details for later. It provided a mandate for Brexit, but not for any of the very different forms Brexit can take. It is unclear how MPs should reconcile their duty to honour the referendum with the duty of each one of them to act in the best interests of their constituents. Other countries avoid that mistake. Ireland holds referendums, too. But Article 46 of its constitution is clear: the people vote on a change only after a bill has passed through the Dail with the details nailed down. Britain never thought to be so sensible. Brexit is itself sowing the seeds of further constitutional chaos, by threatening the integrity of the union. In the elections for the European Parliament (see article), the Scottish National Party (SNP) won an increased share of the poll. Scotland voted Remain in the referendum, and the SNP’s leaders can understandably claim that they have just won an enhanced mandate to leave the United Kingdom. Yet, at least one of the Tory leadership candidates is ruling out any further referendums. Breaking up the union would be a constitutional nightmare—if only because no process for secession is laid down. Merely choosing to hold a second Scottish referendum could be fraught. Mr Johnson is loathed north of the border. Plenty of English voters are calling for a second Brexit referendum.

Mrs May told the SNP to wait until Brexit had been resolved. Legally, could Prime Minister Johnson hold the line against a determined Scottish campaign? It is unclear. The very act of leaving the EU would also load the constitution with fresh doubts. The Charter of Fundamental Rights, which enshrines EU citizens’ rights in law, would no longer govern British courts. Some would-be Tory leaders, such as Dominic Raab, want to scrap domestic legislation that embeds those rights. If Parliament passed oppressive new laws, the courts might complain, but they could not stop it. Voters who moan about meddling European judges might start to have second thoughts. Cue calls for a British Bill of Rights and another fit of ill-considered constitutional innovation. And that leads to a final worry. Britain’s ramshackle, easily amended constitution is vulnerable to the radicalised politics produced by three years spent rowing about Brexit. Jeremy Corbyn and his colleagues on the hard left could not be clearer about their ambitions to revolutionise Britain. It is naive to think they would focus on the economy and public spending, but leave the rules alone. A Labour government under Mr Corbyn—or, for that matter, a Conservative government led by a populist Tory—would be constrained only by its ability to get its way in Parliament. Labour has already called for a constitutional convention. Most Britons seem blithely unaware of the test ahead. Perhaps they believe that their peculiar way of doing things always leads to stability. It is indeed just possible that their constitution’s infinite flexibility will permit a compromise that gets the country through the Brexit badlands. More likely, however, it will feed claims that the other lot are cheats and traitors. Brexit has long been a political crisis. Now it looks destined to become a constitutional crisis, too. It is one for which Britain is woefully underprepared.

to the Fed for inspiration. The belated battle-planning, although welcome, is awkwardly timed. Central banking is becoming more politicised. President Donald Trump has called for the Fed to cut rates and tried unsuccessfully to appoint two of his cronies to its board. Left-wingers are increasingly interested in taking charge of monetary policy. In Britain they have suggested, variously, that the Bank of England should cap house-price growth and target productivity—as if the rate of technological change were a monetary phenomenon. Central banks are often eyed as a source of cash for infrastructure investment or for fighting climate change. The European Central Bank’s quantitative easing (QE), bond-buying with newly created money, is a source of tension between euro-zone countries, helping make the ECB’s leadership race even more political than usual. Given these pressures, central bankers’ caution should hardly be surprising. They surely fear that overhauling their targets and tools could lead to a free-for-all in which stability and independence Continues on page 19

Monday 03 June 2019

BUSINESS DAY

In Association With

Back to the ballot box

Unable to form a government, Binyamin Netanyahu calls an early election Not for the first time, his rivals sense an opportunity

T WAS NOT even two months ago that Binyamin Netanyahu declared “a great victory” after his Likud party took 35 seats in a hard-fought election. The voters seemed to have given the prime minister an unprecedented fifth term; soon he would become Israel’s longest-serving leader. His bloc of nationalist and religious parties held a 65-seat majority in the Knesset (see chart). All that was left was the haggling, over cabinet posts and policies, before Mr Netanyahu announced his new government. The haggling, though, got the better of him. Bedevilled by the demands of Avigdor Lieberman, a rival on the right, Mr Netanyahu was unable to form a government by the deadline on May 29th. To stop the president from asking the opposition to have a go, he and his right-wing colleagues (along with the Arab parties) finally agreed to dissolve the Knesset and call a new election. Many members had yet to make a speech when they voted to give up their jobs. For Mr Netanyahu it is an unusual failure—one that threatens his political survival. The situation is unprecedented. Every other election since Israel’s founding in 1948 has resulted in the formation of a government. The finance ministry says there is no money for a new election, which has been scheduled for September. (It will surely find the shekels.) The ostensible cause of all the chaos is legislation, drafted by the previous government, that would cut into the exemption of religious students from compulsory military service. Under the bill an increasing (though still small) number of such yeshiva students would be required to serve. Mr Lieberman, who leads Yisrael Beiteinu, a secular nationalist party, insisted that it be passed by the new Knesset without any amend-

ment. But United Torah Judaism (UTJ) and Shas, ultraOrthodox parties, oppose the measure. Mr Netanyahu needed the support of all three in order to have a majority. He could not bridge the divide. The exemption for yeshiva students has long been a political hot potato. Mr Lieberman insists that for him it was “a matter of principle”. But he is also positioning himself for the day after Mr Netanyahu. The two go back three decades. Mr Lieberman, a former Likudnik, served as his political aide and directorgeneral of the prime minister’s office. He was Mr Netanyahu’s defence minister until last year—when he (unsuccessfully) tried to bring down the government by withdrawing his party from the ruling coalition. He again senses weakness and by choosing an issue popular with secular voters he believes he can increase support for his party in the next election, while hastening his rival’s downfall. Mr Netanyahu normally exudes confidence. But as the deadline to form a government approached, he looked desperate. He tried to tempt Labour to join him by offering it the defence portfolio—even though he has spent years branding the party as weak on security. Perhaps he was

just trying to scare Mr Lieberman into a compromise. Perhaps he was scared himself. Mr Netanyahu has been indicted, pending a hearing, in three corruption cases. He was counting on his new coalition to pass laws that would grant him immunity from prosecution and limit the Supreme Court’s power to overturn legislation. Prosecutors accuse Mr Netanyahu of taking gifts from wealthy benefactors in return for favours, and offering help with regulatory matters to publishers in exchange for positive coverage. He denies wrongdoing. The allegations did not seem to hurt him during the last election. But even if he wins the next one, he may not have time (or a majority) to pass his desired laws before pre-trial hearings begin in October. His lawyers have tried to delay the proceedings. They are now ploughing through piles of evidence. Mr Lieberman is the first right-wing politician to rebel against Mr Netanyahu. Will others follow? Within Likud there are grumbles, but only one senior member, Gideon Saar, a former interior and education minister, has criticised the effort to grant the prime minister immunity. The party has never deposed its leader and Mr Netanyahu is

still popular with the rank and file. Other potential rivals seem not to share Mr Lieberman’s assessment of the prime minister’s vulnerability. That Mr Netanyahu was able to convince a majority of lawmakers to fire themselves shows the hold he still has over the right wing. It is also a testament to the weakness of the opposition. Benny Gantz, the leader of Blue and White, which also won 35 seats in the last election, demanded that he be allowed a shot at forming a government. But he could not muster the votes to block Mr Netanyahu’s move. During the latest election he was unable to cut into the prime minister’s support, instead taking votes from other centre-left parties. Turnout was down. Mr Gantz may have trouble convincing voters to show up in September if he seems likely to lose again. Much can change between now and then. In late June the Trump administration will unveil the economic portion of its plan for peace between Israel and the Palestinians. It had delayed the announcement in order to keep it from becoming an issue in the last election. But the new vote will probably turn into another referendum on Mr Netanyahu, who has four months to convince voters to increase his mandate.

How central banks should prepare for... Continued from page 18

give way to populist interference or even economic quackery. But that is not a sufficient reason to hold back. A worse danger is that the world faces a downturn it cannot adequately fight (see article). Central banks need to prepare for what is coming, by looking afresh at their targets and their tools, even as they strive to keep their independence. Unfortunately, the outcome of the review is likely to be just a tweak to the Fed’s target or its communications policy and a decision not to change to its tools. The Fed may pledge to redefine its inflation goal, of 2%, so that this applies on average over the economic cycle. Overshoots during booms would make up for shortfalls during busts. The theory is that this might help deal with interest rates stuck near zero, by boosting inflation expectations in a downturn. That would mean real rates were lower, giving the economy a boost. However that is likely to prove too modest. Start with targets. Inflation has undershot the Fed’s target 85% of the time since it was announced in 2012. Financial markets expect these shortfalls to continue for years. Investors may well ignore any new pledges from central bankers to get inflation above the target. And even if they believed the Fed, the cut in real interest rates would be too small to offset a bad bust. In the dark days of 2009 one rule of thumb for monetary policy suggested that nominal interest rates needed to be almost minus 4%. The tools are equally in need of an overhaul. Most central banks have three unconventional policies to stimulate depressed economies: QE, forward guidance (trying to talk down bond yields) and negative interest rates. Debate rages over the effectiveness of QE—some see it as little more than forward guidance in disguise. Yet forward guidance is not always credible, whether it is disguised or not. And deeply negative interest rates require reforms to prevent people from hoarding cash or from causing instability at banks, which will struggle to get people to pay them for taking deposits.

Monday 03 June 2019

BUSINESS DAY

In Association With

Baba go-slow

Nigerians got poorer in Muhammadu Buhari’s first term He will need to solve a revenue crisis in his second

ONG LINES of lorries stretch like tentacles from Apapa port, the largest in Nigeria. Drivers doze in their cabs, feet flung over dashboards; some sling hammocks beneath the chassis. Musa Ibrahim, an ebullient trader, says he has been queuing for two days. He gestures at empty buildings. “Most of the companies you see here they done close,” he sighs. The Nigerian economy is stuck like a stranded truck. Average incomes have been falling for four years; the IMF thinks they will not rise for at least another six. The latest figures put unemployment at 23%, after growing for 15 consecutive quarters. Inflation is 11%. Some 94m people live on less than $1.90 a day, more than in any other country, and the number is swelling.

By 2030 a quarter of very poor people will be Nigerian, predicts the World Data Lab, which counts such things. Nigeria’s engine was already sputtering when President Muhammadu Buhari took the wheel in 2015. The price of oil, which makes up 9% of GDP and more than 90% of export earnings, had crashed. But “Baba Go Slow”, as Nigerians took to calling him, made a bad situation worse. Instead of letting Nigeria’s currency slide, which would have stoked inflation, policymakers rationed dollars to maintain the naira’s long-standing and artificially high peg to the dollar. To do so the central bank refused to release foreign currency for a long list of imports, ranging from toothpicks to shovels. Without dollars for equipment or supplies, factories closed and workers were laid off, lead-

ing to a recession in 2016. The central bank confused things further by introducing several exchange rates. First was the official one of 305 naira per dollar, an absurdly low rate useful for importing petrol and massaging political egos. Its second rate, of 320 naira per dollar, was used to funnel artificially cheap greenbacks to favoured importers. Naturally, there were not enough dollars to go around, so most Nigerians (especially those importing toothpicks) had to pay as much as 500 naira for one on the black market. Most of these rates have converged of late, at about 360 per dollar. But the confusion arising from having so many discourages foreign investment. The government thinks the answer to the “dollar shortage” is for Nigerians to make and grow more and import

less (see article). To this end it has slapped import taxes on rice and is giving tax breaks for a huge new oil refinery. There is little sign of the kind of export-led industrial revolution that has lifted incomes in Asia. This is not only because the naira is overvalued. It is also because the state has spent decades neglecting basic public goods, like roads, schools and electricity. “In Nigeria if you set up a business you have to build your infrastructure, you have to build your power plant, you have to build everything,” says Abdul Samad Rabiu, the chairman of BUA Group, a conglomerate. Eghosa Omoigui, who manages a tech fund, compares running a business there to “running a nation state”. Where urgency is needed, Mr Buhari offers only caution. Few are holding their breath for any more drive in his second term, which began on May 29th. “We are trying to avoid shocks,” explains Adeyemi Dipeolu, his economic adviser. Sharp currency movements or hikes in electricity tariffs would be felt by ordinary Nigerians. Yet officials are postponing a crisis, not averting one. Consider borrowing. The debt-to-GDP ratio is 28%. But Nigeria collects so little in tax that interest payments swallow about 60% of federal revenues. “We don’t have a debt problem, we have a revenue problem,” insists Udoma Udo Udoma, the budget

minister in Mr Buhari’s first term. The government plans to raise funds by selling off some of its share in jointventure contracts with oil companies and might hike taxes on luxury goods. Revenues are rising, but fall far short of budget targets. Some of the gap is probably being filled by running up an overdraft with the central bank, which now holds more assets than all other banks in Nigeria combined. Public finances would be healthier if the government raised the price of fuel, which is imported by the state oil company and sold on at a loss. Last year this subsidy was worth at least 0.5% of GDP—as much as the government spent on health care. Politicians are scared to end it. An attempt to do so in 2012 led to massive protests. Although the government has expanded school-feeding programmes and is working on a safety-net for the poor, most citizens get few benefits from the state. Oxfam, a charity, ranks 157 countries on their commitment to reducing inequality, based on social spending, taxes and labour laws: Nigeria comes last. For Nigeria to prosper, the state could harness the vim of its 200m citizens. Instead it ignores them, except when politicians need votes. People have come to expect nothing from government, says Chika Okeke, who owns a small stationery shop in Lagos: “you struggle yourself.”

Protection racket

Muhammadu Buhari has big ambitions for Nigerian manufacturing But his policies help only a few industrialists

UNLIGHT POURS onto yellowing cloth in the Gaskiya textile factory in Kano, northern Nigeria’s largest city, through gaping holes in its tin roof. Chickens in the carcass of a van pierce the silence. Before this textile mill closed in 2005, says Yau Muhammad, one of 4,000 former employees, it was among West Africa’s largest. In 1985, when Muhammadu Buhari—then Nigeria’s military ruler—cut the ribbon on this factory, industry was thriving in Kano. In the decades since many others in the city have suffered its fate, crippled by power shortages and cheap imports. More than 300,000 jobs have vanished from the textile industry alone. Mr Buhari, who was elected president in 2015, wants to promote manufacturing by getting Nigeria to make more and import less. His central bank governor has withheld foreign exchange for some goods (see article) or slapped hefty import duties on them. This has been excellent news for industrialists such as Aliko Dangote, a billionaire who grew rich selling cement at eye-watering profit margins that reached as high as 60% behind high import tariffs. It has not been so good for Nigerian consumers, who must pay more for their groceries

and their homes, or for productivity. Companies must pay more for buildings; the government, for roads and bridges. Officials insist that protectionism works. They point to rice farming, which is booming thanks to a 60% tariff on imported rice. At the Umza Rice Mill on Kano’s outskirts, workers feeding machines with sacks of rice lifted from burlap mountains do not have time to stop and talk. Muktar Khaleh, the factory’s managing director, says its capacity has more than doubled since 2014 and that he has little sympathy for failed textile firms. “They need to modernise and try to compete with China, the way we compete with rice-producing coun-

tries like Thailand,” he says, ignoring the role tariffs play in nobbling the competition. Tariffs encourage smuggling, too. Thai rice exports to Nigeria have slumped since the tariffs were raised in 2016, but those to neighbouring Benin mysteriously more than doubled between 2015 and 2017. This tiny country of 11m people is now the world’s largest importer of Thai rice. For manufacturers who are not protected by tariffs, things are grim. This is especially so if they cannot get subsidised foreign currency from the central bank to import raw materials. A plastics-maker in Kano says he and most of his neighbours are operating at less than 10% of capacity. Many may be sunk by a

planned two-thirds increase in the monthly minimum wage. Other managers complain that electricity supplies are unreliable and expensive. Even successful firms like the Umza Rice Mill rely on generators for their own power. “There is no way anyone in Nigeria can produce without them,” says Mr Khaleh. A Chinese textile importer laughs when asked if he would ever move production to Nigeria. The government says it is tackling the power shortage. To its credit, factory owners in Kano say power cuts have become slightly less frequent in the past year. It has extended loans to power distributors to help expand their capacity and has loosened regulations to allow companies to buy power from independent producers at whatever price they want, instead of the one set by the regulator. Even so, Nigeria’s electricity firms produce about as much power as the city of Edinburgh. Without a huge increase in capacity—let alone literacy rates— Nigeria has little chance of expanding its industry, says Charlie Robertson, an economist at Renaissance Capital, an investment bank. This is harsh news for the millions of Nigerians who will reach working age in the next few years.

For many, like those laid off by Gaskiya textiles, the government’s manufacturing push comes far too late. Mr Muhammad gets a stipend from his union to guard his former workplace, so that its owners cannot sell off the land and machinery until they have settled unpaid wage bills. But, he says, most of his ex-colleagues are still out of work. “Muhammadu Buhari,” he sighs, “was our last hope.”

Monday 03 June 2019

BUSINESS DAY

COMPANIES & MARKETS

C&I Leasing grows Q1 profit by 7% to hit 5-year high

COMPANY NEWS ANALYSIS INSIGHT

Pg. 22

MARKET

Nigeria’s stock market surges most in May since January 2018 on MTN, Dangote rally OLUWASEGUN OLAKOYENIKAN

he performance of stocks listed on the Nigerian Stock Exchange (NSE) in May 2019 was the best in 15 months, thanks to Dangote Cement Plc and MTN Nigeria Communications Plc, the market’s biggest firms that made that happen. The benchmark index of the NSE, the All-Share Index (ASI), which fell to its lowest level in two years as of May 15, gained 6.55 percent in May to reverse the market’s loss of 6.06 percent in the previous month. T h e i m p re s s i v e p e r f o rmance was buoyed by the listing of MTN Nigeria by a way of introduction, which caused the stock to rally in the first six trading days, and Dangote Cement’s best monthly performance since January 2018. MTN listed 20.35 billion of its shares at the Lagos bourse at 90 per share on May 16. Having traded for eleven (11) trading sessions, the telecoms firm’s stock appreciated 51.67

percent to close at N136.50 per share on Friday. This placed MTN as the second-best performer on the NSE for the month after Thomas Wyatt which rose 60 percent. Similarly, the cement maker

surged 11 percent in May to close at N199.50, this compares with N180 a share of Dangote Cement valued at the beginning of the month. As a result, the return of the cement giant since the start of the year stood

at 5.17 percent. Consequently, out of N2.73 trillion added to investors’ wealth, MTN Nigeria delivered N946 billion, translating to 35 percent of the total market gain for the month. Investment of

Dangote Cement’s shareholders appreciated in value by N332 billion to post 12 percent contribution to the market. O t h e r b e s t-p e r f o r m i n g stocks on the NSE include Beta Glass which rose 33.9 percent to N75; Fidson Healthcare, 20 percent to N5.05; Courteville Business Solutions, 20 percent; and AG Leventis, 15.4 percent to 30 kobo. But in spite of the gains, the market’s year-to-date return remained in the negative territory of -1.15 percent. This was driven by losses recorded by other market bellwethers. Nestle Nigeria fell by 4.61 percent during the month to N1,450 per share. Nigeria’s most capitalised bank, Guaranty Trust Bank, plunged 4.24 percent to N31.60, while Zenith Bank dropped 5.63 percent to close at N20.10. Also, Nigerian Breweries lost 10.77 percent to close N58. Stanbic IBTC fell by 3.23 percent to N42, while Seplat Petroleum Development Company closed lower by 4.37 percent to N549.90.

TELECOMS

MTN Nigeria records 79.7% surge in profit on impressive revenue growth …Data drives revenue growth in 2018 ...Revenue, PAT hit 5-year high DAVID IBIDAPO

he world being a global village, which has necessitated the need for data purchase for internet access to connect with everyone, has paid off for MTN Nigeria as its revenue hit N1 trillion from rapid growth in data purchase by Nigerians. Evident in the financial statement of MTN Nigeria published on the Nigerian Stock Exchange (NSE) market as a requirement for a listed firm, growth in data income in 2018 outperformed growth in other sources of revenue for the Telco giant. The data stream of income recorded a 41 percent growth from N116.7 billion in 2017 to N165.1 billion in 2018. Revenue from data purchase as at 2018 stood as the second larg-

est stream of income for MTN. This accounted for about 16 percent of total revenue from contract with customers. The first remains revenue from Airtimes and subscriptions which accounted for 65 percent for the year ended 2018. During the period, MTN recorded a 17.12 percent growth in total revenue from N887 billion in 2107. This therefore translated to an improved profit margin of 14 percent in 2018 against 9 percent in 2017. The biggest non-oil foreign direct investment (FDI) in Nigeria grew its profit after tax (PAT) by 79.7 percent to N145.68 billion in 2018 against N81.07 billion in 2017. In 2018, the ultimate holding company of MTN group limited entered into a settlement agreement for compen-

sation in respect of losses arising from the breach of contract with Zhongxing Telecommunications Equipment (ZTE) as reported in the financials. In terms of the agreement, ZTE agreed to provide specific discounts and free goods to the value of $26.7 million to MTN group limited and its operating companies. MTN Nigeria accounted for this transaction ($5.8 million) as other income measured at the fair value of the free and discounted goods. To this end, other income stood at N2.22 billion in 2018 against no income recorded in 2017. The entrance of MTN’s listing by introduction on the NSE market saw existing shareholders of MTN grow their wealth by N763.12 billion in market value to N2.77 trillion as at the end of trading

on Friday. Analysts are optimistic however that fundamental of the company remain very

strong with future growth potentials looking promising. Recent development in the company reveal that the Telco

giant has identified Ethiopia as a rare new market into which Africa’s largest wireless carrier wants to expand.

L-R : Andrew Otike-Odibi, MD/CEO, C&I Leasing Plc ; Tunji Adenusi Adebayo, Chauffer of the year 2018 ; Maureen Ogbonna, group head, HR, C&I Leasing Plc, Ayedele Babatunde , country manager, Hertz , during the presentation of awards ceremony at the grand finale , Hertz chauffer excellence award 2018 in Lagos. Picture by Pius Okeosisi

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

Monday 03 June 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

LOGISTICS

C&I Leasing grows Q1 profit by 7% to hit 5-year high SEGUN ADAMS

&I L easing, a listed support and logistics company, has announced its highest bottom line figure in 5 years driven by stronger earnings in the first quarter of 2019. Profit after tax increased by 6.82 percent in the first three months to March 2019 to print N398.46 million compared to N373 million recorded in the same period a year ago. Gross earnings surged 21 percent to N7.81 billion in the quarter, its highest gross earnings in 5 years. The support and logistics company has consistently grown revenue year-on-year in the first quarters of the last three years since profit dipped 56 percent from N219.7 million posted in 2015. C & I Leasing provides

transportation logistics solutions in the form of car and marine rental, fleet management as well as human resource solutions. Its support services are provided along three business lines; fleet management, personnel outsourcing and marine services. In Q1 2019, net lease rental income rose some 26 percent to N2.96 billion owing to a 26 percent increase in lease rental income, from N4.37 billion in Q1 2018 to N5.51 billion, although lease expense rose by the same magnitude to N2.55 billion in the review period. Outsourcing income improved by 25.75 percent from N 1.63 billion in Q1 2018 to N2.1 billion Q1 2019. Outsourcing expense increased by 27 percent to N1.85 billion with Net outsourcing income amounting to N202.83 million, 15 percent over Q1 2018 figures. Similarly C&I leasing was

able to grow revenue from Tracking segment, with a 59 percent increase in net tracking income which hit N33.22 million in Q1 2019 from N20.89 million in the equivalent quarter of 2018. The increase was fuelled by a 35 percent rise in income from Tracking while corresponding expenses increased by 7 percent in the period. C&I’s interest income ballooned by 1000 percent as its bank deposits earned an interest of N12 million in Q1 2019, as against N53,000 in Q1 2018. Other operating income declined by 81.46 percent and income from joint venture appreciated by 44.67 percent. The support & logistics company faced higher finance cost in the quarter which rose by 16 percent in the quarter but had 70 percent less impairment charges. personal, depreciation and other expenses grew in the period.

L-R: Adedamola Olusunmade, MD/CEO; Esosa Balogun, chairman, and Bolanle Oyekan, company secretary, at the annual general meeting of the company in Lagos. Picture by Olawale Amoo

ICT

Courteville Business Solutions declares N179m pre-tax profit …pledges to grow African, Caribbean markets KELECHI EWUZIE

igeria’s foremost e-business solutions and advisory company, Courteville Business Solutions Plc, has announced a Profit Before Tax (PTB) of N179.8million in 2018 against N52.01 in 2017. This profit, according to the company, is coming on the back of strong cost and financial control measures implemented by the management team. Afam Edozie, chairman, Courteville Business Solutions in his speech at the 14th annual general meeting of the company in Lagos said the Board of Directors based on the result recorded and the current economic realities, will however not recommend the payment of dividend to the shareholders. Edozie said the ICT industry

continues to be a fast-growing sector and witnessed growth of 9.7 percent, which helped in contributing to the two per cent growth in the non-oil sector of the national gross domestic product (GDP), year-on-year, according to the National Bureau of Statistics (NBS). The telecoms and information service continues to be the biggest contributor to growth. He further pledged that the company will continue with its business expansion drive especially for its flagship product, AutoRegT; within the local boundaries, while assuring that the company will also continue to grow the business internationally especially within the African and Caribbean Markets. Edozie said the 2020 financial inclusion target of the Federal Government has seen the growth of Mobile Money Op-

erators and the disruption of the banking industry; but the sector requires close watching going into the 2020 deadline for an 80 per cent financial inclusion target for the Nigerian citizens. On the outlook for 2019, the chairman opines that many forecasters expect GDP growth to regain 3.01 per cent level in 2019, contingent on a number of critical conditions being met. Sunny Nwosu, coordinator, Independent Shareholders Association of Nigeria (ISAN) commended the performance of Courteville Business Solutions Plc, management for their prudent handling of the company affairs especially with the current economic realities. Nwosu called on the board and management of the company explore more lucrative ways to improve return on investment for shareholders.

COMPANY RELEASE

L-R: Ogbueshi Ben Osuno, chairman of the event; Layi Fatona, celebrant/MD/CEO, Niger Delta Exploration and Production (NDEP); Toyin Fatona, celebrant’s wife; Osten Olorunshola, compere/director, NDEP, and Bayo Akinpelu, guest speaker, during a public lecture tagged ‘‘Will The World Need Nigeria’s Oil In The Future’’ to mark Fatona 70th birthday in Lagos.

L-R: Shamsideen Kareem, a guest, engineer; Dare Lawal, another guest; Binta Adisa, MD, Roots Foods Limited; Lanre Adisa, chairman, Roots Foods Limited, and Awoga Awoyemi, a guest, at the celebration to mark the fifth anniversary of the company in Lagos recently.

Firm institutes fellowship for consumer goods sector leadership DANIEL OBI

s part of efforts to build capacity for the consumer goods retail sector in Nigeria, FoodCo Nigeria Limited, a diversified consumer goods company with interests in retail, manufacturing and fast food, has instituted a fellowship aimed at preparing MBA students for leadership in the category. This is against the backdrop of projected growth in the food and consumer goods market segment, currently the largest in Africa, which is expected to hit $40 billion by 2020. Announcing the Fellowship, Ade Sun-Basorun, Executive Director of the Company, stated that the initiative is targeted at building capacity for

management positions. He added that the FoodCo Fellowship program had become imperative in order to train a specialized workforce that will drive the expected growth in the sector and help it maximize its potentials. He said: “As modernization and a population shift from rural to urban centres continue to stimulate growth in the Nigerian consumer goods retail sector, the FoodCo Fellowship program aims at preparing a complementary workforce with the requisite skills and disposition to harness the vast opportunities within the sector and transform it into a significant economic bloc.” He continued: “Candidates are selected from MBA or Mas-

ters programs and set up in teams where they are expected to solve real world operational issues including team building, leading others, analyzing problems, communicating solutions and progress in both related and non-related fields. Whereas similar programs place trainees in a learning position where they understudy employees in the hopes of gaining work experience or mandatory credits for their degrees, the FoodCo Fellowship puts fellows in the centre of everyday business decisionmaking and practice so they can learn while simultaneously impacting the organization with their personality and wealth of knowledge gained in the classroom.

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L-R: Dennis Okoro, director, MTN Foundation; K. R. O. Izogu, permanent secretary, Ministry of Health, Imo State; Ayodeji Salami, Ag. Health portfolio manager, MTN Foundation, and Abasi-Ekong Udobang, senior manager, program implementation, MTN Foundation, at the State roundtable for the MTN led Anti-Substance Abuse Programme (ASAP) in Owerri, Imo State.

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Monday 03 June 2019

BUSINESS DAY

COMPANIES&MARKETS ICT

Chinese government commences second phase of free satellite TV to Nigerian villages JOSEPH MAURICE OGU

n a bid to enhance digital life, Chinese Government in partnership with StarTimes Nigeria, a provider of digital satellite has commenced the installation of satellite TV to some villages in Lagos to kick-off the second phase of connecting Nigerian rural communities to digital television. Two years after piloting the first phase of the program in rural communities in Abuja, and being satisfied with the outcome, StarTimes commenced the second phase of the program by installing satellite TVs to some villages in Lagos. During the China-Africa Cooperation Summit in Johannesburg, South Africa, Xi Jinping, the president of China, announced that his country would provide satellite television to 10,000 African villages as part of the efforts to boost African, Chinese relations. Known as “Access to Satellite TV for 10,000 African villages,” and being executed by StarTimes, the project is aimed at providing 10,000 villages across Africa the opportunity of being connected to the digital world of television programming. During the formal

launching of the program in Nigeria, Justin Zhang, formal CEO of StarTimes Nigeria, said 1,000 villages across Nigeria would benefit from the program. Ishagira-Elete, a riverine community in Ojo Local Government Area, Lagos, is one of the benefiting villages in Lagos. Samuel Idowu, the Baale (community head), said he was excited and grateful to the Nigerian and Chinese governments and to StarTimes for connecting his village to the world global village through the installation of digital satellite televisions. With the installation of the television, his village could now be known nationally and globally, he said. Besides putting IshagiraElete village in the global map, the villagers too will have the opportunity of knowing a lot more of things happening in Nigeria and around the world. “I thank the Chinese government and StarTimes for linking my villagers to the world,” he said passionately. Samuel Opeifa, the spokesman for the community told BusinessDay it was a carnival-like ceremony when the equipment were brought to the community for installation, as one of the

benefiting villages not only in Nigeria, but in Africa. “We are very happy to know that our village is one of the chosen 10,000 villages in Africa,” he said excitedly. More so, Opeifa said, everyone was happy that the gesture came at a time when Under 20 FIFA World Cup was going on, as the satellite television gave them the opportunity to be abreast with the competition. Also, it made their football loving children and youth to watch the round leather games at home instead of crossing over to the city in search of game viewing centres to watch the games. Isah Nurudeen, assistant headteacher, St. Peter’s Nursery & Primary School, Ishagira-Elete, where the satellite television has equally been installed, said he believed the digital television would enhance pupils-teachers, learning and teaching relationship, through the various educative children channels. “I believe the satellite television will surely assist and enhance teachers in their teaching process,” Nurudeen said optimistically. He advocated for such innovation to be installed in all village schools across the state.

HEALTHCARE

Hygeia HMO starts monthly payments to boost universal health coverage goals ANTHONIA OBOKOH

yg eia HMO, one of Nigeria’s leading health insurers, is expanding access with monthly payments of as low as N2,950 and individuals can now pay online and get reliable and effective health insurance to provide cover for a wide range of medical needs. With a legacy of integrity and excellent technological capacity, Hygeia Health Management Organisation’s monthly payment options are the most recent in a series of innovations the company has introduced. “Our mission is simple; to help our members access quality healthcare affordably,” says Obinnia Abajue, chief executive officer of Hygeia HMO. “The simplicity of this mission statement belies the magnitude of the problem we are committed to solving. Nigerians need access to

healthcare that is not only of good quality but is also affordable enough for them to actually enjoy.” With pervasive crowd funding requests on social media by people who urgently need medical care but cannot afford to get it, Hygeia HMO plans to offer comfort to those wary of getting in similar straits. With monthly payments of N2,950 or N5,850, members will get access to coverage for up to N500, 000 or N850, 000 respectively. Hygeia HMO’s monthly payment options provide affordable entry points to millions of Nigerians who have had to go without health insurance because of the burden of bulk annual payments. Now, that bulk is broken and people can choose to pay monthly or annually at once. Either way, they get the same coverage and access to quality care. With the largest healthwww.businessday.ng

care provider network in the country, Hygeia HMO offers the distinct advantage of members being able to access medical care nationwide. This means that frequent travellers, entrepreneurs and traders with family members or businesses in multiple locations across the country can be secure, knowing that they are covered wherever they are in Nigeria. The monthly payment options are launched in partnership with CREDEQUiT Y. “ The majority of Nigerians don’t have insurance. Hence health emergencies or even nonemergency situations continue to be a huge burden. We were happy to partner with Hygeia HMO because we want to change how Nigerians buy and sell so that people don’t have to wipe out their savings to get healthcare” says Tunde Leye, chief executive officer of CREDEQUiTY. https://www.facebook.com/businessdayng

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Monday 03 June 2019

BUSINESS DAY

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Monday 03 June 2019

BUSINESS DAY

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Monday 03 June 2019

BUSINESS DAY

real sector watch

Red flag as Africa moves on with free trade without Nigeria ...smuggling seen increasing across Nigerian borders ODINAKA ANUDU

he African Continental Free Trade Area (AfCFTA) has officially come into

force. “It is now official: African Continental Free Trade Area (AfCFTA) agreement has entered into force today, 30th May 2019,” a Twitter statement from the AfCFTA on May 30 said. “The required number of ratifications has already been deposited and the agreement is now a binding international legal instrument,” the statement added. Last month, the Gambia joined 21 other countries to ratify the continental trade agreement that will remove trade barriers and restrictions across African countries. The AfCFTA has the capacity to create the largest trade zone in the world and increase intra-African trade by 52 percent by 2022 while removing tariffs on 90 percent of goods. Th e Ga mb i a j o i n e d South Africa, Ethiopia, Sierra Leone, Lesotho, Burundi, Namibia, Guinea Bissau,

and Botswana, among others, which have ratified the agreement to support the commencement of the largest trade agreement since the World Trade Organisation (WTO) in 1994. Though this has come into force, it does not mean that Africans will begin to see free trade movements across borders immediately. African states still require time to make necessary adjustments. But this agreement is coming into force without Africa’s largest economy and most populous country, which is circumspect about AfCFTA implications on its economy. The Manufacturers Association of Nigeria(MAN) is the biggest opposition to the AfCFTA as it argues that ratifying the agreement could kill industries in the country. The body with over 2,500 manufacturers says the country’s leadership is yet to do a cost-benefit analysis on the impact of the trade treaty on revenue, manufacturing and the general economy. “Right from the period preceding the Kigali Summit and up until now, the content of the Nigerian of-

Hope Nuka, head, SEPCo Social Performance/Social Investment (l); Seun Samson-Olawale, adviser, Social Performance/Social Investment; Ezinne Ezeani, founder, SheCan Nigeria and COO, Mbr Signature Ltd and Stanley Ezeani, co-founder, SheCan Nigeria and MD, Mbr Signature Ltd at the signing of the sponsorship partnership between Shell Nigeria Exploration & Production Company (SEPCo) and SheCan Nigeria for Women Empowerment and Skill Acquisition in Lagos recently.

fer has remained unknown to manufacturers who are the number one stakeholders to be positively and or negatively impacted by the proposition,” MAN said in Lagos in the second quarter of 2018. But chambers of commerce in the country believe the treaty is more important to Nigeria than any other African country. “Our position is that our dear country should sign the AfCFTA. While we continue to address the issues

around it, and work on a strategy for implementation to tackle the problems, we should sign the agreement now,”Iyalode Alaba Lawson, national president of Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), said in Lagos in July 2018. The Lagos Chamber of Commerce and Industry (LCCI) had, in late May 2018, backed the trade deal, arguing that if smaller African countries were not

afraid of it, Nigeria with 200 million people and humongous $430 billion GDP, had no business shying away from inking it. “I don’t see anything to be afraid of,” Babatunde Paul Ruwase, president of LCCI, said at a stakeholders’ consultative forum on AfCFTA in Lagos that month. “If smaller countries are not afraid of it, we should have no fear to be there,” he added. The Nigerian government says it will ratify the

agreement but requires time to ascertain the implications of the treaty on the economy. Nigeria has the continent’s largest gross domestic product (around $420 billion) and population (200 million). The AfCFTA treaty was signed by African Union (AU) countries on the 21st of March 2018 in an AU summit in Kigali, Rwanda. However, the signing of the agreement still needed to be ratified by the parliaments of at least 22 member states of the AU to come into force. The number became complete in April when the Gambia joined the fray. Nigeria and many countries in North Africa are still consulting and are being left out of the party. A four-page analysis by BusinessDay in 2018 had argued that whether Nigeria signs the AfCFTA or not, African products will find their way into the country either by hook or by crook, being the largest market on the continent. Smuggling is already a gargantuan challenge for Nigeria and refusal to sign AfCFTA will only more than quadruple it.

Broken infrastructure, ports hurting manufacturers — MAN …as Customs denies causing Apapa congestion JOSEPH MAURICE OGU

he Manufacturers Association of Nigeria (MAN) says members are facing a lot of hassles while trying to get their consignments in and out of Lagos ports. At t h e a s s o c i at i o n ’s CEO’s Business Luncheon entitled ‘Lagos Ports Congestion: An End in Sight? Analysing the Economic Cost to Industries in Ogun State and Exploring Viable Options’, held in Sango-Otta, Ogun State, manufacturers called for rehabilitation of broken infrastructure across the country to steer industrial growth. Speaking on behalf of the association, Seleem Ad-

egunwa, chairman, MAN, Ogun State chapter, said manufacturers in Nigeria face various challenges which make doing business difficult. “The success of any manufacturing outfit is contingent upon various factors,” Adegunwa said. According to him, some of such factors include good infrastructure that will ease the movement of raw materials and finished products; readily available and affordable power supply, and an enabling regulatory environment. Adegunwa also pointed out that one of the greatest challenges facing manufacturers is the multiplicity of taxes paid and unnecessary demurrage incurred as a www.businessday.ng

result of delays at ports, due to congestions in accessing Apapa. He said these delays and demurrages are caused by the time wasted in accessing Lagos ports. Apart from traffic gridlocks, another factor is the actual time taken to clear raw materials and machineries. Manufacturers say this has deliberately been tripled, thereby revving up production costs. There is also the needless bureaucratic processes that cause bottleneck for industrialists in getting their goods in or out of Apapa. “Of particular concern and importance to us (MAN) are the challenges we face in moving our raw materials and goods to and

from the ports,” Adegunwa said. “The effect is that the production cost of members has increased tremendously,” he said. Adegunwa pointed out that if the trend is not checked by relevant government agencies, it could result in collapse of more factories and businesses, noting that some firms have already shutdown their operations and relocated to neighbouring countries. Responding, the Nigerian Customs Service (NCS) said the service is not part of the congestion at the Apapa and Tin Can ports. Olutade Francis Adetoye, Custom Zone ‘A’ Controller, said what is apparently be-

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ing experienced in Apapa and other parts of Lagos is “road congestion and not port congestion.” He said it is not within the purview of the service to control road traffic as such responsibility is meant for other government agencies, both at the state and federal levels. He said the service only works inside the Wharf and always ensures it is not congested. Speaking with BusinessDay exclusively, Adetoye denied the involvement of Customs in setting up road block along Apapa axis in order to extort money from truck drivers. Adetoye explained that what “we probably see on the roads are special task @Businessdayng

forces who can go anywhere and who act upon receiving intelligence reports concerning any container,” adding that, “even among the taskforces there are groups who monitor the activities of the taskforces.” It is a long chain of checks and balances, he said. Explaining further, Adetoye admitted that it is possible for a Customs officer to connive with a clearing agent to compromise the content of a container. In such a case, if the service receives a tip-off, it may stop such container on the road to crosscheck the content. He added that such operation should not be tagged as setting up of road blocks and extorting money from truck drivers.

Monday 03 June 2019

BUSINESS DAY

real sector watch

How FG’s ‘reverse auction’ renders EEG scheme redundant ODINAKA ANUDU

he federal government has introduced the reverse auction for the Export Expansion Grant (EEG) scheme as a way of paying exporters owed between 2006 and 2016. Reverse auction means that creditor exporters will bid for promissory notes by offering discounts to the government. The simple explanation of this is that Frigo Glass that is owed N185.988 million, according to one of the documents seen by BusinessDay, will have to bid and reduce this amount by as lower as possible to have a chance of being paid at all. The lower this company is willing to go, the more chances it has. Companies that bid much lower will have to be paid before others that are unwilling to go much lower. Experts see this as trivialising an exercise that is expected to boost non-oil exports amid declining foreign exchange earnings. “The implication of this is that un-genuine exporters can go any lower just to get anything,” an expert, who does not want her name n print, said. The reverse auction is being managed by the Debt Management Office. “The discounts offered will be the basis for alloca-

tion,” the Debt Management Office (DMO) said at a presentation recently. This means that no exporting company is sure of how much it will get when the payment begins. “So, the question is, will the government also pay me an interest on what they owed me all these years?” asked an exporter. The EEG was originally established in 1986 to help Nigerian exporters to become competitive at the global market. It is a practice in many developing and developed countries such as China, India and Australia to provide concessions or cash rebates/grants to companies

penetrating new markets or consolidating already established markets to enable them rival competitors In Nigeria, companies that exported different kinds of products or commodities between 2006 and 2016 were owed billions of naira in claims as the federal government did not meet the obligation of settling them as promised The government is using promissory notes for the settlement of qualified exporters, rather than the negotiable duty credit certificates used before 2015. A document seen by BusinessDay shows that the National Assembly committees on promissory notes have ap-

proved notes of 269 companies worth N193.042 billion. BusinessDay earlier reported that some of the companies approved were A&P Foods, African Glass Limited, African Textile Manufacturers Limited, Crown Flour Mills, Jebba Paper Mills, Deli Foods, Peugeot Automobiles, Procter & Gamble, Ajaokuta Steel Company, Olam Nigeria Limited and GZ Industries, among many others. However, the list of approved firms contains companies that have questionable export records. For instance, Ajaokuta Steel Company that has not produced a single sheet since its establishment in 1971, despite

L-R: Sheriff Balogun, deputy president, Nigerian-American Chamber of Commerce (NACC); Oluwatoyin Akomolafe, national president, NACC; Marie Macfoy, Globacom’s state manager, SME, Ikeja; Brent Omdahl, commercial counsellor, U.S. Mission to Nigeria; Joyce Akpata, directorgeneral, NACC at African Food and Products Exhibition & Conference organised by NACC on 24th and 25th May, 2019 in Lagos.

gulping over $8 billion, had N118.006 million approved as its share for the EEG. Experts wonder what Ajaokuta that has little local relevance to the steel sector would have exported between 2006 and 2016 when the public officers in charge of the complex said it was dead. “One of the major challenges why Ajaokuta Steel has not commenced full production has been the problem of infrastructure, like the railway for transporting raw materials to the plant,” Musa Mohammed Sada, former minister of Mines and Steel Development, had said on December 24, 2014. In 2016, Kayode Fayemi, then minister for Solid Minerals Development, said while defending his ministry’s budget in February 2016 that the Federal Government would need to clear all legal hurdles surrounding the Ajaokuta Steel Company Limited for it to begin to function. Yet, money was allocated to this moribund complex as an exporter. Money was also approved for Peugeot Automobile, which specialises in car assembly. There was also an approval for Jebba Paper Mill, which has been struggling to produce papers for the country since 2009 when it came on board. “It will be interesting to know what all the companies exported and to where,” an exporter, whose company

was approved, said. “You can also see that some textile companies are on the list. It will be interesting to know whether they exported textiles or cotton within the period,” the exporter said. Amid the outcry that some of the companies are not genuine exporters, and the fact that 38 firms are being held to ransom by legislators, the federal government is also saying that it cannot pay what is due to exporters using the reverse auction as a front, say experts. Nigeria’s non-oil revenue to GDP has remained four percent since 2014 owing to lip service paid to issues around export and business environment in the country. Its total non-oil export earnings from more than 25 commodities in 2018 was $3.3 billion (N1.19 trillion), according to the National Bureau of Statistics (NBS), but Bangladesh, once among the poorest countries on earth, earned almost 10 times as much ($33bn) from exporting one ready-to-wear garments. “The key issue with Nigerian export is competitiveness. Unless we have an environment that positions the economy for competitiveness, we cannot make any headway,” Muda Yusuf, director-general of the Lagos Chamber of Commerce and Industry (LCCI), said at a book launch in Lagos recently.

you check the seal and sometimes their contacts to get in touch with them. When you make use of those measures, you will definitely get a good engine oil.” Dolapo Motunrayo Mariam, head of Chemical Technology Unit, Kwara State, who presented a paper on ‘Certification of Lubricants’, explained that certifications are carried out when products conform with minimum requirements of NIS MANCAP for locally manufactured products and SONCAP for imported products. Standards, according to her, are based on consolidated results of science, technique and experience, saying implementation of standards

ensures effective certification of lubricants. Mariam said the process usually starts from raw materials, process check, conformity to relevant NIS, and adequate storage among others. “High value realisation and better quality of production boost the economy of the country.” Olufadi Adamu Bayo, who presented the second paper on ‘Penalties for Manufacturers, Circulating and Sales of substandard Products’ advised manufacturers not to be consumers’ enemies, adding that henceforth any manufacturer found guilty of producing substandard products would be dealt with accordingly.

SON urges lubricant makers to comply with NIS standards SIKIRAT SHEHU, Ilorin

he Standards Organisation of Nigeria (SON) wants producers of lubricants to adhere strictly with standards and make quality products that conform with the Nigeria Industrial Standard (NIS) . Esther Okon, Kwara State director of SON, stated this during a certification session by SON in collaboration with Virtualdox Nigeria Limited in Ilorin. The standards body seized the opportunity to sensitise the general public, consumers and other stakeholders on how to identify good and substandard petroleum products.

Okon, who tasked oil manufacturers to improve on their products and avoid compromising quality, equally warned motorists to desist from buying substandard lubricants and ensure they use oil only certified by SON. “The standard products are certified through a coordinated operation that involves planning and implementation of factory /port inspections, sampling and laboratory testing /analysis and reports on local and imported products,” Okon said. “This is complimented on market survey, wherehouses and other market sources to fish out the substandard products for compliance www.businessday.ng

purposes. “The certification of the requirements offers protection to consumers, promotes competitiveness and reduces the level of consumers/ manufacturers’ complaints. Therefore, SON stands for zero tolerance to substandard products from manufacturers right now,” she added. In his remark, Osita Obaloma, director-general of SON, represented by Gombo Dimka, FCT coordinator, noted that substandard products are risks to the consumers, industry, and the economy. According to him, the seminar was aimed at improving knowledge and

communication for sustainable actions to reduce the level of substandard engine oil in the markets. “Because of the availabilty of base oil, you find out that a lot of people are thinking of quick ways to make money and for that, they go into all shady deals, producing substandard engine oil. “The only way we can tackle the problem is first, if the public are aware and are ready to spend their money to get good oil, then they should look for the characteristics of quality oil which has to do with information on the label; look at the brands. Most manufacturers today ensure that their engine oils have seals and so, you ensure that

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Monday 03 June 2019

BUSINESS DAY

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Monday 03 June 2019

BUSINESS DAY

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Monday 03 June 2019

BUSINESS DAY

insurance today

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Insurers beat analyst’s projection in 2018, as premium growth peaks at 10% Stories by Modestus Anaesoronye

nsurance companies 2018 financial year results coming in reveals that the industry surpassed analysts’ growth projection of 7.5 percent in premium during the period. “The Nigerian insurance industry was projected by analysts to grow at an average annual rate of 7.5 percent in 2018, but available reports revealed a cumulative average growth rate (CAGR) peaking at 10 percent, confirms Eddie Efekoha, managing director/CEO, Consolidated Hallmark Insurance Plc. Efekoha who is also the

president of the Chartered Insurance Institute of Nigeria (CIIN) said factors responsible for the growth were listed to include a sterling performance by the life insurance segment. The nation’s life insurance market is growing at an average 35 percent annually over the last four years as result of compliance with group life by medium size oil firms, federal public sector, other corporates and income from annuities being embraced by a large number of retirees, in compliance with the Pension Reform Act 2004 as mended in 2014, analysts have said. “Recent realization by retirees of the huge benefits in annuity against programmed withdrawal as op-

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

tions for retirement benefits as provided in the Pension Reform Act is also adding

reasonably to life insurance premium, analysts said. Annuity is a series of fixed payments paid at regular intervals over the specified period of the annuity, purchased by a retiree from his pension emoluments. As provided in the Pension Reform Act, a retirement Savings Account (RSA) holder may upon retirement or attaining the age of 50 years (whichever is later), purchase an annuity from a life insurance company licensed by NAICOM with monthly or quarterly payments. Since the last four years, except for 2018 when government did not pay premium for full year, group life insurance for public sector workers from the office of the head of service has been

generating annually in the neighborhood of N6 billion and N7 billion, resulting to a significant contribution of the life business to total industry premium figure. Section 9 (3) of the Pension Reform Act stipulates that every employer, to which the Act applies, must maintain Life Insurance Policy in favour of the employee for a minimum of three times the annual total emolument of the employee. Under the policy, total annual emolument is defined as the basic salary, transport and housing allowances and shall not include bonuses, overtime, directors’ fees or other fluctuating emoluments. According to the guidelines for life insurance policy

for employees jointly issued by the National Insurance Commission (NAICOM) and National Pension Commission (PenCom), the employer is required to fully bear all costs in relation to procurement of this policy, and this shall be in addition to the contributions to be made by the employer to each employee’s Retirement Savings Account. The policy provides cover to the insured against death and the insurance cover is mandatory for all employees as long as they are in employment. This means that the policy provides for the payment of the sum assured in the event of the death of a member of the scheme from any cause, natural and accidental.

expect to draw from the wisdom, knowhow and technical capabilities that come with our longevity. “Having had a longstanding commitment to making positive impact in the communities and countries where we operate, we know that the Old Mutual brand is trusted for its strong track record of championing a positive and rewarding future, and we intend to deepen and demonstrate these values for more decades to come. “Today, our operations in Nigeria have been strengthened by strategic partnerships positioning us to serve the market with tailored and innovative insurance solu-

tions. Our strategic partnership with Ecobank on a Bancassurance gives millions of Nigerians access to our life and general products from over 130 Ecobank branches across the country. We have also partnered with Roche Limited on our Critical Illness Insurance plan, specifically developed to protect Nigerians from the high cost of some illnesses as well as, with Price Pointe the large wholesale store in Nigeria and the list continues to grow. We continue to show our unwavering commitment towards championing financial inclusion, education as well as responsible investment and risk management in Nigeria”, Alford added.

Old Mutual celebrates 174 years anniversary …reiterates commitment to Nigerian insurance market

oremost pan-African Insurer and leading global financial services group, Old Mutual Limited, in May 2019 marked its 174th years anniversary of providing insurance, savings, investment, lending and banking solutions to over 11.3 million customers in 13 African countries and China. In commemoration of the anniversary, Nigerian subsidiaries, Old Mutual General Insurance Company Nigeria Limited and Old Mutual Nigeria Life Assurance Company, on Thursday, 23rd May 2019, hosted a Diversity Day ceremony themed, “Empowering Africa: The time is NOW to do

great things!”, at its Corporate Head Office in Victoria Island, Lagos. The ceremony was aimed at celebrating Old Mutual’s deep African roots and its commitment to championing financial inclusion, education and prosperity in Nigeria and on the continent. Old Mutual began operations in Cape Town in 1845 and now offers life protection, general insurance, savings, investments, lending and banking solutions to 11.3 million in 13 African countries and China. Old Mutual has been operating in Nigeria since March 2013, having acquired the majority stake in Oceanic Life Assurance Company.

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

In January 2014, Old Mutual also acquired a majority stake in Oceanic General Insurance Limited thereby

offering both life and general insurance solutions tailored to meet unique individual and corporate client’s needs. Since its entry into the Nigerian market, Old Mutual has leveraged its proud heritage and expertise, launching a wide range of insurance solutions tailored to meet unique needs of Nigerian’s insurable population and corporate clients’. Speaking on the anniversary celebration, Keith Alford, managing director, Old Mutual Life Assurance Company Nigeria Limited, said “The significance of this milestone anniversary is not lost on us. We understand that our customers and indeed all our stakeholders

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Monday 03 June 2019

BUSINESS DAY

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Effective pricing spur insurers to growth as underwriting profit surges 394.41% BALA AUGIE

nsurers in Africa’s largest economy have recorded efficient underwriting capacity as premium income continues to grow amid high claims environment, thanks to the contribution of regulatory authority and effective pricing. Insurers need strong underwriting profit that is synonymous with manufacturers’ gross profit to give impetus to bottom line (profit). Fifteen largest insurance companies saw combined underwriting profit surge by 394.41 percent to N36.50 billion from N7.38 billion a year ago, according to a recent report by Markets and Intelligence. The growth could be as a result of effective pricing and appropriate pricing. This means they are selecting their risk appropriately. Average industry combined ratio (CR) increased to 91.12 percent in the period under review as against 83.12 percent as at December 2017; cumulative real underwriting real results stood at N19.17 billion as at December 2018. The real underwriting result is arrived at by deducting 1 from the combined ratio and multiplying by net premium income. Aiico Insurance Plc recorded an underwriting profit

of N3.21 billion in December 2018, from a loss position the previous year. Leadway Assurance, the largest insurer by asset, premium, and equity posted underwriting profit of N2.96 billion in the period under review from N10.40 billion the previous year. FirstBank Insurance’s underwriting profit surged by 168.86 percent to N7.34 billion in the period under re-

view from N2.73 billion as at December 2017. AXA Mansard Insurance’s underwriting profit surged by 129.77 percent to N5.93 billion in the period under review as against N2.58 billion as at December 2017. Nigerian largest insurers have magnified revenue in a country where over 50 percent of its people wallow in abject poverty as penetration remains abysmally poor de-

Sigma Pensions promises best services to retirees Modestus Anaesoronye

ension Fund Administrator, Sigma Pensions Limited has reaffirmed its commitment to continue to provide best of pension services to its retires and contributors. Assuring the retirees of continuous improvement in delivery at a one-day retiree/ prospective retiree forum held in Owerri, the Imo state capital, Ophelia Alex-Iwuanyanwu, head, Relationship Management, Business Development Division –East, Sigma Pension noted that the welfare of retirees and prospective retirees was its biggest priority. According to her, over the years, the PFA has strived to improve its service delivery and have continually initiated fresh ideas that give refreshing experience to clients. Alex-Iwuanyanwu said:

“Our promise to you has always been that we will work for you, providing real and consistent returns on your pension contributions, adding the PFA has no intention of taking unnecessary risk, neither do we have intentions of relinquishing this promise to you”. She insisted and assured that the certainty in their ability to pay retirees a monthly pension for the rest of their time on earth is a driving force that cannot be overemphasized. She further said: “Today we have staff of the Pension Commission here to tell us some of the things the commission is doing to ensure that things are easier for you retirees, for you as contributors and for us as administrators to ensure the contributory pension scheme (CPS) is a continuous success”. In his contribution, Ngozi Ebili, a retiree from the dewww.businessday.ng

funct Power Holding Company of Nigeria (PHCN) observed that before the sensitization programme some of their members had gone to other pension schemes, even though they were not getting better services there than Sigma, but praised the organizers of the workshop for bringing the event closer to them in Owerri, even though the event was meant for the South-East zone. She said “we wish the seminar will be regular so that we will be on ‘the know’ of what is happening to our contributions. I am proud of Sigma Pensions because we receive our alerts before the end of every month. We want them to continue”. For another retiree from the Central Bank of Nigeria (CBN), Peter Osuji said: “It is a very good development to have brought the seminar to Owerri. Its benefits are overwhelming.

spite regulators effort to continually jerk up capital base with a view to encouraging firms to take on more risk. For instance 16 insurance companies that have released 2018 audited financial statement saw combined premium written increase by 15.79 percent to N345.16 billion, from N298.0 billion as at December 2017. A breakdown of the figure shows life insurance spiked by 32.07 percent to N139.48 billion December 2018 from N105.60 billion a year ago while non-life insurance was up 48.41 percent to N161.24 billion from N139.48 billion a year ago. The boost from life segment is propelled by regulator intervention in the sector, according to Owolabi Salami, Executive Director of Allianze Insurance Plc. “NAICOM had in January 2018 mandated life insurers to comply with the Group life rate at six percent per mile, which was 300 percent higher than market rate. This means for every N1000 of the sum insured the person will be charged N6,” “Also, infrastructure spends by the federal government created a lot of business opportunities for operators in the industry. For instance, the second Niger Bridge and rail way projects pave the way for premium income. We experienced an uptick in income from retail business with regards motor vehicle,” said

Owolabi. Most companies where struggling to survive before the new guide line because the rates they charged are not commensurate with the liabilities there in. A breakdown of non-life insurance figures shows these firms raked in N114.40 billion from Fire Business, representing 66.06 percent increase from N8.67billion recorded the previous year. Motor segment surged by 154.96 percent to N15.40 billion from N6.04 billion recorded the previous year. Combined oil and gas business surged by 604.89 percent to N17.30 billion in the period under review as against N2.86 billion the previous year. Despite the improvement in revenue, Nigeria’s insurance sector is still one of the most underdeveloped compared to peers in most African countries. Nigeria, with a population of 180 million people, has a penetration rate of 0.3 percent. That compares with South Africa (14.7 percent), Kenya (2.8 percent), Angola (0.8%) and Egypt (0.6%). Similarly, the sector’s insurance density (a measure of industry gross premium per capita) is still one of the lowest when compared to peers – South Africa ($762.5), Egypt ($22.8), Kenya ($40.5) Angola ($30.5) and Nigeria ($6.2).

Because firms do not have the financial strength to invest in fixed income securities like treasury bills or debt instrument or real estate to underpin revenue, they have continued to record slim margins. On like their peers in the banking industry that have been taking advantage of Central bank’s monetary policy to deliver a higher returns to shareholders, insurers’ investment returns have been weak. In the Europe, United States, and Asia, insurers are so liquid that they own banks; they also own skyscraper building they earn rent from. “Proper education and enlightenment of people about insurance will help deepen penetration, and there has to be more transparency on the part of companies,” said an industry expert who doesn’t want his name mentioned,” said Moronfola Monsuru - Actuarial Analyst - Wapic Insurance Plc. Monsuru said that insurers should do more of retail business because it is more profitable and reduces risk. “You tend to retain more when you do retail because you cede less. The regulator has announced the recapitalization of the insurance and reinsurance companies so that they can take on more risk and become competitive on a global arena.

AIICO marks Children‘s Day with Hearts of Gold Children’s Hospice Modestus Anaesoronye

s Nigeria join the rest of the world to mark the 2019 Children’s Day, AIICO Insurance Plc, took the opportunity to live out its passion for enabling people live better lives. This year, the insurer joined hands with Hearts of Gold Children’s Hospice Surulere and spent the day with the children at the hospice. Hearts of God Children’s Hospice, is a home for abandoned, orphaned and sick children suffering from a vast range of congenital abnormalities and children with terminal or life threatening illness. Babatunde Fajemirokun, executive director/COO said “AIICO has a culture of giving back to society in ways that impact a significant uplift in the lives of people. Our Corporate Social Responsibility program is centered on: pro-

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moting literacy and STEM education, skill acquisition and aiding in the delivery of quality, affordable healthcare for all. This initiative had two aims, the first was the intervention in providing better health care for the children at the hospice. The second was to igniting a spirit of compassion in younger generation who will be our future leaders. A number of our staffs’ children were part of the visit to the hospice”. During the visit to the home, @Businessdayng

AIICO donated items such as; beds, mattresses, generator, microwave, foodstuff and toiletries. AIICO Insurance Plc is a leading composite insurer in Nigeria and commenced operations in 1963. AIICO provides life insurance, health insurance, general insurance, wealth management and pension management services as a means to create and protect wealth for individuals, families and corporate customers.

Monday 03 June 2019

BUSINESS DAY

BUSINESSINTELLIGENCE

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The Nigerian code of corporate governance, 2018 Principle 5 – Executive Directors ‘Executive Directors support the Managing Director/Chief Executive Officer in the operations and management of the Company’.-Principle 5 of the Nigerian Code of Corporate Governance 2018 BISI ADEYEMI.

xecutive Directors (EDs) are employees holding senior managerial positions in the Company. They have a dual relationship with the Company as Directors (accountable to shareholders) and as employees – members of the management team, answerable to the Board. Typically, they have responsibility for specific aspects of the business – Operations, Risk, Credit, HR & Admin, IT, etc. and report to the Board in respect of these specific business areas. They are usually technically competent in the area of oversight and responsible for the day-to-day running of the Company. As employees of the Company, they are expected to devote their whole time and attention to the business of the Company. Many Executive Directors are appointed to the Board via promotion and lateral hiring. As with the Managing Director and NonExecutive Directors (other than the Independent Non-Executive Directors), the Code does not specify term limits. This is a departure from the provisions of some industry specific Codes which set fixed term limits for Directors. The NCCG 2018 expects that each Board will decide on tenure, taking into cognizance the peculiarities of respective companies. Given their day-to-day responsibilities, Executive Directors have access to much more information about the Company than their Non-Executive counterparts. As such, they have a responsibility to ensure that they correct the information asymmetry as much as possible and provide accurate and timely information to the Board to facilitate robust decision making. The Code requires EDs to have a broad understanding of the Company’s business in addition to possessing such other qualifications as may be needed for their specific assignments or responsibilities. It is imperative that the responsibilities and authority of EDs are clearly set out in a contract of employment. A Delegation of Authority Document by which the Board delegates some of its authority to Management is useful. Collectively, EDs comprise the Management team led by the

Managing Director/Chief Executive Officer. The team is charged with the responsibility of implementing strategic initiatives and the prudent management of the Company’s resources. They should carefully balance their role ‘Managers’ with their fiduciary responsibilities as Directors. Some Executive Directors struggle to strike a balance between their management of the company, their fiduciary duties and the independent state of mind required of a Director. As a fiduciary, a Director is expected to consider the best interest of the Company and not what is “right for the Management of the Company”. Sometimes the pursuit of performance targets which usually translate to personal gain by way of bonuses, can bring the ED’s interest in conflict with that of the enterprise. As with Non-Executive Directors, Executive Directors are expected to contribute to the robustness of deliberations on the Board to engender optimal decision making. The full complement of the Board’s diversity reckons with the skills set and experience Executive Directors bring on board. It will thus be a disservice to the Board and the enterprise if the only view the Board gets to hear from the Management side is the CEO’s. To ensure that the Board functions as a cohesive team, the Management team must be mindful of not creating a “we” versus “them” dispensation. Whilst the Management team should present a unified position to the Board, to the extent that the ultimate duty of loyalty is owed to the Company, all Directors irrespective of which side of the divide they belong, are expected to act in the best interest of the enterprise. It is instructive that the Companies and Allied Matters Act does not distinguish between executive and non-executive Directors in spelling out the duties and responsibilities of Directors. “It may be “unhelpful and even misleading to classify company directors as “executive” and “non-executive” for purposes of ascertaining their duties to the company or when any specific or affirmative action is required of them” – Re Elgindata Ltd. The Management team should avoid springing up surprises on the Board by providing up-todate and relevant information.

This gives the Board a fair opportunity to offer insight and value to the Management team. To take maximum advantage of the Board’s diversity of skills and experience, Management should galvanize the Board to thoughtful action rather than presenting “cast-in-iron” proposals. Executive Directors should be receptive to feedback from the Board and not defensive. As image and brand bearers, Executive Directors should maintain impeccable reputation and the right attitude when dealing with regulators, shareholders, the media and other stakeholders. Executive Directors can be appointed as Non-Executive Directors on other Boards to the extent

that such appointment is not detrimental to his/her responsibilities as an ED and is in accordance with a Board-approved policy. The Code requires EDs to declare any conflict of interest on appointment and annually thereafter. If they become aware of any potential conflict of interest at any other point, they should disclose this to the Board at the first possible opportunity. Actions following disclosure shall be subject to the Company’s Conflict of Interest Policy. EDs are also restricted from being members of Board Committees responsible for remuneration, audit, or nomination and governance. To perform optimally, Executive Directors need to be prop-

erly prepared to step up to the Board. Relevant leadership and director development training programmes are imperative. An independent mindset – as aspirational as it sounds – is required of all Directors. The confidence to speak up and candidly, ability to contribute to healthy debate and conversational intelligence are desirable traits in an Executive Director. Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to badeyemi@dcsl.com.ng. For more articles, kindly download the DCSL Knowledge Hub via this link - https://www.dcsl.com.ng/index/ pages/page/dkhub

Audit Committee Seminar “Improving the Performance of the Audit Committee” © Audit Committee Members, Directors, Internal & External Auditors, Accountants, Compliance and Regulatory Officers, Company Secretaries & Risk Managers Date: June 27th & 28th, 2019 Venue: The George Hotel, Ikoyi, Lagos Modules: • Responsibilities of the Board & Statutory Audit Committees – An Overview of the Nigerian Code of Corporate Governance; • The Role of the Audit Committee in Averting Corporate Governance Fail ures – Case Studies; • The Audit Committee and the Whistle Blower; • Managing Cyber Risks – A New Era of Security; • Corporate Financial Reporting – Key IFRS Provisions; • Evaluating the Effectiveness of the Internal Audit Function; and • Maintaining an Effective Control Environment – The Independence of the Internal Control Function.

For enquiries and registration: Nike Taiwo: ntaiwo@dcsl.com.ng or 08090381864 |Mobile:08037699347 Temi Tuoyo: ttuoyo@dcsl.com.ng or 08090381864 |Mobile: 08081579496

Monday 03 June 2019

BUSINESS DAY

Start-Up Digest

In association with

Learning from American entrepreneurship ecosystem ODINAKA ANUDU, Washington DC

he American entrepreneurship ecosystem provides a case study for developing countries like Nigeria struggling to battle high youth unemployment and economic slump. It clearly points way for governments across the world scavenging for policies to stimulate start-ups and small businesses. For starters, the American economy is driven by small businesses which constitute 99 percent of enterprises and employ 55 percent of working Americans, according to John Dearie, founder and president of Center for American Entrepreneurship (CAE). The economy is full of entrepreneurs working to disrupt the status quo. It has produced world’s biggest entrepreneurs such as Facebook’s Mark Zuckerberg, Bill Gates of the Microsoft fame and Jeff Bezos of Amazon, among many others. One of the biggest steps taken by the United States is to prioritise new businesses without neglecting existing ones. A study done by the United States Census Bureau on the jobs created between 1980 and 2005 showed that 100 percent of new jobs within this period were created by businesses that were less than five years. Older existing businesses, in aggregate, shed about one million jobs annually on the average. Another study by Ewing Marion Foundation revealed that in the 22 of the 29 years between 1977 and 2005, 100 percent of the net new jobs were created by businesses that were less than one year. Start-ups contributed an average of three million net new jobs annually. Armed with the data, American government pays special attention to attracting new businesses—local and foreign. “Innovation mostly comes from small businesses,” Dearie told journalists in Washington DC during the Foreign Press Centers international reporting tour, which was part of the Global Entrepreneurship Summit. “New businesses and existing businesses are different,” he further explained. “New businesses are exceptionally fragile and can be affected by issues like accept to capital and tax compliance. New businesses are sources of innovation. Old

businesses are not like the guy who started Uber,” he added. However, the American society encourages innovation even among old businesses by providing funding and required collaborations. The government of the United States makes processes so transparent that businesses gain a lot by being structurally formal. Dane Stangler, president and chief policy officer at StartUp Genome, which supports forward-looking regions to catalyse their start-up ecosystems, explained that what countries like Nigeria needed to do was to remove barriers preventing businesses from becoming formal structures. “The question is, how do you remove the barrier and allow informal entrepreneurs to become formal,” he asked. “A lot of entrepreneurs do not want to become formal because they do not want to pay taxes,” he said. Apart from the need to create new jobs, the American entrepreneurship ecosystem is shifting from New York and San Francisco to Chicago. Like Lagos in Nigeria, estimates show that 85 percent of investments in the U.S go to New York. Similarly, the renowned Silicon Valley of San Francisco

John Dearie, founder and president of Center for American Entrepreneurship, during an entrepreneurship session with international journalists at National Press Building, Foreign Press Center, Washington DC, United States, last Tuesday

Betsy Ziegler, CEO, 1871

L-R: Michael D. Alter, clinical professor of entrepreneurship, Univeristy of Chicago Booth School of Business; Eric Belcher, entrepreneur and former CEO of InnerWorkings; Rich Gallun, co-founder of B-Swift, and Rob Chesney, venture partner at Chicago Ventures, at an interactive session during Foreign Press Centers International Reporting Tour in Chicago last Friday

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attracts tech start-ups, venture capitalists, angel investors and institutional investors. Consequently, New York and San Francisco are expensive for start-ups and small businesses. But entrepreneurship is now moving Midwest to Chicago today, whose economy is above $600 billion. Currently, investors are flocking to Chicago with foreign direct investment in the city estimated at $100 billion. There are 1,800 foreign –based companies there and no one industry makes up more than 14 percent of the economy. The city is the home of big firms such as method, ADM, Grubhub and Suntory, among others. Flights from all over the world touch down at airports in Chicago. The question for Nigeria is, can there by an innovation hub away from the ever-busy, overpopulated Lagos? The innovation in Chicago is being strongly aided by schools in the city. The Chicago Booth Business School’s Polsky Exchange is the entrepreneurship hub of the entire University of Chicago, said Michael Alter, clinical professor of entrepreneurship. It has raised $500 million in venture capital and grown 100 companies, including GrubHub. Firms worth $10 billion were made in the entrepreneurship hub. In fact, universities in the United States are platforms through which entrepreneurs are hatched. They bridge the town-gown gap by making vital skills available for industries. A lot of research comes from the universities, making innovation easier while reducing costs that should have been borne by entrepreneurs. This is completely different in many countries, especially Nigeria, where universities are centres of theoritical education. Research is limited owing to poor state funding. The immediate consequence of this is that skills are in high shortage, with several multinationals complaining of not finding the right talents months after job placements. The World Business Chicago, a privatepublic, non-profit partnership, is now in the forefront of supporting businesses

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and promoting Chicago as a global city, said Dennis Vicchiarelli, executive vice president of business development. With this alone, employment has gone up by 15 percent in the Midwestern city since 2011 and it has been ranked as the number one in corporate expansion and relocation by Site Selection magazine. “Since 2011, there has been 142 percent increase in corporate expansions,” Vicchiarelli said. An initiative of World Business Chicago called ChicagoNext has birthed a number of firms. Basically, ChicagoNext is targeted at driving inclusive growth for all in Chicago by developing small and medium business support. More so, in 2012, a firm known as 1871 was founded. It was created to support Chicago’s digital start-up community. Today, it is the home of nearly 500 early-stage, high-growth digital start-ups. Those with ideas come to 1871 and discuss them with investors who are available in a room. These investors—mostly venture capitalists and angel investors—provide funds for setting up such businesses. It is a typical co-working environment where people share ideas and get funded. “We bring people with different ideas and equip and assist them to grow,” Betsy Ziegler, CEO of 1871, said. “We have 450 companies being built here. We do not have money, but we introduce businesses to those who have money,” she further explained. She has 130 corporate partners and seven universities. Interestingly, 36 percent of founders in 1871 are female. “Businesses that come here are digital based,” she said. This is clearly what is lacking in many countries. Nigeria has some interesting innovation hubs, but they hardly fund or test marketable ideas. Again, they are not yet developed hubs where investors come daily looking for who to invest in. Entrepreneurs believe that Chicago will become world’s biggest entrepreneurship hub in the next 100 years.

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Monday 03 June 2019

BUSINESS DAY

Start-Up Digest

Meet Adefemi Longe, entrepreneur providing specialist legal services for SMEs Josephine Okojie

defemi Longe is a cofounder of Longe & Akunebu LP, a start-up law firm helping small and medium enterprises to resolve their legal issues. Adefemi is just that legal advisor that businesses and entrepreneurs need, to effectively deal with challenges that present themselves along their journey. “We are a law firm with a focus on commercial, corporate and civil dispute law as well as property consultants. We support both established and new businesses,” the graduate of Demontfort University, United Kingdom, says. The young entrepreneur was inspired to establish his law firm by the exemplary life of late Obafemi Awolowo, who was also a lawyer and an ideologist that impacted lives in the society. Adefemi says that he wants to impact lives by helping to solve legal problems faced by businesses. He established Long &Akunebu LP with Uzochukwu Akunebu, his co-founder, after resigning from his job at a downstream oil and gas firm. He says his initial start-up capital was very small and was spent on getting an office space and buying stationaries for the business.

Adefemi Longe

Since starting, Adefemi says the business has grown and is still growing, as he continues to get referrals from former clients.

“Since we started in 2014, the business has been expanding. Now, there is a need for us to hire a junior lawyer, which we never

Battling high start-up failure rate with Matthew Moog model ODINAKA ANUDU, Chicago

athew Moog is the chief executive of PowerReviews, a leading provider of customer review technology to more than 1,000 brands and retailers in the United States of America. An active angel investor, Moog is a co-founder of FireStarter Fund, an early stage investment fund focused on helping technology companies grow. Since 2012 when this firm came on board, it has invested in 12 firms. He is also the founder of Built In Chicago, a network of online communities for tech companies and start-ups in the Midwestern United States’ city. Moog is aware that start-up failure rate is on the rise across the world. A recent study by Statistic Brain showed that the failure rate of all U.S. companies after five years was over 50 percent, and over 70 percent after 10 years. In Nigeria and many African countries, two out of three start-ups die within the first three years of starting. In the light of such high failure rate, Moog suggested a model that would work for entrepreneurs across board. For him, entrepreneurs must not be afraid of being small until

they were confident they could be big. He said start-ups often made the mistake of concentrating on raising money and spending it, rather than getting customers and retaining them. “Businesses just start before raising money,” he said, during the Foreign Press Centers Global Reporting Tour in the U.S. on Thursday. He said entrepreneurs must master their revenue and cost structures He frowned at entrepreneurs that set up companies with the intention of selling them after few

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years, stressing that it was a bad business model. “Build a business to make money, not to sell it,” he said. “I have seen where people spent five years building businesses and sold them without making a dime,” he added. He explained that entrepreneurs needed not scale when they had no product that would provide solutions. “The very first step that we try to tell start-ups is that they should not scale until they have the product the market wants,” he said. “Develop the most basic product first. This is what is called ‘minimum viable product’. Develop such products and see if you are solving a problem,” he suggested. He said every industry needed technology to succeed in the 21st century. He, however, cautioned that most celebrated businesses across the world had been in existence for about 10 years before being in the public eye. For him, investors all over the world were looking for start-ups with integrity and strong ethics, including those with good, marketable ideas. “I want to see someone who is passionate and has done their homework,” he said.

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thought would happen soon. This is because we were able to create a niche for ourselves on corporate matters,” he explains. “Also, we have ensured customers are satisfied with our services by not taking them for granted. This has made us get referrals for everyone of our past clients,” Adefemi adds. Speaking on how the chamber has survived in the last five years, the young entrepreneur says that the business has focused on the areas it has strength while creating a niche for itself on corporate matters. “We have done a thorough and professional job for our clients. Meeting our clients’ satisfaction has been a sustaining factor for us. If we are supposed to be at the court by 9am, we ensure we are there 30 minutes before time,” he says. “Currently, the business has five full -time employees and it is planning of employing a young lawyer,” Adefemi says. Answering questions on the potential in the Nigerian legal industry, Adefemi says that the industry is still developing. He says that in the 1960s Nigerian law graduates had to go overseas to attend law schools but the trend has changed as the country has six law schools across the country. He notes that graduates of law from other West African coun-

tries now attend the Nigerian Law School to become practising lawyers. Adefemi says that corruption is not only peculiar with the judicial system in the country but is in all strata of the society, adding that the legal industry in the country is progressing but at a very slow pace. Responding to questions on the challenges limiting his business, the young entrepreneur says that the long time frame in resolving cases remains the major challenge limiting his business. He states that the challenge leads to waste of resources and manpower as constant filing of cases and court proceedings incur costs. He identifies inadequate court room facilities as another major challenge facing his business. “The Nigerian court rooms are not well equipped,” he says. He urges the government at all levels to constantly upgrade the court room facilities with modern equipment to aid proceedings. Speaking on expansion plans for his business, he says he plans to have chambers across the six geo-political zones in the country. On his advice to other entrepreneurs, he says, “No guts, no glory. Every entrepreneur must have guts to survive. They must have the courage and determination, as this goes a very long way in having your own practice.”

LSETF, Mamamoni partner to empower 100 women startups

n line with its access to finance programme which provides funding for micro, small and medium enterprises (MSMEs) as well as capacity building to boost their businesses, the Lagos State Employment Trust Fund (LSETF) has signed a partnership agreement with Mamamoni Limited to empower poor rural and urban women with free vocational skills and mobile loans. After the Memorandum of Understanding (MoU), there was a courtesy visit to the Mamamoni’s newly opened innovation hub in Amuwo Odofin, Lagos, targeted at raising the skills of rural women. Under this partnership tagged the ‘Mamamoni Women Empowerment Project’, LSETF will provide N5 million to train and provide funding to 100 women to enable them become distributors of Mamamoni’s locally produced Levantar Liquid Dish Wash, a fast selling consumer good in the local market. The beneficiaries of the initiative will get funding of N50,000 each with a loan tenure of 12 months. To qualify for this loan, the applicant must have gone through the skills acquisition training and certification organised by Mamamoni Limited. Commenting, Teju Abisoye, acting executive secretary of the LSETF, said, “We are pleased to enter into this agreement with Mamamoni as it aligns with our man@Businessdayng

date for creating opportunities for micro enterprises to create wealth within the Lagos local economy. In targeting women, we connect to the well-researched philosophy that when you empower women, you empower the community. We are confident that with the track record of Mamamoni in executing similar interventions, this partnership will help create a new pipeline of successful Micro-Entrepreneurs who will contribute significantly to family and community building, whilst creating jobs for the young ones.” In her remarks, Nkem Okocha, founder, Mamaoni Limited, said; “I am very proud to be collaborating with the LSETF, renowned for their unbiased, open and accessible programmes. We are determined to lift more women from the poverty lines, engineer economic growth and societal development. This partnership with LSETF allows us the opportunity as a brand to fulfil this objective.” “This arrangement states that we provide necessary training and visibility for the women and their businesses as well as logistics support to all beneficiaries, while the LSETF will provide access to affordable funding through a loan programme for the start-ups. I am very excited at the prospect of this intervention and the opportunities it offers our women to grow themselves and groom others,” Okocha added.

Monday 03 June 2019

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

Beauty on a budget MONEY MATTERS

Nimi Akinkugbe

n our fast-paced, competitive and fickle world, do good-looking people have an edge? Does looking good give you an advantage? The world tends to reward beauty, whether it is in the workplace, business, at school or simply in our routine social interactions. Looking good has an impact on how others perceive and treat you. It may even help you to make friends, get that dream job, or the attention of someone you like. Most importantly, looking good makes you feel good about yourself, as it boosts your selfesteem and confidence. Have you ever thought about how much you spend on personal grooming and beauty products? There are the hair care products and salon visits, your creams, cosmetics and the service of skilled makeup artists, etc. Then there are the manicures and pedicures, and the well-deserved spa day to pamper yourself after all the hard work; it all adds up. Just keeping up your appearance can cost you. Here is the dilemma; you want to look nice for yourself and for others, yet you can’t afford to spend that much on your personal appearance. Beauty doesn’t always come cheap. Here are some tips to keep you looking lovely on a budget: It starts with SMART goals What are you trying to achieve? By setting goals, you have something exciting to work towards, and won’t be easily swayed. Achieving financial goals through saving and investing makes it possible for you to afford so many niceties of life. Create a budget There is no hard and fast rule as to how much one should spend on clothing, beauty products or hair care; you have to determine what your priorities are with the range of essential expenses that you face including rent, transport, education, health care etc. To make the most of your appearance, take a look at your lifestyle and what you really need; do you have speaking engagements, many social events that are important to attend? What sort of clothes do you require to look the part? Look at your income and living expenses, estimate your needs and build it into your budget setting a reasonable and realistic amount to looking good. Quality makeup You don’t have to buy the most expensive makeup to look great. There are some good quality brands out there; the key is to understand what suits you and to learn how to apply it. Look out for deals and discounts as an opportunity to stock up. Don’t buy too much though, as makeup is not at its best if left for several months or longer. If you do decide to spend a little more than usual on a product,

it should be for a fundamental one, like your foundation or a perfume that works well with your skin. Learn how to do your routine makeup Pay for a makeup class from an expert, so that you can learn the basics for your daily outings. Then you can invite a professional for the special events and occasions where you want that extra special look. Many ladies have been very successful in learning about how to apply make up through tutorials on YouTube. Find a range of quality beauty products that works for your skin and stick to it. Space out your salon and spa visits Yes, you would like a weekly visit to the hair salon or the spa and for your manicure and pedicure. Can you afford to go so often? Perhaps you can space it out a little. Select a salon that gives you quality; you might pay a little more but with visits spaced out, you will find you look just as good without spending so much overall. An excellent hairstyle or haircut and a good pedicure or manicure will last longer than mediocre, slapdash efforts. Your “beauty sleep” is important There are things that you can do to take care of yourself that are simple and free but have a massive impact on your health, well-being and both your internal and external beauty; sleep is one of them. Sleep allows our bodies to recharge, heal, repair and restore. Poor sleep habits have been linked to physical ailments as well as mental health issues such as depression and anxiety. Build enough sleep into your daily routine. The quality and length of sleep you receive every night can have a profound impact on your skin’s health. What goes into your body? Drinking at least 8 glasses of water a day helps rid the body and skin of toxins. Most people notice a significant improvement in their skin and general wellbeing after increasing their water intake. Any diet that is good for your health is good for your skin. The best skin diet includes fresh vegetables, fruits, and healthy fats. This combined with exercise is the icing on the cake. By increasing blood flow, exercise helps nourish

skin cells and keep them vital and healthy. Your wardrobe matters Of course, the clothes, shoes and bags make up the whole look. Arrange your clothes for convenience and easy access, properly hung and ready to wear. In groups or by colour, you can see at a glance what you have. Clear out every so often so that you are aware of what you need. Do you know what suits you? Have a stylist or a well-dressed and honest friend go through your closet with you; try things on to get a second opinion. She might even help you to combine pieces that you might have missed. It’s about quality not quantity. Buy the best quality of clothes and accessories that you can afford. Quality lasts longer, looks better, washes better, and ultimately will save you more money than if you buy lots of cheap clothes of inferior quality. Invest in a few classics. Wardrobe staples such as the proverbial little black dress, a navy-blue blazer, welltailored trousers and skirts, good quality white shirts, and a smashing pair of jeans are a must-have. You can then complement these with a few key pieces. Classic pieces don’t date easily and will keep you elegant. Treating your clothes with respect and care lengthens their life. Follow washing labels and use the best dry cleaner. Iron and fold or hang garments with good quality hangers, not the wires you get from returned drycleaning! Opt for mix-and-match separates. By using the clothes you already have in new and different combinations, you can give yourself many options without having to buy several new pieces. Accessories spruce up a look and are usually the first things people notice. Invest in a few statement pieces, like brooches, belts, scarves, timepieces or jewelry. If you are a hardcore bag lady on a tight budget, a classic statement designer handbag in a restrained colour and without logos plastered all over it, will get you much farther than a bright one. Invest in good quality shoes. Some serious back and muscle disorders have been linked to inappropriate, poor quality, or ill-fitting

‘

Be creative in looking for new and simple ways to look and feel good professionalism. Be creative in looking for new and simple ways to look and feel good

shoes. Don’t skimp on shoes that are bad for your feet, only to have to spend a fortune on a chiropractor in later years. Shopping off-season or in the sales will save you money. Visit your favourite stores just before the end of the sales and earmark some favorites; on the closing days many items are slashed and you can pick up some bargains. Shop with a list. If you shop on impulse and without a list you easily lose focus and end up buying things that you don’t need, that you may never wear. Be selective and you will enjoy your wardrobe. You can be frugal and fabulous There is a common misconception that you have to spend huge amounts of money to look good. Being beautiful and well-dressed doesn’t have to cost a fortune. If you invest some time in careful planning and treat your clothes and personal care as an investment, you can stretch available funds and look amazing. In the final analysis, money is only part of it. Looking good is more about how you feel about yourself, being fulfilled, and carrying yourself with confidence. Emotional trouble often shows up as skin trouble. Stress and other psychological factors can affect your skin. Surround yourself with positive people that encourage you. Smiling often and being happy does wonders for your looks. Your mood and demeanour when positive will reflect in your appearance much more than the most expensive designer wear or the most perfectly made up face. Being on a budget, planning and shopping economically doesn’t mean forgoing beauty, style or professionalism. Be creative in looking for new and simple ways to look and feel good. You do want to look the part, but try not to break the bank whilst you are at it!

Follow Nimi Akinkugbe on: Twitter and Instagram: @ MMWithNimi, Facebook: ‘Money Matters With Nimi’ Send an email to info@ moneymatterswithnimi.com Or visit her Website www. moneymatterswithimi.com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance. For more personal finance tips, contact Nimi: Email: info@ moneymatterswithnimi Website: www. moneymatterswithnimi.com Twitter: @MMWITHNIMI Instagram: @MMWITHNIMI Facebook: MoneyMatterswithNimi

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Managing

Monday 03 June 2019

BUSINESS DAY

Monday 03 June 2019

GOVERNMENT BUSINESS

BUSINESS DAY

IBE KACHIKWU

Former Minister of State for Petroleum Resources

Interview with Public Sector Leaders

We have positioned the oil and gas sector for its next wave of growth – Kachikwu IBE KACHIKWU, former Minister of State for Petroleum Resources, has spent four years in office. In this interview with BusinessDay and other journalists he spoke on a plethora of issues affecting the sector: refineries, bid rounds, oil production, Niger Delta insecurities and pipeline vandalism. Kachikwu also highlighted some of his achievements, failures and the challenges facing Nigeria’s oil and gas sector. Excerpts:

o you think you have set the industry for the next growth phase; let us say you do not come back, how will what you left behind be carried on by the next person taking your place so we won’t have policy somersaults? You are absolutely right, that’s why we always talk about continuity and being able to sustain what is on-going which we have done over the years. One of the things we have done is to institutionalise the policies by going to the Federal Executive Council (FEC) to pass the policy on Petroleum Industry Bill (PIB) and gas policy. We have submitted the final copy of the fiscal policy, unfortunately, it was not taken but the other two were. However, the two policies taken basically encapsulate what needs to be done in those areas and it is from there that we also launched the 7big wins by the president which was also institutionalised. The things we have done around gas monetisation programme, refinery projects, infrastructural projects, Niger Delta militancy projects were also institutionalised. We have also worked with the National Assembly in ensuring passage of the bill because ultimately the bills are important. Also, we need to note that although policies are fantastic however, the bigger steps are to get them into law. Unfortunately the first leg of the bill the Petroleum Industry Governance Bill was not signed by the president for reasons of wanting a few amendments some of which we supported and is being done by the assembly from what I hear. If you listen to my clearance in 2015, one of the questions I was asked by the Senate was the PIB, which I said was never really going to be able to pass because it was just too political. So there was the need to break it down into specific areas, as at that time. They have obviously embraced that approach which is why we are where we are today. Most of the segments of the bill such as the fiscal, host communities are ready so to answer your questions I think we have positioned the sector in such a way that there are places to build from. The fact that there is a continuing government also helps. What is delaying the rehabilitation of the refineries, which is still performing poorly? Yes, you are right. They are still performing poorly. I think it is one area we did not deliver on the mandate and I am bold enough to say that. One of the media platforms wrote a story that says “Kachukwu fails to deliver on his five promises on refinery” I think it is a stack misunderstanding of how the system works. I started with being group managing director and also minister of state. At that point, most of the works and power were centred on me. So the first problem we had with the refineries was the fact that they were not even functioning or producing at all and because of the apparent huge fuel scarcity, it was a major challenge for me because if I have to wait for vessels each time to meet the delivery timelines we always have a problem. So I focused on trying to make them at least begin no matter how little even if it’s one million litres per day it will be good because that is something I don’t have to import. My target was to try and get 5 million litres on a short time frame. How was I to do that? The pipelines that were supplying petroleum products had all being destroyed if we remember clearly, and the previous government had then entered into a contract to buy products by vessels however the cost of those vessels supplying were more than the crude that was being supplied so it

wasn’t making any financial sense. So, with the president’s permission, I cancelled the contracts and challenged Nigerians who were in those contracts that if you want to add value to this entity, go and use your own money to repair the pipelines if I watch it, in three months it’s working we would pay or give you maintenance contracts which was what happened as about two or five companies came together to bid for the contract using their own funds and resuscitated the pipelines and then the refineries came to life. By March 2016, the refineries started producing not obviously by 90 percent capacity but at least they were adding close to 2 or 3 million barrels. However, the years of Turn Around Maintenance (TAM) were all a failed exercise as billions and billions of naira were spent with nothing to show for it. The Nigerian National Petroleum Corporation (NNPC) by duty of its operation keeps charging money for the repair of pipelines with no integrated repairs. I went to the president and said we don’t have the money what we need to do is go out and find private investors who are willing to invest in the refineries, not as shareholders but on an incremental volume optic. I created a business model whereby if repair of the refinery had it working at about 90 per cent and moved production from an average of 50,000 barrels per day to an average of 300,000 bpd the profit from it will be used to offset the loan. The president approved it however as at that time I left as GMD of NNPC and handed over. The NNPC owns the refineries so the minister’s role is not to come in and head the negotiations with investors on how refineries are run; the minister’s work is to push for policy approval and make sure they stay on track. As chairman of the board, I worked hard in pushing NNPC on this but it didn’t deliver. By December last year, when I got worried we were not meeting the mandate that is expected from the refineries I then called a meeting and tried to resolve the hitches with investors themselves over the contractual terms and I thought I did eventually. NNPC still rejected the terms we agreed on. So when people say I didn’t deliver I don’t know what else they were expecting from me but I think if we should look at refining, we should look less at public sector refining. The future is in private sector refining so what else did we do outside the public sector; we worked with Aliko Dangote because he nearly abandoned the project before because of all kinds of issues such as pricing, approval, support in terms of tariff and customs duties. I have visited the refinery about four times some of my guys have been there over 20 times and we set a timeline working with them as if it was a public sector project. So there has never been that kind of corporation before. If it delivers, which I think he would because the petrochemical complex is almost ready right now. Apart from the refinery, the government is creating an enabling environment to support investment; the modular refinery which was a concept we pushed for peace in Niger Delta is currently working successfully, three are near production point about seven others are nearing final investment decision (FID) so if those ten refineries come on board in the next two or five years that’s another 250,000bpd refinery capacity added to Dangote’s refinery. I tend to look at the refineries from the volume not physical assets. On a longer time basis, the refinery is also an export earner we need to be able to supply product to the rest of West Africa, East Africa and Southern Africa. I am also making efforts talking to the Gulf countries like Saudi Arabia, Qatar and China trying to see whether they will be interested in com-

ing in both for the purpose of Greenfield refinery building or the Brownfield refinery building which the responses have been positive. We are almost at the threshold of signing a Memorandum of Understanding (MOU) with South Africa which will not just cover refineries but also cover pipelines and liquefied natural gas (LNG) investment which are huge. The PIB was intended to make Nigeria take control of substantial part of the oil resources, how much would Nigeria own after everything is done? The bill will limit the size of acreages for splitting which will allow more investors to come in, it also protects the rights of those who have been given licenses because if we don’t have a safe business environment we can’t raise money but ultimately a law is as good as its enforcement. As Nigeria, we ought to be willing to make our country grow which will never happen if we are always looking at the short time growth. So basically lack of enforcement has to be the bane of our issues. Oil blocks seem to be awarded based on political patronage to Nigerians. Those who get them turnaround and resell same to foreigners, how do you intend to end this kind of practice? First, this government has not given out any oil blocks for the four years it lasted. We did not even do marginal fields. The Presidents belief was that we should first clean up the sector, before we start dishing out political patronages. In terms of what has been done in the past, my philosophy is a little bit different, because I am a private sector person. Giving oil blocks to Nigerians is not a bad thing. Who else should get it? Are they the right kind of Nigerians, with due reserve there, I do not know. Oil blocks obviously take some level of connection to get, no doubt

about it. It requires some level of funding, that is, money to develop the blocks. You need some level of connection to be able to reach out to Joint Venture partners who will bring in the technical expertise. All over the world, those sorts of opportunities are given to people who have come into the upper echelon of society. If you do not have these qualities, you will likely not be able to meet up with the requirements that the DPR sets. So, I do not think it is a bad thing but what we need to do is to make sure that those who do get it will actually work the field. They will have to pay the right royalties and taxes. They opportunity should be open to all Nigerians. Some of the people who own working oil blocks today where not there 15 years ago. One of the things we have done with marginal fields is to develop guidelines for the President on the basis of technical skill, financial capability, work programme that is monitored and efficient. And if somebody has done well in his own marginal fields, he qualifies to be given more considerations to get more. If you fail in what was given to you then it is time to retrieve it because that is an asset that nobody is doing anything with. Some Nigerians get oil blocks and it is like a geographical family picture that the just hang in the house. It does not do anything. They are just running all over the place to find out who is going to buy it from them. They can go on with this till eternity. There was a time I issued a warning that unless those concerned went back to their blocks and began to work it; we were going to take back those blocks. Some of them said we have a 20 year timeframe. They are right in one sense, you cannot breach contracts but when it comes to the time for renewal if you are not meeting your work obligation on the block we will take it off you. And give it to individuals who would work the field. They government is losing money for every idle oil block. How many oil blocks are due for renewal? I do not have the numbers off hand. You know we had an early renewal programme to raise N1.80

billion for the government and most of those have been renewed. The ones that are within the frame of 2020 – 2021 have already been captured by the early renewal. The ones that are after that we have not dealt with. We did close to about 40 renewals under the early renewal programme. The essence of the early renewal was to get upfront money for government to meet its financial obligations. Two million barrels a day, 40 billion reserves target seem far off but when compared to countries like Iraq just coming out of war and have grown production and reserves fast. What will it take for Nigeria to grow its oil production and reserves? Then the deregulation of the downstream sector, why is it so difficult to do? Things you need to grow the reserves are one adequate legislation and predictability of the terms, which is why the Petroleum Industry Governance Bill (PIGB) is fine. We probably need 20 year type structure that is firm because certainty of time is very important. Second factor is speed of approval. I went from a two-year target threshold to six months. Every delay you have has cost implications. The third is that you have to be a friendly investment destination. Nigeria is seen as a very difficult investment destination. Things take too long to happen. There is too much politics involved in making investment decisions and you cannot predict where it is going to end. Understand that oil is somebody’s future dreamland, the belief that down there is something good relying on data generated by seismic studies. But there is no certainty, it is basically a gamble. An uncertain investment environment is recipe for anarchy. They reason you find some countries doing very well is because they are predictable and things seem fast. There are no political interferences as we have in Nigeria. I was in the private sector and when you had to do investment analysis and had a bundle of countries in which to invest say $100 million my job will be to find the one with highest return on investment. Say you have about seven countries

that have potential for development, some finish their final investment decision in three months, the certainty they are giving is much better, they have skilled labour already so you do not have to bring in labour. Then another one has huge resources, a historically successful area. But things never get done. Decisions get changed midway and you are stirring at this $100 million and thinking about return on investment. The reality is that Nigeria is sometimes its own worst enemy. We need to sit down and let the sector run professionally, let things be done with speed. Nigeria has everything it takes. We are a mature field and the certainty of striking oil is high. With this we can get tougher in our contractual arrangements, unlike countries just starting out. We have managers and engineers and you do not have to import them. There is an enabling, attractive welcoming environment. But then there are rigors of law, rigors of delays, rigors of multiple taxes, rigors of uncertain fiscal terms, these are the things we need to work on. I have found that in my four years as minister that if work with the private sector, very little things matter. The fact that they can come to my office and see me on no notice, unlike before when they will come to Abuja and stay for three to five days, it saves them cost. My philosophy is that if you are producing oil or have the potential to put money in government coffers, by all means please let us talk immediately. You see projects like Egina take off. Bonga and Zabazaba want to take off because the realise sitting with this individual you know clearly where he stands. These little things matter. On short-term three to four years we can reach 3 million barrels a day. On the downstream, I wish every Nigerian took the view that it is taking too long to deregulate. I was the guinea pig on this in 2015, 2016. I will be first person in history working with the president to make that massive a jump in prices for N85 to N145. It took away everything that was subsidy then. We began to have over recovery. Fuel queues disappeared overnight, scarcity ended. It has been done so it is not too difficult. It is a highly emotive issue though. We should not downplay the fact that somehow the literature over the years has convinced the lower economic earners in the society that this not good for them, even though that is not the right literature.

This wrong literature has permeated the system so much that that we need to first deal with it. One of the things we need to put in place is the refineries. When the bulk of your consumption is locally produced, it is easier to deal with that. I am doing a book called ‘Energy 2015 to the Future’, which captures what we have done and charts a path for the future of energy in Nigeria. Subsidy as a concept is not necessarily a bad thing. America just gave how many billions to agricultural farmers because the trade war with China. It is not the subsidy that is the issue but its mismanagement. There is subsidy everywhere. Many of things that we do as a country are subsidised – power, gas and rail even food by the virtue of the fact that fertilizers are subsidised. When we removed subsidy, petrol consumption dropped from 50 million litres to 30 million litres a day. This means there was profiteering going on. Then you have to look at your refineries. Before the elections, you heard the opposition say during their time they spent billions but today Nigeria spends trillions of naira on subsidies. What is your take? I think quite frankly the amount spent on subsidies you have to get from the NNPC. The simple truth is that they monitor subsidy. They are the sole importers right now. They are the sole suppliers. I do remember that the last time I checked. It was a higher number. But we have a policy of zero scarcity and in a bid to avoid scarcity we carry reserves that ordinarily we should not carry. Traditionally we keep about a 20 to 23day reserve. We found ourselves carrying 30 days to 45 days and even up to 60 days reserve. This increased the amount spent on subsidy. Now, can this be more efficiently done? Absolutely yes. We must find a way to track and determine consumption and also look at the delivery and performance indices. Early in the life of the administration, around 2015, there were talks about pipelines and how to protect them. How do we do that now? Again this is an operational issue, it is for the NNPC. The minister deals with policy and is not a contract awarding person. What we have done is to get the right bidding process in place. Look for contractors who are from host communities as much as it is

possible and where it is possible. Set up an oversight function, whereby the community is overseeing what they contractors are doing. This is the overall action policy. But for the specifics of who gets what contract that is for the NNPC to deal with. What is the landing cost of petrol? The last time I checked I think it was about N180. I know that there was a differential of N40. What is your view about listing the NNPC on Nigeria Stock Exchange? Listing is not a certificate given you for free; you have to qualify for listing. Saudi Aramco is trying to get listed on the New York Stock Exchange; you see what they are doing? They are publishing their reports. They are showing their twenty-year projection. But the feedback they get is that they are still very much pseudo-Saudi Arabian company because they are not investing in other areas. Their risks are not hedged. So, they have started investing in America, they’re investing in Europe and are talking to Nigeria. They are preparing for listing. We are not yet ripe for that. There is still a lot more work to be done. I have been telling the management of NNPC to enter a pre-listing mode. This does not mean it is happening any time soon but it involves publishing audited reports as at when due, with internal controls in place. This was the kernel upon which I drove efficiency by encouraging transparency. I will invite Nigeria Extractive Industries Transparency Initiative (NEITI) to come join us rather than chase them away. These are preparations for listing but we are not there yet. A company that is going to be listed will not sell a product at N145 when it costs N180. At that time we adopted prepare for listing management concept and hope they will continue with it. The NNPC has such huge assets and value that if we run it well it is going to be good for this country. Recently there was a report that the Federal Government wants to sell down its stakes in the JVs to 40%. If you do come back as minister how would that process work, was it one of your policy initiatives? How do I answer that? It was not one of my policy initiatives. It was a policy initiative of Budget and Planning and Finance. It was from the point of view of addressing fiscal imbalances to find money and create efficiency. But it was a policy suggestion and has not been approved. When the President read his budget of 2018, it was mentioned but it has not been worked out in terms of timelines of what is to be sold and percentages. Everybody does agree that some of the assets of government in the oil sector need to be looked at again. There is so much inefficiency and we are not making the most of them because of ownership structures. As bullish as I am on private sector participation, I am usually conservative when it comes to selling government assets. I would rather open up the field for people to compete on JV basis and that sort of stuff. Refineries are different, you can sell some. But depriving yourself as government of the ability to participate in the oil industry is difficult to imagine. But when you go into production sharing contracts (PSCs), I think more efficiency is needed too, especially with regards to meeting up with cash calls. If we sold our stake in JVs to say 30 percent and got bulk money, what happens after that? They NLNG and Indorama are models to follow. However, the NLNG is about project not resource ownership. You are not selling gas, you are selling the business.

Monday 03 June 2019

BUSINESS DAY Harvard Business Review

MONDAYMORNING

In association with

Can we trust machines that sound like us? DAVID WEINBERGER

retty soon everything will have a voice. Your phone already has one, and maybe your smart speaker. Those voices are likely to be both highly reliable and based on a lie. Before long we’ll be talking with just about anything that has an electric switch, and all those things will be replying in a human voice. In these simple, practical cases, if we find out that these assistants are not telling us the truth, we’ll simply stop using them. But they also all have an incentive to tell us

a bigger lie every time they talk: that they are like us. Assistants sound like humans because their makers want our trust. They know we’re wired

to attach ourselves emotionally to human voices. That’s also why they tend to default to women’s voices: We humans, at least in the West, apparently find

those voices more reliable. If sounding like a talented frog happened to play into our biological preferences, then Siri would be voiced by Kermit. Unearned trust

should not be trusted. Furthermore, all of this humanizing isn’t aligned with our actual interests. I’d like to be able to tell Alexa to speak faster and to skip the pleasantries. In fact, a device that talks in a flat, speedy voice designed for nothing but the efficient transfer of information may be better at signaling that its maker’s interests are aligned with ours. We don’t need the stove to pretend it cares about us. It may be too much to ask that our devices not try to speak like humans right out of the box. But as the things around us start to compete for our attention

and our trust by talking in phony human voices, companies may find that giving us the option to command our digital assistants to speak like the soulless machines they are makes good business sense.

(David Weinberger is a senior researcher at Harvard’s Berkman Klein Center for Internet & Society.)

Harnessing digital information to improve population health SAMYUKTA MULLANGI, JOHN P. POLLAK AND SAID IBRAHIM

ealth systems do not systematically collect information on social determinants of health, or SDH — the conditions in which people are born, live, grow and age — despite knowing they have a big impact on individual and population health. But the shift from reimbursing providers for the volume of services they deliver (fee for service) to the quality of patient outcomes relative to cost (value) is causing them to focus more on maintaining patients health, by investing in population health management strategies, which require them to better understand local populations and identify

unmet needs. Alternative means of collecting such information are emerging: smartphones, credit card transactions and social media. — SMARTPHONES: The Pew Research Center estimates that more than

three fourths of Americans now own smartphones. One example of how these devices could be used to collect SDH information involves the mobile applications that health systems offer to allow patients to easily book

appointments or contact medical providers; these apps can also access information on patients’ location, which can be cross-referenced with rich databases to understand a patient’s experience of his or her neighborhood. In a

research setting, this type of location sharing has yielded startling insights. — CREDIT CARD TRANSACTIONS: These are another gold mine of information that can help round out the medical record. Distinct lifestyle clusters can be identified in terms of expenditure patterns, age, mobility, and social networks. — SOCIAL MEDIA: Leveraging the willingness of people to divulge personal details on social media is yet another emerging frontier, and can be used to successfully access populations that have historically been considered hard to reach: younger people, females and lowincome individuals. Certainly, several pragmatic issues might create barriers to applying these approaches. An obvious

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one is privacy. Another lies in the very act of obtaining consent from a large number of patients. Finally, it may be difficult to get the attention of physicians already suffering from information overload. But with these new elements in place, health care systems will be able to identify the needs and interventions required to create healthier communities.

(Samyukta Mullangi is a hospitalist at NewYorkPresbyterian Hospital and a health-policy researcher at Weill Cornell Medicine. John P. Pollak is a co-founder of Wellcoin. Said Ibrahim is vice chair for development and strategy at the Department of Health Policy and Research at Weill Cornell Medicine.)

Monday 03 June 2019

Harvard Business Review

BUSINESS DAY

MONDAYMORNING

In association with

Research and development spending has surpassed advertising spending VIJAY GOVINDARAJAN, SHIVARAM RAJGOPAL, ANUP SRIVASTAVA AND YE WANG

ave firms’ commitment toward marketing changed over time? We recently examined this question using data. Marketing expenses are typically not disclosed in financial statements. However, firms do disclose their advertising expenses. Although marketing and advertising are distinct, advertising expenses could represent a firm’s commitment toward marketing as a discipline. Until the late 1970s, companies spent about the same amount on R&D and advertising. Today, they spend 10 times more on R&D. Firms spent more than 1% of their total expenses on advertising until the 1980s. This percentage declined to less than 0.8% in recent years. During the same period, R&D investment increased dramatically

from less than 1% to more than 7% of total expenses. Retail firms have not changed their business models for the past 35 years, which could explain their struggle to face the onslaught of competition from new challengers like Amazon. In contrast, the manufacturing industry has changed its business model and now spends

more than 5% of its total expenses on R&D. Technology firms show the most dramatic change. Since 1995, they have spent more than 10% of expenses on R&D and less than 1% on advertising. The fastestgrowing industry in the past three decades has shifted its focus away from marketing toward innovation and product

development. There are several other explanations that could partly account for our findings. First, firms might increasingly rely on acquired brands instead of developing them organically. Second, firms might achieve higher mileage from advertising dollars through more intimate knowledge of their

customers and by using improved tracking and analytics. Third, firms increasingly rely on peer networks, word-ofmouth, blogs and cross-sold services to establish brands. And fourth, new firm founders may be more passionate about discovering new technologies than about their marketing success. But it is at least plausible that marketing has lost relevance relative to engineering, technology and product development, which would have profound implications for organizational structures, manpower planning and management education.

(Vijay Govindarajan is a professor at Dartmouth’s Tuck School of Business. Shivaram Rajgopal is a professor and vice dean at Columbia Business School. Anup Srivastava is an associate professor at the University of Calgary. Ye Wang is a doctoral student at the University of Calgary.)

Should companies use artificial intelligence to assess job candidates? people, and what we should know about them, with the possibilities surpassing both legal and ethical boundaries. Yet organizations — and individuals — will benefit enormously when new technologies can boost their ability to place the right person in the right job.

TOMAS CHAMORRO-PREMUZIC AND REECE AKHTAR

ew things seem creepier than algorithms mining our voices or photos to determine whether we should be considered for a job, and yet we’re not that far from this scenario at all. What’s more, it may not be as creepy as you think. If we want to make talent identification more effective — and more meritocratic — it’s important to continue to look beyond existing methods, particularly if technological innovations enable us to predict, understand and match people at scale. One of the major problems with the way we currently interview job candidates is that the process is largely unstructured, leaving the questioning to the whims and fancies of the interviewer. This is not only inefficient, but it also leads to biased decision-making. Video or digital interviews can remove these limitations almost

entirely. And AI algorithms can mine a candidate’s facial expressions and body language, alongside both what they say, and how they say it. Mining all this data can reveal a lot about the candidate’s talent, and can indicate how they might perform on the job. The fact that AI algorithms can detect and measure latent or seemingly intangible human qualities may lead some to be skeptical, but there are plenty of scientific

studies demonstrating that humans can accurately identify personality and intellect from very thin samples of both verbal and nonverbal behavior. AI algorithms simply leverage the same cues that humans do. The difference is that the latter can scale, and can be automated. What’s more, AI does not have an ego that needs to be managed. We do not suggest that all hiring decisions be made by an AI system. There must

always be human oversight. Instead, we believe that human decisions can be significantly improved if there is accurate and valid data to inform and shape our judgments. Of course, it’s essential to consider the legal and ethical implications of using these innovative tech tools, just as we do when we consider using traditional assessment methods. Also, clearly, there is now a difference between what we can know about

Brought to you courtesy of First Bank Nigeria

(Tomas Chamorro-Premuzic is the chief talent scientist at ManpowerGroup and a professor at University College London and Columbia University. Reece Akhtar is the head of product innovation at RHR International and a visiting lecturer at New York University and Columbia University.)

Monday 03 June 2019

BUSINESS DAY

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FirstBank Insurance’s combined ratio, best among peers Insurers in Africa’s largest economy have been grappling mounting claims brought by exposure to the oil and gas, and rising operating expenses mean they will have to embark on costs cut to bolster profit. FirstBank Insurance and Aiico Insurance have utilized the resources of shareholders in generating higher profit as they recorded the largest expansion in return on capital employed among peer rivals. FirstBank Insurance’s ROE expanded by 30.71 percent while Aiico’s ROE moved by 78.32 percent as at December 2018; this compares with a 48.20 percent reduction for LeadWay Assurance, (-31.18 percent), Zenith; (-10 percent), Wapic, (-75.12 percent), NEM. Experts are of the view that the new rules by regulator will help shore up the capital bases of companies; the rules will also enable firms take on more risk since there will be an improvement in liquidity position. In the new capital base, life insurance companies will now have a minim paid-up capital of N8bn from its previous N2bn, General Insurance companies will now have to recapitalize to N10bn from N3bn, while Composite Insurance companies will now need N18bn to underwrite businesses from the previous N5bn minimum capital.

BALA AUGIE

n a tough and unpredictable macroeconomic environment, it is easier for a camel to go through the eye of the needle than insurers to record significant uptick in profitability and deliver a higher return to shareholders in form of a bumper dividend and share appreciation. With the challenges in ease of doing business as evidenced in rising overhead costs, operating and claims expenses have eroded profitability, leaving companies with a ver y slim profit margin. Amid the aforementioned myriad of challenges, FirstBank insurance Nigeria Limited has emerged the efficient company, as evidenced in efficient underwriting capacity. For instance, FirstBank has a combined ratio of 35.12 percent as at December 2018, this compares with Aiico Insurance, 103.13 percent; 105.13 percent; AXA Mansard, 104.25 percent; Wapic Insurance Plc, 118.12 percent; Linkage Assurance, (123.12 percent), and Veritas Nigeria Plc, 176.15. A combined ratio below 100 percent means an insurer earns more in premium than it pays out in claims.

36 companies are yet to release 2018 FY results Ifeanyi John

months into the beginning of the New Year, 36 companies are yet to release the full year result of the 2018 financial calendar. Of the 169 companies listed on the stock exchange 21.3 percent have either filled for a delay or out-rightly missed regulatory filling. The insurance sector leads the number of companies yet to file full year results due to the implication of IFRS 9. 11 insurance companies have filled for a delay in filing full year results. This represents 30 percent of the companies that researchers and

investors are waiting on. Timely disclosure of financial statement information is a critical requirement for firms and well-functioning capital markets. Late filings delay disclosures help investors make informed investment decisions and, as a result, increase information asymmetry. Late filings may also trigger costly regulatory penalties and covenant violations. Lafarge, Honeywell, Conoil are amongst the large cap stocks that are yet to post full year financials and with differences in financial calendars companies like Flour Mills, Guinness, Presco will be expected to release results before the end of July. Obinna Uzoma, lagos based

economist said to BusinessDay that “filing of results this year has been good so far and just one or two big guys are yet to report. It is not easy especially for companies with subsidiaries who need to audit individual financial statements and obtain the approval of its respective regulator prior to submission for consolidation.” Other companies who are yet to release the results are FTN Cocoa, International Breweries, Northern Nigerian Flour Mills, Conoil, Learn Africa, University Press, Chellarams Plc. “This is also a way to understand where investor confidence lies in a market. The more companies fail to report result on

time without reason the more the market will punish stock prices of that company.” Uzoma added. The NSE Rulebook states that “any Issuer that does not apply for extension of time and obtain approval of The Exchange to file its accounts out of time, prior to the deadline for filing its accounts, shall: receive a “Filing Deficiency Notification” from The Exchange within two (2) business days after the deadline for filing its half year or annual accounts has passed. The affected Issuer’s name shall be published in The Exchange’s XCompliance report as “Missed Regulating Filing” (MRF) and shall remain published for as long as the Issuer does not file its accounts.”

P.E

SHORT TAKES 1.96 mbpd In the first quarter of 2019, average daily oil production stood at 1.96 million barrel per day (mbpd), lower than the average daily production of 1.98 mbdp recorded in same quarter of 2018 by 0.02 mbpd.

57.8 index points Manufacturing purchasing manager index (MPI) in the month of May 2019 stood at 57.8 index points, indicating expansion in the sector for the twenty-sixth consecutive months. 13 of the 14 subsectors including transportation equipment and electrical equipment reported growth in the review month. N13.7 trillion The market capitalization of listed stocks on the Nigerian Stock Exchange stood at N13.7 trillion after Friday’s trading, with Dangote Cement, MTN Nigeria and Guaranty Trust Bank as the mostcapitalized stocks on the exchange.

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: Dipo Oladehinde, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: FIFEN FAMOUS)

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Email the BMI team patrick.atuanya@businessdayonline.com www.businessday.ng

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Monday 03 June 2019

BUSINESS DAY

MARKETS INTELLIGENCE Dangote Flour, Chams, Thomas Wyatt, MTNN, best performing stocks since January Ifeanyi John

s the first half of the year draws slowly to an end so do the bearish trend of the Nigerian equities market, and the negative trend that was carried into 2019 seems to be subsiding on the back of acquisition news of Dangote Flour and the listing of MTN Nigeria. The broad index recorded more losers than gainers on the bourse since the beginning of the year. 29 stocks had seen their share price grow from the beginning of year to date while the prices of 89 stocks slumped. However, the broad index is down by less than half of a percent and this is largely due to the big gains from Dangote Flour and MTN Nigeria. Dangote Flour dominated the Nigerian Stock Exchange as its shareholders have been smiling at their portfolio since the beginning of the year. The stock had started the year with N6.60 and was the best performer of the first quarter of the year but after the news broke the shareholders were set for more

returns. After news broke that the company was set to be acquired by Olam, the share price doubled. In the month of April, the price went

from N9.20 at the beginning of the month to a year high of N18.80 at the end of the month. YTD the stock is up 133.58 percent and is the best performing stock for the

Goldman Sachs aims to woo more midsized companies Bank plays down talk of cuts to trading business even as it seeks growth elsewhere Laura Noonan, FT

ohn Waldron, president of Goldman Sachs, has pledged to take the bank deeper into middle America by winning investment banking business from 1,700 extra midsize clients in the next three years. The new target came alongside remarks that downplayed expectations that the bank’s trading business would be dramatically scaled back as Goldman seeks areas of growth elsewhere. Goldman had been slammed by analysts for postponing an investor day where Mr Waldron and new

chief executive David Solomon were expected to detail plans for improving efficiency in the Wall Street firm’s trading businesses and investing in a wide range of growth areas. “We’re going to be deliberate, we may be more deliberate than the market would like,” Mr Waldron said of the bank’s decision to postpone the investor day until 2020. “We’d like to make progress and make sure that the decisions we’re making and the strategies we are employing are sticking, that they’re working, before we come out and claim we have the metrics and the targets you want us to have.” He told the Bernstein Strategic

Decisions conference in New York that the bank would target companies worth less than $2bn, an area of investment banking which in the US traditionally has been dominated by the likes of Bank of America and JPMorgan Chase, as well as smaller firms such as Baird. Mr Waldron said Goldman already had more than 3,000 clients of this size, generating around $2bn of annual revenue. “We now have a proven track record of serving midsized clients,” Mr Waldron said, outlining plans to win more of them in the next three years by dedicating around 100 bankers to the drive.

American Tower buys African masts group Eaton in $1.85bn deal

cquisition could trigger further M&A in market seen as ripe for consolidation American Tower has acquired African masts business Eaton Towers for an enterprise value of $1.85bn. The deal could trigger more activity in the African towers market, which has long been tipped for consolidation. Towers have become tradeable assets for telecoms companies worldwide with the US, Africa and India leading the pack in splitting the masts from the operations side of the sector. European companies have been slower to embrace the split, although Vodafone and Deutsche Telekom

have moved to review their huge mast portfolios while smaller companies Sunrise and Altice in Portugal have sold their towers, opening up an opportunity for independent companies such as Cellnex to hoover up thousands of towers. Eaton Towers, which was founded in 2008, owns 5,500 towers in Ghana, Uganda, Kenya, Burkina Faso and Niger, which it leases back to carriers including Orange, Tigo, Vodacom and MTN. The company was due to list shares in London and Johannesburg last year but pulled the float. The Financial Times reported at the time that the initial public offering was expected to flush out a bidder

such as American Tower, one of the largest independent mast owners in the world. Eaton Towers was founded by Terry Rhodes, who launched African mobile phone company Celtel and remains its chief executive, alongside former Orange chief executive Sanjiv Ahuja and Alan Harper, a Vodafone veteran who now chairs satellite company Avanti. Its largest investors are Capital Group Private Markets, Development Partners International, Ethos Private Equity and Standard Chartered’s private equity arm. IHS Towers and Helios Towers, another African group to have pulled a London listing last year, also operate large African mast networks.

first five months of the year. The month of April was also beneficial to the shareholders of Chams Plc as they saw the value of their holdings in the company

double in a month. The company paid dividends for the first time in a while on the back good annual results and the market rewarded the company well. The stock is up 90 percent from its N0.20 price in January to N0.38 at the close of trading on Friday. Thomas Wyatt was the third best performer with 73.91 percent and the newcomer to the bourse, MTNN, had gained N930 billion since listing on the bourse to become the fourth best performer with a 37.37 percent increase. On the index front, only two indices outperformed the broad equities while others were in the negative. The All Share Index was down by half of a percent while the Premium Board and the ASeM were up by 12.69 percent and 1.44 percent respectively. The NSE Consumer Goods index was the worst performing index with -13.76 percent, Oil and Gas (-12.47%), Pension (-11.29%) and Banking (-9.44%) amongst others. The worst performing stocks were Goldlink Insurance (-62.26%), Resort Savings & Loans (-60.00%), Academy Press (-50.00%) and Champion Breweries (-44.72%).

Markets under pressure as trade war shifts gear The US administration has tied Mexico tariffs to illegal immigration

arning signals over the health of the global economy are flashing. US President Donald Trump’s latest tariffs on Mexico have changed the rules of the game at a time when global growth momentum is fragile and even a contained macro shock could push it off track. Investors have taken cover. Central bankers should be poised to act. This week’s sharp moves in global equity and bond markets highlight the potential for a significant fallout from the escalating trade tensions. Global equities had their worst month since December with sectors most exposed to global trade feeling the brunt of the weakness. Yields on government bonds fell sharply across the board reflecting both a flight into safe assets and expectations that weaker growth will push inflation lower. While US trade policy has proved fickle under Donald Trump, this week’s pronouncement that tariffs may be used for an entirely different “problem” adds another layer of complexity. Mr Trump’s decision to link a 5 per cent tariff on Mexican goods to illegal immigration has left investors fearing what comes next from the mercurial president. It comes just a few weeks after he abruptly reversed course on a trade deal with China, to the consternation of Beijing and complacent markets. The third shoe has yet to drop. Mr Trump is still weighing whether to impose tariffs on European and Japanese carmakers. But the recent

twists and turns of the president’s trade policy confirm that the US position can shift at the speed of a tweet. As such auto shares in Europe and Japan were among the worst hit on Friday. Officially the Mexico tariffs were not linked to goods trade, but it did not escape attention that the country has the largest bilateral trade deficit with the US after China, with Germany and Japan following closely behind. How far Mr Trump’s trade war is affecting global growth is unclear. Buoyed by tax cuts the US economy recorded its strongest year of growth since 2015 last year and this year got off to a good start. But while the 3.1 per cent gross domestic product figure for the first quarter leaves the US as the fastest growing major economy, the composition of growth is weak. Stockpiling was a key contribution to the headline figure, suggesting such strong growth rates are not expected to last. Higher frequency data on manufacturing and durable goods have also been weak. Growth momentum looks fragile elsewhere. Renewed fiscal stimulus has maintained China’s economic performance for now but this is starting to fade. Latest data on manufacturing showed the sector contracting and retail sales are at a 16-year low. In the eurozone, the German economy bounced back in the first quarter after narrowly avoiding recession last year, but even here the outlook remains sluggish and inflation has dropped further below the ECB’s target.

Monday 03 June 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Friday 31 May 2019

Top Gainers/Losers as at Friday 31 May 2019 LOSERS

GAINERS

Company

ASI (Points)

Opening

Closing

Change

N1454.5

N1450

-4.5

N60

N58

-2

GUINNESS

N50.5

N48.5

-2

VOLUME (Numbers)

STANBIC

N43

N42

-1

VALUE (N billion)

N17

N16.25

-0.75

Company

Opening

Closing

Change

DANGFLOUR

N16

N16.85

0.85

N26.9

N27.5

0.6

MTNN

N136

N136.5

0.5

FLOURMILL

N13.4

N13.6

0.2

NESTLE

NASCON

DEALS (Numbers)

MARKET CAP (N Trn)

31,069.37 3,737.00 212,940,919.00 2.730 13.684

C&I Leasing, Dangote Flour, Chams outperform other stocks year-to-date Stories by Iheanyi Nwachukwu

n five months to May 31, 2019, listed stocks like C&I Leasing Plc, Dangote Flourmills Plc and that of Chams Plc outperformed others on the Nigerian Bourse after recording over 90percent growth year-to-date (ytd). At N7.20per share as at close of trading on Friday May 31, stock investors in C&I Leasing Plc have seen their stock rally by 304.5percent this year, surpassing any other equity listed on the Nigerian Bourse. At N16.85 per share, Dangote Flourmills Plc is second on the top advancers’ league, recording 146percent increase year-to-date. At 38kobo per share, the price of Chams Plc stock has risen this year by 90percent. Barely two weeks after listing its shares by introduction on the Nigerian Stock Exchange (NSE), the share price of MTN Nigeria Communications Plc (MTNN) increased by 51.7percent to N136.50. After a disappointing first-quarter (Q1), the Ni-

gerian stock market staged strong rebound in this second quarter (Q2) as many investors continue to show interest in newly listed MTNN and that of most capitalised stock (Dangote Cement Plc). Year-to-date (Ytd), the stock market return is in negative of 1.15percent. Other stocks that have impressed the market this year include that of Caverton Offshore Support Group Plc which has recorded Ytd increase of 33.9percent; Julius Berger Plc (18.7percent); Livestock Feeds (20.4percent); Redstar Express Plc (31percent); Sterling

Bank Plc (21.1percent). Also amongst others, Union Bank Plc stock price has advanced this year by 22.3percent; Beta Glass Plc is up this year by 9.8percent; while that of Cadbury Nigeria Plc has increase Ytd by 9.5percent. The Nigerian Stock Exchange (NSE) All Share Index (ASI) closed at 31,069.37 points on Friday while Market Capitalisation stood at N13.685 trillion. Amid this feat, analysts expect the new month of June to begin on a mixed note, picking up where it left off, as sentiment

surrounding the biggest catalyst seen this year, MTNN, continues to wane. “Sentiment in the first half of the month was bearish, however, things took a bullish turn after the MTNN listing midmonth. The stock ended the month at a 52percent premium to its listing price, likewise, the re-balancing of portfolios tracking the MSCI index boosted select names, predominantly Banking, in the last week of the month”, according to equity research analysts at Lagos-based Vetiva Securities.

Global market indicators FTSE 100 Index 7,161.71GBP -56.45-0.78%

Nikkei 225 20,601.19JPY -341.34-1.63%

S&P 500 Index 2,763.38USD -25.48-0.91%

Deutsche Boerse AG German Stock Index DAX 11,726.84EUR -175.24-1.47%

Generic 1st ‘DM’ Future 24,942.00USD -248.00-0.98%

Shanghai Stock Exchange Composite Index 2,898.70CNY -7.11-0.24%

Consolidated Hallmark Insurance restates commitment to dividend payment

onsolidated Hallmark Insurance (CHI Plc) has restated commitment to its promise of regular payment of dividend. CHI Plc has paid dividend for 7 out of its 11 years in operations. Obinna Ekezie, chairman of CHI Plc stated this in his address to shareholders of the company 24th annual general meeting (AGM) held in Lagos recently. Ekezie said the company’s disciplined approach to cost management led to a profit after taxation (PAT) of N407.074 million for the year ended December 31, 2018. Out of the profit, the directors recommended a dividend of N162.6 million that translated to 2 kobo per share. “We shall remain committed to our promise of regular dividend payment, God willing, having paid dividends seven financial years out of eleven of our operations in the past. This year, we are proposing a total dividend

rise in revenue, hitting a gross premium written of N6.865 billion, an increase of 20.85 percent over the 2017 figure. Business retention remains good, even as we have further energized our Retail and agency segments to grow new business inflow into the group. The retail segments achieved a combined growth of 135per cent in 2018 on their 2017 performance,” he said. According to him, CHI Plc’s revenue diversification drive was a major factor that aided the sustained financial performance through the challenging market conditions of 2018, further reinforcing its role as a formidable player in the Insurance Industry. “We have continued to fufil our claims payment obligations to customers promptly amidst rising claims in the industry, with N4.787 billion on claims settlement in 2018 when compared with the N3.354 billion. The 42.72 per cent increase, though

payment of two kobo per share subject to your approval at this meeting. This will translate to a total dividend payout of N162.6million from our 2018 operations,” he said. Speaking on the financial performance of the company, the Managing Director/CEO, CHI Plc, Eddie Efekoha said the results of their performance in 2018 was an improvement on the growth projections for the industry. “It is an all-time high

significant, is a reduction of the 93 per cent growth in 2017 claims expenses over that of 2016. The increase in the figure for 2018 is attributable largely to a few large oneoffs with a single payment on a marine hull loss amounting to N2.174 billion. Significant recoveries on overall claims expenses amounting to N2.984 billion were, however, made from our robust reinsurance arrangement,” Efekoha said.

Chams deploys e-voting for CITN election

frontline identify management organisation, Chams Plc is set to deploy its robust e-voting platform for this year’s election into the council of Chartered Institute of Taxation of Nigeria (CITN), Besides, Chams, renowned for its comparative advantage in e-voting has assured CITN of data security, transparency of electoral process and simplicity of use of the platform before, during and after the election. Speaking during the flagoff ceremony in Lagos on Thursday May 30, Chams Ex-

ecutive Director, Innovation, Marketing and Corporate Communications, Funke AlomoOluwa, explained that Chams had always been a partner in progress with CITN. “We are assuring CITN that we have put together, the highest level of data security for this election. Our infrastructures are robust and these guarantee seamless voting. We have also assembled professional support team for enhanced assistance at any time,” AlomoOluwa said. Corroborating her, the President and council chairman CITN, Cyril Ikemefuna www.businessday.ng

Ede, represented by Davidson Alaribe, urged the committee saddled with the responsibility of the election, to work with the service provider Chams Plc to ensure transparency and credibility of the election. “We are pleased with the process so far. We urge everyone to ensure that the process is transparent and credible in order to enable a credible leader that will take the Institute to another greater heights emerge”, he said. Speaking on the process of accreditation and voting, the E-voting Administrator and Chief Scrutineer, CITN,

Rasaq Quadri, stated that the total accredited members was 22,206 while the total number of eligible voters for the election accredited through membership identity number, telephone number and their email addresses stood at 7,257. He explained that each voter would log -in through his or her email address to the platform and vote. The e-voting platform opened at exactly 12:00 noon for all eligible voters to start voting. Quadri noted that ten candidates were contesting for positions in the council this year.

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BUSINESS DAY

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BUSINESS DAY

NEWS Summit: Osun to align development agenda with private sector needs

sun State government will use its economic and investment summit to align its development agenda with the private sector needs, Olalekan Yinusa, the summit planning cochairman, says. Yinusa, who supervises the Budget and Economic Planning Ministry, says the summit is expected to attract investments in critical

growth sectors thereby leading to economic prosperity and growth in the state. He spoke while reviewing the plans for the June 25 - 27 Summit slated for Osogbo, the state capital. Governor Adegboyega Oyetola in his inauguration address promised to organise a summit to bring together the state government and potential local and international investors on areas of possible collaboration and

partnerships and to create a diversified and sustainable economic growth. Yinusa said the summit “will not be a talk-show,” but will comprise mainly of plenary sessions, having up to 52 key economic drivers in the country as speakers, panellists and moderators. Chairman of First Bank, Ibukun Awosika, is one of the key business leaders who have confirmed their participation.

Also confirmed to participate among others are the chairman of the Nigerian Economic Summit Group (NESG), Asue Igbodalo, the managing director/chief executive of the Transmission Company of Nigeria (TCN), Usman Mohammed, and the Central Bank of Nigeria. Yinusa gave the main focus of the Summit as agriculture; mining; Information Communication Technology (ICT)/Innovation

Hub; Culture, tourism and Creative Economy; Youth and Jobs; Infrastructure/ Public-private Partnership (PPP); Industry, Commerce and Market; Healthcare; Technical and Vocation Education; Environment (Waste to Wealth), and Service Delivery Frameworks.” He added that the Summit was designed to promote investment in the identified sectors to guarantee continuous growth.

FCT satellite towns projects gulp N19bn in 2 years – coordinator

oordinator, Satellite Towns Development Department (STDD) of the Federal Capital Territory Administration (FCTA), Ishaku Yamawo, says about N19 billion has been spent on various projects in the satellites in two years. Yamawo stated this during the handover ceremony to the director of the STDD, Felix Nwankwo, on Friday in Abuja, saying, “Payment of capital projects witnessed uncommon improvement with the sum of N9,384,207,854 released under 2017 capital project. “And over N10 billion released under the 2018 capital year being the first time in the history of STDD capital projects.’’ He regretted that the department could not get autonomy to become an agency but expressed optimism that Nwankwo would achieve such objective. He said when he took over he discovered some lapses which included inadequate budgetary provision, lean release of funds to execute projects and programmes and under utilisation of service/support units. He recalled that over 80 per cent of contractors handling projects abandoned their sites in satellite towns, saying, “The policy changes on the status of the STDD, resulting to ineffective satellite towns’ development. “Efforts are being made to regenerate and restore the status of the STDD to STDA for the benefits of the citizenry. “Today, I can tell you that we have completed some projects, such as that at Gbagalape road, Karu embankment, Byazhin road in Kubwa, one in December in Gwagwalada, and many others. “If you go round the six area councils, you will see the presence of STDD.” According to him, the only challenge was for STDD to become Satellite Towns Development Agency (STDA), so that it would have its own autonomy to operate like other secretariats. “And that is the only thing I can say I regret leaving behind. I thought I was going to achieve that during my tenure, but God has done it the other way round,’’ he said. www.businessday.ng

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Governor Oyetola will present the economic roadmap of his administration and showcase investment opportunities to prospective investors and partners at the Summit. According to Yinusa, the Summit will provide an opportunity to bring the state government, potential local and international investors together to exploit the opportunity of collaboration and partnership.

Monday 03 June 2019

BUSINESS DAY

Access Bank Rateswatch Market Analysis and Outlook: May 31st – June 07, 2019

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.01

Q1 2019 — lower by 0.38% compared to 2.38% in Q4 2018

Broad Money Supply (M2) (N’ trillion)

35.17

Increased by 3.95% in Apr’ 2019 from N33.83 trillion in Mar’ 2019

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

24.90 21.59

Increased by 3.76% in Apr’ 2019 from N23.99 trillion in Mar’ 2019 Increased by 0.25% in Apr’ 2019 from N21.53 trillion in Mar’ 2019

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

11.37

Increased to 11.37% in April 2019 from 11.25% in March 2019

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

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

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

45.09 75.76 1.82

COMMODITIES MARKET

STOCK MARKET Indicators

NSE ASI Market Cap(N’tr)

Friday

Change(%)

31/05/19

24/05/19

31,069.37 13.68

30,881.29 13.60

0.61 0.61

Volume (bn)

0.20

0.29

(32.43)

Value (N’bn)

2.60

6.63

(60.71)

MONEY MARKET NIBOR Tenor

May 28, 2019 figure — an increase of 0.66% from May start May 31, 2019 figure— no change from the prior week April 2019 figure — a increase of 5.27% from March 2019 figure

Friday Rate (%) 31/05/19

Friday Rate (%)

Change (Basis Point)

Indicators

31/05/19

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

1-week Change

YTD Change

(%)

75.76 2.56

0.00 (0.39)

17.43 (16.23)

2429.00 101.40 68.96 11.69 507.25

(0.33) 7.64 1.65 0.60 6.34

25.46 (22.12) (11.02) (23.74) 17.01

1295.02 14.51 264.10

1.03 (0.41) (1.84)

(1.71) (15.59) (19.43)

24/05/19

OBB

4.1400

11.1400

(700)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N CALL

4.9300 4.7857

12.0000 11.4375

(707) (665)

Tenor

10.8143 11.9616

10.9669 12.5760

(15) (61)

30 Days 90 Days

FOREIGN EXCHANGE MARKET Market

Friday (N/$)

31/05/19

Friday

1 Month

(N/$)

Rate (N/$)

24/05/19

Friday

Change

(%)

(Basis Point)

31/05/19 9.61 12.11

9.99 10.52

(38) 159

6 Mnths 9 Mnths 12 Mnths

13.06 13.20 13.20

12.02 12.60 12.82

104 61 39

30/04/19

Official (N) Inter-Bank (N)

306.95 360.43

306.90 360.39

306.95 360.63

BDC (N) Parallel (N)

0.00 361.00

0.00 360.00

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Friday

(%)

BOND MARKET AVERAGE YIELDS Tenor

24/05/19

1 Mnth 3 Mnths

Friday (%) 31/05/19

Friday (%)

Change (Basis Point)

24/05/19

3-Year 5-Year

0.00 14.12

0.00 14.39

0 (27)

7-Year 10-Year 20-Year

14.27 14.35 14.36

14.05 14.33 14.30

22 3 6

30-Year

14.69

(0)

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

Change

(%)

(Basis Point)

31/05/19

24/05/19

Index

2,895.70

2,892.40

0.11

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr)

8.71 5.40

8.70 5.41

0.11 (0.09)

YTD return (%) YTD return (%)(US $)

17.88 (37.93)

17.75 (38.04)

0.13 0.11

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

91 Day 182 Day

24,372.79 23,157.66

364 Day

19,842.35

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

Rate(%)

Date

11.95

30-May-2019 30-May-2019

12.2

30-May-2019

Global Economy In the US, economic growth in the first quarter accelerated by slightly less than initially estimated, according to revised data released by the Commerce Department. The Commerce Department said real gross domestic product surged up by 3.1% in the first quarter, reflecting a slight downward revision from the previously reported 3.2% jump. The downwardly revised increase in GDP still represented a notable acceleration from the 2.2% growth seen in the fourth quarter of 2018. The pace of consumer spending and exports was revised slightly higher, while business spending and inventory investment were revised slightly lower. Consumer spending rose at a 1.3% annual rate in the first three months of the year, an upward revision from an earlier 1.2% estimate. The pace of exports was revised higher, to a 4.8% annual rate. Imports, a drag on growth, declined less than previously estimated. In China, activity in the manufacturing sector slowed in May, falling victim to the ongoing trade war with the United States. The official Purchasing Managers' Index (PMI) for May dropped to 49.4. April's reading was 50.1. A PMI reading above 50 indicates expansion. A reading below 50 signals a contraction in manufacturing. Factory output expanded at a slower pace as new orders fell for the first time in four months. Export orders extended their decline for the twelfth straight month with the sub-index pulling back significantly to 46.5 from April's 49.2, suggesting a further weakening in global demand. In South America, the Brazilian economy advanced by 0.5% year-on-year in Q1'19 from 1.1% in the previous quarter. It is the weakest growth witnessed since the first quarter of 2017 and this was due to a slowdown in household consumption and fixed investment. Household expenditure grew by 1.3% (1.5% in Q4'18) and fixed investment by 0.9% (3% in Q4'18). Government spending also went up by 0.1% (-0.7% in Q4'18). Exports rose by 1%, lower than 12% witnessed in the previous quarter and imports fell by 2.5% (6% in Q4'18). Domestic Economy The Nigerian Stock Exchange (NSE) published its monthly Domestic & Foreign Portfolio investment report for April 2019. The report revealed that the total transactions at the nation's bourse increased by 35.24% to N148.91 billion from N110.11 billion recorded in March 2019. Consequently, total foreign transactions increased by 37.13% to N76.92 billion from N56.09 billion the prior month. Total domestic transactions which is split into retail and institutional investors revealed that retail investors were outperformed by institutional investors by 18%. Total retail transactions increased marginally by 6.6% to N29.26 billion in the reference month from N27.44 billion in March. Likewise, the institutional composition of the domestic market climbed by 60.75% to N42.73 billion in April 2019 from N26.58 billion in March 2019. Total foreign outflows also edged up by 38.34% to N41.78 billion from N30.20 billion and foreign inflows also jumped by 35.76% to N35.15 billion from N25.89 billion between March and April 2019. In a separate development, businesses expressed optimism on Nigeria's macro economy in May 2019 according to the Central Bank of Nigeria (CBN) monthly Business Expectations Survey (BES). The report, which was posted on the apex bank's website stated: “at 29.7 index points, respondents' overall confidence index (CI) on the macro economy in the aforementioned period was less optimistic when compared to its level of 29.2 index points recorded in April 2019.” The respondent firms were made up of small, medium and large organisations covering both import- and exportoriented businesses. The positive outlook by businesses in May 2019, according to the report, was driven by the opinion of respondents from the following sectors: services (15.7 points), industrial (9.7 points), wholesale/retail trade (2.8 points) and construction (1.4 points) sectors. The surveyed firms listed insufficient power supply, high interest rate, unfavourable economic

climate, unclear economic laws, financial problems, insufficient demand, unfavourable political climate and access credit as the major factors constraining business activity in the reference month. The business outlook for June 2019 showed greater confidence on the macro economy with 62.7 index points. Stock Market Bargain hunting pushed the All Share Index (ASI) higher in the week ended May 31st, 2019. The index rose by 0.61% to settle at 31,069.37 index points from 30,881.29 index points the previous week. Similarly, market capitalization gained 0.61% to close at N13.68 trillion from N13.60 trillion last week. The industrial goods and consumer goods sector contributed to the rise in the ASI. This week, we expect the market to sustain its bullish momentum following sustained investors' interest in large-cap stocks. Money Market Rates at the money market trended southwards last week, boosted by Open Market Operations (OMO) maturity of N133 billion. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates settled lower at 4.14% and 4.93% from 11.14% and 12% respectively the previous week. Likewise, the 30- and 90-day NIBOR closed at 10.81% and 11.96% from 10.96% and 12.58% respectively the previous week. This week, we expect tight liquidity due to retail Secondary Market Intervention Sales (SMIS) and OMO auction to drive rates higher. Foreign Exchange Market The naira recorded mixed performances against the dollar across various market segments in the week ended May 31st, 2019. At the NAFEX window the local currency witnessed a marginal appreciation of 21 kobo to close at N360.18/$. However, the official window ended at N306.95/$, a 5 kobo depreciation from the previous week. Meanwhile, the parallel market remained unchanged at N361/$. This week, we envisage that rates would remain at prevailing levels. Bond Market Average bond yields moderated on the short st end of the curve in the week ended May 31 , 2019 with minimal volumes traded across some maturities. Yields on the five-year debt instrument closed lower at 14.12% from 14.39% the preceding week. Consequently, the Access Bank Bond index rose marginally by 3.29 points to close at 2,895.70 points from 2,892.40 points the previous week. This week, client inflows should dictate the market direction. Commodities Oil prices further retreated last week as comments from Donald Trump ramped up trade conflicts, weighing on demand output. Prices were also depressed by an increase in U.S. oil production. Consequently, the OPEC benchmark crude, shed $1.46, or 2% to $67.10 per barrel. Precious metals prices went in varying directions as gold prices picked up while silver prices declined. Gold prices shot up by 1.03% to $1,295.02 an ounce due to increased demand on the safe-haven commodity after U.S. Donald Trump vowed to levy tariffs on all Mexican imports, ratcheting up concerns of a global slowdown. Conversely, silver fell by 6 cents or 0.4% to $14.51 an ounce. This week, prices may remain pressured due to the current trade conflicts between U.S. and China. For precious metals, prices may remain supported by the ongoing trade tensions. MONTHLY MACRO ECONOMIC FORECASTS Variables

Jun’19

Jul’19

361

362

Inflation Rate (%)

11.30

11.23

11.21

Crude Oil Price (US$/Barrel)

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

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Aug’19

Exchange Rate (Interbank) (N/$)

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Monday 03 June 2019

BUSINESS DAY

news FG unlikely to meet revenue projections ... Continued from page 1

oil benchmark, continues

to drop, according to analysts. The slowdown in the global oil market has continued in the last one month. Brent crude fell 4.4 percent to $66.49 a barrel on Friday (6pm Nigerian time), taking its decline in the month of May to 8.2 percent, its worst performance in the year. If the drop in oil prices continues, it will throw the 2019 Appropriation Bill of N8.92 trillion signed into law last week by President Muhammadu Buhari into disarray. This will worsen the low capital release and other factors that have marred the full implementation of previous budgets. Nigeria estimates total revenue of N6.97 trillion (3 percent lower than the 2018 estimate of N7.17 trillion) in the 2019 budget, consisting of oil revenue projected at N3.73 trillion and non-oil revenue estimated at N1.39 trillion. Other projected revenues include Companies Income Tax (CIT) of N799.52

billion,ValueAddedTax(VAT)of N229.34 billion, Customs Duties of N302.55 billion, and IndependentRevenuesofN624.58billion. The 2019 budget revenue projection is based on a benchmark of $60 per barrel of oil and assumed oil production of 2.3 million barrels per day, even though this target hasn’t been met in over a decade. Nigeria needs the oil price to rise and in the worst case remain steady at any price above the $60 benchmark. But analysts are concerned that even if the oil prices stay high, the 2019 budget revenue projection may head the same path with previous revenue projections which have failed to meet their targets in the last five years. Ayo Akinwunmi, head of research at FSDH Merchant Bank, said even if international oil prices were higher, the government would still not be able to meet its expected revenue because the country had yet to achieve the

projected oil production of 2.3 million barrels per day. “For the government to generate more revenue, it needs to build up infrastructure and facilities to be able to generate more non-oil revenue via tax generation and compliance,” Akinwunmi said. The Federal Government’s actual retained revenues in 2014 stood at N3.727 trillion, according to data obtained from the Central Bank’s quarterly reports. This value represented a shortfall of N3.5 billion from the N3.731 trillion projected in the 2014 budget. In 2015, when the country started feeling the gentle heat from the fall in crude oil prices, the difference between actual and projected revenue rose 19.58 percent to about N675.89 billion. In that year, Nigeria realised N2.776 trillion even though it projected revenue generation of N3.452 trillion. The gap, however, widened further in the thick of the economic recession in 2016 that forced the country to look to the non-oil sector as the messiah that would lift the economy

from its precarious state. For the first time in many years, the non-oil sector raked in the highest amount of revenue for the government while the oil sector played second fiddle. Of the total N2.621 derived as revenue in 2016, non-oil revenue raked in N824.22 billion while retained revenue from oil stood at N697.80 billion. However, even an increase in non-oil revenue could not narrow the shortfall between actual and budgeted revenues. Variation between budgeted and actual revenues in 2016 ballooned some 32 percent to N1.234 trillion. The same trend continued in 2017 and 2018 when variations between actual and budgeted revenues stood at N2.426 and N3.2 trillion, respectively. For 2018, the Federal Government could only manage to hit revenue of N3.96 trillion, a figure that is wide off the mark from the N7.16 trillion apportioned in the budget. Gbolahan Ologunro, research analyst at Lagos-based CSL Stockbrokers, said perennial issues such as militancy in

the Niger Delta and pipelines leakages would continue to obstruct oil revenue from reaching its projections. “We can get more money from the oil sector by simply just deregulating the downstream sector which will attract a lot of investment in the value chain, while for non-oil revenue, increasing the tax net through the use of technology and improving the operating environment such as infrastructure will go a long way in solving the problem,” Ologunro told BusinessDay. Godwin Emefiele, CBN governor, in the last Monetary Policy Committee meeting raised the alarm on the need for the government to build revenue buffers by pegging the budget at a realistic oil price to enable the country save for rainy days in an event of a collapse in oil prices. Ibe Kachikwu, immediate past minister of state for Petroleum Resources, also raised concerns about fluctuating international oil prices. “I worry about oil prices which are beyond our con-

How Kachikwu strove to fulfil oil sector... Continued from page 1

his achievements efforts to revive the country’s failing

refineries, bid rounds, local content, relative calm in the Niger Delta and reduction in pipeline vandalism. The minister, usually at the forefront in local and international meetings representing and speaking on behalf of President Muhammadu Buhari (who doubles as minister of Petroleum Resources), narrated how he was able to achieve results and scale through series of issues or challenges affecting the sector, although admitting that the refineries were one area the administration did not deliver on its mandate. “On the entire transparency index, this sector has done phenomenally well compared to when we came in 2015. However, there are little areas we need adjustment. We have had transparent contracts and cancelled those which are not well done. We put in place the direct sales, direct purchase (DSDP) contracts which saved a huge amount and opened up competition,” Kachikwu said in an interaction with journalists in Abuja. In the last four years, Kachikwu explained that the government did not give out any oil blocksormarginalfields,because the president believed there was needtocleanupthesectorbefore dishing out political patronage. “There was a time I issued a warning that unless those

concerned went back to their blocks and began to work it, we were going to take back those blocks. Some of them say they have a 20-year timeframe. They are right in one sense, you cannot breach contracts, but when it came to the time for renewal if you are not meeting your work obligation on the block we will take it off you and give it to individuals who would work the field,” Kachikwu said. At the inception of Buhari’s administration in May 2015, the oil and gas industry was beset with a myriad of challenges ranging from a huge backlog of subsidy payments and cash call arrears to joint venture funding issues, infrastructure deficit, insecurity in the Niger Delta, limited refining capacity, and sharp fall in global oil prices. In order to vigorously pursue the oil sector reform agenda, President Buhari kept to himself the petroleum minister portfolio and appointed Ibe Kachikwu as minister of state. To avoid policy summersault and continuity, Kachikwu said his ministry put plans and structures in place to institutionalise policies such as the gas monetisation programme, refinery projects, infrastructural projects, Niger Delta militancy projects and many others. Concerning the refineries, Kachikwu admitted that the ministry did not meet its mandate despite series of efforts in reviving the refineries to make it produce at least close to 2-3 million barrels per day. He,

Buhari’s desire for inputs from new... Continued from page 2

committee that he would expand his cabinet. Our source at the Presidency said this is likely to happen this time around. “Actions are on to split some ministries to make them more responsive to meeting the peo-

ple’s needs,” the source said. He cited the Ministry of Power, Works and Housing which, he said, “will definitely split into three ministries”. “But as for those who will likely return, it is a very sensitive matter and as you know, the President has kept this to www.businessday.ng

trol; any country that can produce with the minimal level of cost automatically challenges our existence,” Kachikwu said in a recent parley with journalists in Abuja. But Nigeria is in desperate need of growing its revenue. Yvonne Mhango, head of research for sub-Saharan Africa at Renaissance Capital, said to grow revenue, the low hanging fruits such as decrepit infrastructure must be the focus of the government. “Economy grows when infrastructure grows,” Mhango told BusinessDay at the last RenCap event in Lagos. She also emphasised the need for champions in various sectors that can influence and push government policies. Even though Africa’s most populous country has over time failed to meet its targeted revenue,ithascontinuedtopayhuge sums for an unsustainable oil subsidycurrentlytagged“under recovery” by the Nigerian National Petroleum Corporation (NNPC). In 2018 alone, Nigeria spent some N730.9 billion subsidising the price of petrol. L-R: Funmilayo Falola, head, brands & marketing communications, Wema Bank; Diane NwabuezeOhai, business development manager, Idowu Taylor branch; Dotun Ifebogun, head, retail bank; Opeyemi Tomori, product manager, liability products; Temitope Ogundeji, head, liability products, and the top 3 winners of the Wema Bank Royal Kiddies Creative Competition organised by Wema Bank to mark the 2019 Children’s Day in Lagos.

however, clarified that NNPC owns the refineries and, therefore, the role of the minister is not to head negotiations with investors but to provide policy. “By December last year, when I got worried we were not meeting the mandate that is expected from the refineries, I then called a meeting and tried to resolve the issues with the investors themselves over the contractual terms and I thought I did eventually. The NNPC still rejected the terms we had agreed on,” Kachikwu explained. Despite the challenges with public refineries, Kachikwu said the future of refinery was not in public refineries but in private refineries, which was why the government cre-

ated an enabling environment to support private investment such as Dangote and modular refineries, a concept pushed for to ensure peace in the Niger Delta which is currently working successfully. “Apart from the Dangote refinery coming with 650,000 barrels per day, there are three modular refineries nearing production points while about seven others are nearing Final Investment Decisions (FIDs),” Kachikwu said. On a longer-term basis, Kachikwu said the refinery is also an export earner and Nigeria needs to be able to supply product to the rest of West Africa, East Africa and Southern Africa. “I also made efforts talking to the Gulf countries like

Saudi Arabia, Qatar and China trying to see whether they will be interested in coming in both for the purpose of Greenfield refinery building or the Brownfield refinery building which the responses have been positive,” he said. Kachikwu said Nigeria is almost at the threshold of signing a Memorandum of Understanding (MOU) with South Africa which will not just cover refineries but also cover pipelines and LNG investment which is huge. In curbing the menace of illegal refineries, Kachikwu said the problem with illegal refineries is not just the quality deficiency of the products but the fact that it’s a stolen material, which is why the ministry

is working with the judiciary to fast-track punishment or electronic capturing of offenders. Kachikwu said Nigeria cannot continue to stay at the sub-base of oil business necessitating the need to domesticate the value chain of oil production through initiatives such as Project 100. “So in the ministry we are not just interested in policies, we are also considering those things that benefit Nigerians as well. Project 100 is not about 100 companies, it’s about providing opportunities so there is no limit to the other indigenous companies that can benefit from it. In the next 10 years, I will like to see this country boast of its production platform,” Kachikwu said.

himself,” the source added. The President had said in a recent interview that he was yet to discuss his ministerial list with anyone. BusinessDay gathered that a few of the ministers who had performed “creditably well” in the last dispensation will be retained as President Buhari indicated his preference to keep some of them as part of

his efforts to ensure continuity. It was also gathered that Zainab Ahmed (Finance), Hadi Sirika (Aviation), Rotimi Amaechi (Transportation), Geoffrey Onyeama (Foreign Affairs), Udo Udoma (Budget and National Planning) and Okechukwu Enelamah (Industry, Trade and Investment) are some of the ministers who may make the list.

“I have addressed members of the cabinet and said goodbye to them at least for the four years. I still haven’t discussed it with anybody, and you will not be the first person l will discuss it with,” Buhari said recently. “When l addressed the cabinet, I said I am very pleased we did not have any major scandal. This is a major achievement. And anybody who hasn’t got

any evidence against any of my ministersshouldhavetotrustme andmysenseofjudgmentabout whichoftheministersIwillretain and which ones I will say goodbye to. And very sincerely, too. I won’t go beyond that because, like I said, I have not discussed it with anybody yet,” he said.

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Monday 03 June 2019

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NEWS FAAN assures on Emergency Operation Centres across Nigerian airports IFEOMA OKEKE

anaging director of Federal Airports Au t h o r i t y of Nigeria (FAAN), Rabiu Hamisu Yadudu, says all the country’s international airports have an Emergency Operation Centre (EOC) as part of criteria to deal with crisis situations when they arise. Yadudu said this weekend at the agency’s headquarters at the Murtala Muhammed Airport (MMA), Lagos, during an interview with aviation journalists. It would be recalled that the authority about two weeks ago commissioned the EOC at the Kaduna International Airport. He explained that Kaduna Airport was added to the growing number of emergency centres in the country because of its international status, noting that it was key for all airports to have an EOC that could be activated in times of emergencies.

He said: “So far, it’s only international airports that have EOCs, but it is what we should have in every airport. Kaduna airport didn’t have before now, may be because it wasn’t an international airport, but all the airports should have it. “The essence is to cater for emergencies like air crash, terminals and any form of emergencies that may arise where you have casualties. You need to have a place to coordinate emergencies where you can seat down quickly and direct resolutions of the emergencies. “That’s why it is not

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usually inside the terminal or airside, but where you can have accessibility to the runway, airside and the terminal; you can see what’s happening, but it’s a bit remote from the terminal building. Whatever that is happening in the terminal, you can easily go there. “All the airports have aerodrome emergency plan. When you have an emergency, you quickly activate it and call the people that are in charge of such emergency like the fire service, airport manager and others. All these things are spelt out with their leaders.

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Monday 03 June 2019

BUSINESS DAY

NEWS Sanwo-Olu to partner FG on collapsed Lagos-Badagry road Promosalons Nigeria, FNCCI to lead Nigerian JOSHUA BASSEY

agos State governor, Babajide SanwoOlu, says the state government is looking to collaborating with the Federal Government to fix collapsed sections of the Lagod-Badagry Expressway. The express road has not only become a national embarrassment but a death trap. Thousands of commuters and motorists plying the road are daily cramped in traffic jams, worsened by deep potholes and craters

that have developed along the abandoned sections of the road. Movement on the road is particularly pathetic around the Lagos International Trade Fair complex, stretching to Barracks bus stop, Volks and Iyana-Iba axis, as the contractor engaged by Lagos State government in its bid to expand the road, had long left site due to non payment by the state. But Sanwo-Olu, who took a tour of the road on Sunday, said the state government would work towards com-

pleting the road from Maza -Maza to Okokomaiko before the end of this year. Sanwo-Olu, who addressed journalists, also assured that there would be a major clean up of the road from National Theatre at Iganmu to Maza-Maza, urging traders displaying goods on the road to halt their illegal activities. “We would ensure that the commerce in the Western axis of Lagos come back to life; that is why we have come here,” he said.

NNPC recruitment: Candidates laud Baru for transparent exercise HARRISON EDEH

andidates that participated in the recruitment test of the Nigerian National Petroleum Corporation (NNPC) have applauded Maikanti Baru, group managing director of the Corporation, for organising a transparent and fair exercise across the country. The aptitude test was launched into the third stage on June 1, 2019, with a successful Computer Based

Testing (CBT) for at least 60,000 candidates across 22 states in Nigeria. Some of the candidates praised the NNPC for the smooth process. A candidate, Iheoma Okeke, who participated in the Graduate Trainee test at lead British International School centre in Gwarinpa, Abuja, said: “I am hopeful because the process was smooth and organised. What tripped me the most was that the official were friendly and fair to every-

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one, which is far from what I usually hear.” Another candidate, Bunmi Adeleye, also praised the NNPC for this ongoing recruitment, saying, “I felt so relaxed during the accreditation because it was fast and seamless.” Isaiah Inuwa, chief operating officer, corporate services of NNPC, said the test would had not been possible if the Corporation did not collaborate with some institutions to ensure the success of the programme.

delegation in exploring global opportunities SEGUN ADAMS

romosalons Nigeria, the exclusive official representative of Promosalons France in Nigeria, is organising a business tour to open up Nigerian businesses to international opportunities. The tour is being organised in collaboration with the Franco-Nigerian Chamber of Commerce and Industry (FNCCI) to lead a Nigerian business delegation to France from June 29 to July 6, 2019. According to Akin Akinbola, managing director/ CEO of Promosalons Nigeria, Cameroon and Gabon, the business tour would cut across sector such as: Food industry and agriculture, digital sectors, shipbuilding and leisure marine sector, automotive, defence and security, green business, renewable energy, biotechnology, health, green vehicle and mobility, and the likes. “This is a great opportunity for Nigerian companies in the above sectors mentioned to secure business partnerships with French companies in France, as participants will

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be able to build relationships and contacts with a view to increasing their international trade,” Akinbola said. The business tour will be taking place in Paris, also in the Bretagne region during the July Open De l’international event. The Open De l’international is the international business partnering forum that takes place in Bretagne every first Monday of July, as a big networking and information event that allows participants meet and create new business opportunities with Breton companies. He also added, “The business delegation is an offer to Nigerian companies in relevant sectors to network and build business relationship with French investors, interact with French companies in relevant sectors across to regions in France.” The sectors focus in Bretagne region include over a thousand business-to-business (b2b) meetings at open international with French companies and institution of many choices on a platform where attendees’ business request will be posted online.

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Also, company/industry on-site visits on the following sectors: Agri-tech & Food Tech, E-health, Renewable energies & Smart Grids. On the other hand, the sectors’ focus in Paris region would include technology (Fintech, Agri-tech, Block Chain, IoT), Banking and Finance and Insurance, according to a press release by Promosalons Nigeria. Promosalons Nigeria had earlier in the year, between February 24 and March 3, led a Nigerian delegation to the International Agricultural Trade Shows in Paris to explore global opportunities, interact, and exchange ideas and contacts with other professionals in the agricultural industry from around the world. The Federal Ministry of Agriculture and Rural Development, Boslan Agro Services, Scoa Nigeria plc, Agro Nigeria Magazine, Gorine Energy Limited, Tamtek Global Business, Premier Seed Nigeria Limited, Fortune Agricultural Services were among the experts in agribusiness Promosalons Nigeria led to SIMA Paris 2019 and the Salon International De L’Agriculture (SIA).

Monday 03 June 2019

BUSINESS DAY

NEWS Sanwo-Olu seeks support of faith-based organisations to drive reforms JOSHUA BASSEY

overnor of Lagos State, Babajide Olusola Sanwo-Olu, says support from faithbased organisations will go a long way in achieving success with his administration’s waste and transportation reforms aim to recreate a better Lagos for all. Sanwo-Olu stated this during the first special prayers for his administration at the Central Mosque, Alausa, Ikeja on Friday, where he assured of continuous consultation and dialogue with both Muslim and Christian communities in the state. According to Sanwo-Olu, faith-based organisations have a role to play in getting Lagosians to imbibe the habit of cleanliness and hygiene by sorting their wastes at home and workplaces, and by obeying extant traffic rules and regulations. At the special prayer, which was also attended by his wife, Ibijoke Sanwo-olu, the governor promised he would return to the mosque in later days with waste-sorting materials of different colours, to show congregation and teach them how to sort waste of specific kind in a coloured-specific waste bin. The same, he said,

would be done in churches. The governor implored clerics and leaders in the society to lead the reform campaigns in their communities, as people believe and relate with them more easily. He emphasised the importance of their collaboration, stressing that the reform would be half-won if faith-based leaders actively participated in the campaigns. While thanking Lagosians for their support before and during elections, he urged them not to relent in their prayers for his administration and Lagos, as “their prayers are what will see the administration through.” He said his administration would also give priority to teachers’ welfare, school upgrading and school modernisation. He believed that in the spirit of the holy month of Ramadan, all prayers said for him, his deputy and other members of his administration would be easily answered just as he prayed for God’s special favour on Lagos State. He was accompanied to the special prayer service by Obafemi Hamzat, his deputy, and Hakeem Muri-Okunola, the Lagos State head of service.

The Telnet Group announces new GMD, GED

Folorunso Aliu, new GMD

he Board of Directors of Telnet (Nigeria) Limited is proud to announce the appointment of Mr. Folorunso Aliu as the new Group Managing Director of Telnet Group, effective May 9, 2019. The company made the announcement following the departure of its erstwhile Group Managing Director, Gbenga Odujinrin.

Adewale Adetugbo, new GED

he Telnet board is also proud to announce the appointment of Adewale Adetugbo as the Group Executive Director of Telnet (Nigeria) Limited. Adewale Adetugbo (Wale) was formerly the Chief Technical Officer of Telnet (Nigeria)

Since joining the company in the year 2000, he has risen through the ranks to the present position of the Group Managing Director. He was at various times, the Head of Network Support department, the National Coordinator of Network Support unit, the managing director of iTECO (Nigeria) Limited- a subsidiary of the Telnet Group and the Group Project Director for Telnet (Nigeria) Limited. Folorunso holds a Bachelor of Science degree in Computer Engineering from the Obafemi Awolowo University, Ile-Ife and a Masters of Business Administration (MBA) from the Lagos Business School (LBS). He is a Certified Management Consultant (CMC) and Fellow of the Institute of Management Consultants (FIMC) He is a published author and is married with 3 children. Limited. He has over 2 decades of experience in engineering, high technology, and strategy consulting in West Africa. Working at Telnet in a variety of roles, he has been responsible for a number of client successes by bridging the gap between business and technology for Telnet’s clients. He received a B.Sc. in Electrical Engineering from the University of Lagos, a MBA from IESE Business school in addition to various other technical certifications relevant to his field. Wale was the first Nigerian to earn the coveted CCIE (Cisco Certified Internetwork Expert) certification living in Nigeria and was for over a decade the only certified internetwork expert south of the Sahara. He is married with 3 children. www.businessday.ng

L-R: Oluwatoyin Sanni, CEO, Emerging Africa Capital Group; Teju Abisoye, acting executive secretary, Lagos State Employment Trust Fund (LSETF); Nkem Okocha, founder, Mamamoni Limited, and Okhai Olaghere, director, Fosad Consulting, during the memorandum of understanding (MoU) signing between LSETF and Mamamoni Limited on empowering 100 women start-ups held at Ikeja, Lagos.

NEXIM, Waterways Authority, Sealink move to unlock $1.2bn annual solid mineral export ONYINYE NWACHUKWU, Abuja

igerian Export Import (NEXIM) Bank has signed a tripartite agreement with the National Inland Waterways Authority (NIWA) and the Sealink Promotional Company anticipating to enhance non-oil exports revenues to between $500 million and $1.2 billion annually on bulk solid minerals exports. The memorandum of understanding (MoU) signed in Abuja at the weekend would promote waterway operations for hinterland, transit and coastal trade, especially for bulk cargo. The partnership is basically intended to bridge infrastructure gap that would promote and enhance trade connectivity as well as spur

Nigeria’s regional and global trade competitiveness. At the official signing ceremony, Abba Bello, managing director, NEXIM, said the MoU, a novel public-private partnership framework, was primarily designed to attract private sector investments under government agencies’ facilitative support at no cost to government. “The effective implementation of the Sealink project and the safe utilisation of the inland waterways would no doubt bridge logistics gaps that will attract and facilitate investment flows the two sectors. “This will contribute to the realization of one of the broad strategic objectives of ERGP, which is building a globally competitive economy. To this end, it will also contribute to improving Nigeria’s current World Bank ease of doing business and Logistics Performance Index (LPI)

Lottery is an essential ingredient for socioeconomic development’ JUMOKE AKIYODE-LAWANSON

n addition to human capital and natural resources, social resources are quietly emerging as an important ingredient for socioeconomic development. Ayo Ojuroye, managing director, BET9JA, popular Nigerian betting operator, revealed this in a conversation with newsmen in Lagos, noting that lottery was a social resource positively changing the economic fortunes of countries across the world. According to Ojuroye, “In Nigeria, the operation of lottery has precipitated increase in state revenue through payment of taxes and other levies paid to the government.” Bet9ja pays all taxes and levies due to it as an organisation promptly in compliance with every federal, state laws and best corporate governance practice, he said. Industry analysts have always reiterated the enormous benefits in lottery business and its proceeds for

states and national economy, he said, saying that for any nation to grow, it must possess the power to generate income internally so that the government can meet its civic obligation of providing infrastructure, such as roads, electricity, water, among others, as well as meeting recurrent expenditure. Stakeholders are also of the belief that lottery also invariably contributes to curbing unemployment as opportunities exist in gaming, for instance oddsmakers, analysts, security, cashiers, among others. Indeed, the job opportunities in lottery and sports betting are limitless and the revenue can help sustain the economy of the country. He noted that the induced impacts on the economy arose as employees/beneficiaries of the industry spend their wages in the broader economy - payment of rent, school fees, transportation, food, beverage, and entertainment.

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rankings,” Bello stated. He said the MoU was a significant milestone in their ongoing collaborations with all key national and regional maritime stakeholders, and would be catalytic to the realisation of one of the priority projects under the ECOWAS Community Development Programmes. He recalled that NEXIM’s strategic interest in partnership for the promotion of the Regional Sealink project dates back to 2011 and that the decision was largely informed by the huge logistics challenges and non-tariff measures along the ECOWAS trade corridor. This is coupled with the desire to both enhance Nigeria’s export to ECOWAS that has muted over the years at about 15 percent and to encourage formal trade. He said it was in the quest to

facilitate the realisation of the above strategic objectives that the bank introduced the ECOWAS Trade Support Facility (ETSF) that was specifically designed to also increase Nigeria’s trade flow within the ECOWAS Sub-Region. Dabney Shallholma, chairperson, Sealink Implementation Committee, was optimistic that the MoU on inland waterways development partnership would improve logistics service delivery and enhance hinterland trade. She said the collaboration and strengthening of cooperation was coming, especially at this time when African Union was finalising arrangement for a continental free trade area to foster integration, investment and trade, and that time had come for Nigeria to be bullish in its non-oil export trade to diversify the economy.

NAMA partners Ghana CAA on cross-border search, rescue IFEOMA OKEKE

n a bid to address issues arising from the flow of air traffic among adjacent Flight Information Regions (FIRs), the Nigerian Airspace Management Agency (NAMA) has signed a memorandum of understanding (MoU) with the Ghana Civil Aviation Authority (GCAA) for effective synergy and collaborative cross-border search and rescue around the common boundaries of the two states. The MoU, which was signed at NAMA headquarters in Lagos with a highpowered team of GCAA officials, stipulates guidelines and procedures for collaboration on aircraft and weather/terrain information sharing, deployment of manpower as well as search and rescue equipment in the event of an incident or accident. NAMA at the event also @Businessdayng

signed Letters of Agreement with the visiting Ghana team specifying procedures to be followed for tactical separation of aircraft between Lagos and Accra. Stipulated in the Letters of Agreement are details such as how air traffic controllers exchange or manage the movement of aircraft across the two centres in terms of radio frequencies, the point at which to transfer aircraft as well as established boundaries and altitude for transfer of aircraft across the common borders. Also contained in the agreement are procedures of handling emergencies, transfer of aircraft using technical systems such as Controller Pilot Data Link (CPDLC) and Automatic Dependent Surveillance Contract (ADSC) as well as standard separation between aircraft compliant with that of the adjacent state.

Monday 03 June 2019

BUSINESS DAY

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Monday 03 June 2019

BUSINESS DAY

NEWS L-R: Tajudeen Dantata, chairman, Dantata Food; Abubaka Makinta, head agric finance, Jaiz Bank; Bello Haruna, project manager, DDI; Stella Longpoe, value chain advisor, and Bukola Awosanya, group head agric finance, Sterling Bank, during the Rice and Groundnut Stakeholders Summit to Stimulate Establishment of Innovation Platforms and Advance Inter State Food Commodity Value Chains Across 7 Project State in Abuja.

ECOWAS Parliament speaker blasts Lasun, others over poor attendance INNOCENT ODOH, ABUJA

… blocks payment of allowances

peaker of the Parliament of the Economic Community of West African States (ECOWAS Parliament), Moustapha Cisse Lo, has castigated the deputy speaker of Nigeria’s House of Representatives, Yusuf Suleiman Lasun and other members of the regional legislature over their poor attendance during the just concluded First Ordinary Session of the Parliament. Cisse Lo, who declared the session closed on Saturday, expressed dismay that Lasun, who is the First Deputy Speaker of the ECOWAS Parliament and leader of the Nigerian delegation, could show so much lackadaisical attitude with his poor attendance and still wanted to be paid his full allowance even as he blocked the payment of the allowance to Lasun and all the others who failed to at-

tend plenary. A visibly angry Cisse Lo queried why Lasun would avoid proceedings of the Parliament and get full payment, whereas some members who attended for a number of days did not receive full payment of allowance. Cisse Lo said Lasun had commitments, yet decided to abandon his duty to oversee the proceedings of the ECOWAS Parliament, adding that he authorised a ‘no attendance no payment’ option in order to sanitise the system and also ensure proper attendance of proceedings of the Parliament. He threatened to report to President Muhammadu Buhari if any of the members protested against the decision he took on the payment issue, saying, “Lasun, who never came, is being given full payment. And he is never here. I blocked that payment.

“Yes, I lost my temper. I was out of myself. I gave authorisation because I want to have the list of attendance. I authorised it.” The Speaker said further, “Lasun never came and he got full payment. If he must be paid, everybody must be paid. It is not my money, but the community money. “Lasun didn’t come and he was paid. It is not acceptable. It is not acceptable. If you protest, I will write to President Buhari.” At the time of filing this report, Lasun was said to have travelled to Saudi Arabia for the lesser Hajj. A source close to him described the Speaker’s outburst as “playing to the gallery,” adding that Lasun had taken permission to travel. Reacting to the matter, a member of the Nigerian delegation of ECOWAS Parliament, Biodun Olujimi, said

Cisse Lo overreacted over the issues. Olujimi said: “For me, that was too personal because the Parliament is not to attack individuals, especially if you are a leader, you must be able to manage issues behind closed doors. You don’t need to bring anything up on the floor of the House.” Olujimi further said the Parliament was supposed to be a place where information was distilled and formulate policies, adding that the Parliament was not a place where petty, personal issues would be brought. Olujimi added: “I am not in favour of anyone not attending. However, the Deputy Speaker of the Nigerian House of Representatives is a very busy person. He is put here so that he can oversee and can overlap once in a while.

CBN prioritises Open Banking as Centric Gateway launch initiatives SEGUN ADAMS

entral Bank of Ni g e r i a ( C BN ) has prioritised Open Banking in the development of the Payment Systems Vision (PSV) 2030 as it considers the concept as one of the top global trends and new practices in payments that have been deployed in other countries, which must be considered in Nigeria. According to the apex bank, this is necessary because of the importance of having a strategy that is relevant for the Nigerian market domestically and for regional and global markets where Nigeria plays a role in international flows. The apex bank revealed this in its Request for Information into the PSV 2030 document, which according to the CBN’s director of payment system management, Sam C. Okojere, would “define the strategic agenda for the Payments System for the next ten years.” It comes on the heels of its very successful PSV2020 that wraps up at the end of 2019. Other global payments trends identified for consideration in Nigeria’s payments strategy in the next 10 years are new payment methods, digital access, distributed ledger technology, big data and artificial intelligence, cyber-security, digital identity, as well as machine learning and robotics process automation. This is because of the critical need for the PSV2030 framework to recognise swiftly evolving user requirements, tech-

itel Mobile give Nigerian children memorable outing

o celebrate Children’s Day this year, Africa’s c u s t o m e r- c e n t r i c brand, itel Mobile, treated children nationwide to special superhero themed parties as part of the brand’s CSR initiative tagged “Love Always On.” The smartphone brand, who believes that today’s children are tomorrow’s super heroes, decided to make the annual celebration a day to remember for children, their parents, and their guardians. The party held May 27, 2019, was joined by hundreds of children including pupils from different schools and communities across different cities from Lagos, Abuja, Yola, Onitsha, Ogbomosho, Kaduna and Port Harcourt.

Featuring a beehive of fun activities like face painting, carousel rides, football game, and lots of other exciting side attractions, including the brand’s Happy Mascot, iBoy, who came to the party in the company of other popular cartoon friends. itel Mobile tried its best to make sure all the children were happy and satisfied. Winners of the games got amazing gifts such as educational materials and branded gift bags. That wasn’t all, there were more surprises prepared by itel for the children across the country. itel Mobile partnered with the largest television network in Nigeria, NTA, to bring the fun, games, and gifts to more than 2,500 children in Lagos state. In Abuja, the brand partwww.businessday.ng

nered with Oma ventures to show the importance of giving love, attention, and affection to children in the IDP camp on the 23rd of May, 2019. In Onitsha, itel Mobile celebrated the day with children in Red Cross orphanage home in partnership with Iknobert International Limited, EBI Father Communication and Royal Global Ink Communication on the 23rd of May, 2019. In Ogbomosho, the brand in conjunction with Ajilete FM, Gbambari, and Tundex Multibiz Golden Venture on 23rd May 2019 showed love to children on this special day. The students of Victory Academy in Kakuri, Kaduna were not left out of the love from itel Mobile on the 24th

May 2019. While the brand engaged children in career talks, heroic stories and exciting games in Jimeta, Yola on the 24th May 2019. In Port Harcourt, itel Mobile in conjunction with JJ phones, Vinchino, Daniella best, treated physically challenged kids in PH city to a day of fun and thrills Commenting on the celebration, Oke Umurhohwo, itel Mobile’s Marketing Communications Manager, West Africa, said: “ At itel Mobile, we believe children are our future heroes and every child has the potential to change the world if given the right motivation, and itel has always been concerned about children’s growth and education.

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nical solutions, regulatory environments and external threats that typify the industry. The CBN noted that with change in the financial industry driven by rapid advances in technology, customer expectations and new business models (including Fintech), the payments industry had evolved over the past few decades from the early days of e-payment. In a related development, Centric Gateway, a frontline fintech that implemented an Open Banking gateway for a leading Nigerian Tier-1 bank, has joined Open Banking initiative - led in Nigeria by the Open Technology Foundation - as a member to drive advocacy for a common Application Programming Interface (API) standard. Speaking on the development, Niyi Kolade, CEO, Centric Gateway said, “In concurrence with our vision of improving financial technology throughout Nigeria, across Africa and around the world by creating innovative solutions that work for the market, our collaboration with Open Technology Foundation would help to not only drive our business objectives but to also help the entire payment services industry to better serve the needs of customers everywhere.” Open Technology Foundation (OTF), also known as Open Banking Nigeria, was established to drive the development and adoption of Open Banking standards in Nigeria for greater innovation in the financial ecosystem.

Monday 03 June 2019

BUSINESS DAY

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Monday 03 June 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

TOM MITCHELL AND KATHRIN HILLE

hina has accused the US of “resorting to intimidation and coercion” as Beijing stepped up its trade war counteroffensive with tariff increases on $60bn of American goods and a probe into US delivery group FedEx. Wang Shouwen, the deputy head of Beijing’s negotiating team, on Sunday hit out at Washington for effectively barring US companies from using equipment made by Huawei, the Chinese telecommunications giant, saying it had complicated efforts to find a resolution to the trade impasse. “The China-US economic and trade consultations have been severely frustrated by the US tariff increases and [Washington’s] abuse of export controls by including Chinese companies on the entities list,” Mr Wang said at the release of a Chinese government report on the state of US trade talks. “The more the US government is offered, the more it wants,” China’s State Council added in the trade talks white paper. “Resorting to intimidation and coercion, it persisted with exorbitant demands . . . and insisted on including mandatory requirements [that infringe on] China’s sovereign affairs in the deal.” Wei Fenghe, Chinese defence minister, also upped the rhetoric on Sunday, telling the Shangri-La Dialogue security forum in Singapore: “If the US wants [more trade talks], we will keep the door open — if they want a fight, we will fight to the end.” US president Donald Trump last month announced increased tariffs

China decries US tariff ‘coercion’ as trade rhetoric heats up

Beijing defends drawing up blacklist and FedEx probe as defence minister joins dispute

on about half of all Chinese exports to the US, worth about $250bn, and ordered the Department of Commerce to put Shenzhen-based Huawei on an “entities list” restricting its access to essential US components and technologies. China responded by increasing tariffs on about $60bn dollars worth of US imports, which came into effect over the weekend, and announced it would establish its own blacklist of foreign companies that harm the interests of Chinese groups. A day later, state media reported that Beijing was investigating FedEx for allegedly “undermining the legitimate rights and interests” of its Chinese clients. Last week Huawei accused the Memphis-based delivery company of diverting packages destined for its offices in China to the US. FedEx said it would co-operate fully with the investigation, and has reportedly apologised for what it said was an error. “Our relationship with Huawei Technologies and our relationships with all of our customers in China are important to us,” the company said in a statement. Mr Wang sought to reassure foreign investors’ concerns about China’s list of “unreliable foreign

Obamacare helps fight against cancer, studies show Data on early treatment outcomes come as Republicans try to unwind health reform thousands and thousands of people HANNAH KUCHLER really access what they needed — to ancer patients have received be able to go through the door of a more timely treatment since doctor’s office,” she said. the implementation of ObamBut she warned that attempts acare in the US, potentially in- by Congress to “peel back” parts of creasing the chances of survival the act could cause a “wave of fear” for African Americans and women, that deterred patients from signing according to two new studies. up for plans and getting treatment. As Democratic presidential can- “If they don’t have insurance, they didates push for more publicly won’t have a screening test — and funded healthcare — often dubbed then they turn up in the emergency Medicare-for-All — research pre- department with stage-four cancer,” sented at the American Society of she said. Clinical Oncology (ASCO) showed Expanding access to governmenthow the Affordable Care Act 2010 funded healthcare has become a key improved the health of American issue in the 2020 presidential eleccancer patients. tion, as Democratic candidates seek One study from Yale showed to go beyond Obamacare and look at that racial disparities in how quickly solutions such as making more — or patients with advanced cancer were even all — people eligible for Meditreated disappeared in states that care, the public health insurance for used the act to expand access to seniors. Medicaid, the government health inHaving failed to completely roll surance for low-income populations. back the Affordable Care Act, the Another study from Johns Hop- Trump administration has been kins University found that women contesting its legality in court while with notoriously hard-to-spot ovar- trying to chip away at some of its ian cancer were more likely to re- provisions. ceive a diagnosis at an early stage Richard Schilsky, chief medical after the implementation of the act, officer of ASCO, said the organisation than before the legislation. would advocate for any modification Melissa Wheeler, director of of the act to still include access to disparities and the outreach pro- high-quality cancer care delivered gramme at the Levine Cancer In- by specialists and screenings. “Data stitute in North Carolina, said the presented here demonstrates the studies made “perfect sense”. “It was importance of good health insura great thing to see for the first time ance,” he said.

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Chinese vice minister of commerce Wang Shouwen speaks during a press conference about China-US trade issues in Beijing © AP

companies and individuals”, saying the development had been “overinterpreted”. “The legitimate rights and interests of foreign companies will be respected,” he said. “They should be at ease about this.” But citing the investigation into FedEx, Mr Wang noted that foreign companies “should be investigated” if they violated Chinese law or

abetted “non-commercial” actions against Chinese companies including “blockades”. Mr Wang added that more details about the commerce ministry’s list of unreliable companies and individuals would be released “soon”. The vice-minister declined to comment on whether Mr Trump and Chinese president Xi Jinping would meet on the sidelines of this

month’s G20 leaders’ summit in Japan — an event that most analysts believe will offer the two sides an opportunity to halt further escalations and resume talks that have been frozen since early May. The US president, however, has threatened to begin implementing another round of tariffs — affecting all imports from China — later this month.

Warren finds her footing in Democratic race for 2020 Massachusetts senator gains ground on rivals with detailed progressive policies COURTNEY WEAVER AND DEMETRI SEVASTOPULO

hen Elizabeth Warren launched her presidential campaign in February, the landscape for the Massachusetts senator looked bleak. Ms Warren soon slipped behind Beto O’Rourke, the former Texas congressman, and Kamala Harris, the US senator from California, in the polls. By April, first-quarter fundraising numbers showed her to be lagging behind candidates ranging from Bernie Sanders, her fellow progressive senator, to Pete Buttigieg, the mayor of South Bend, Indiana. However, over the past month the Massachusetts senator has rebounded, gaining ground in the polls against Mr Sanders, who remains in second place behind former vice-president Joe Biden, and eclipsing the likes of Mr O’Rourke and Ms Harris. Her improving fortunes are a sign there is appetite among Democratic primary voters for a policy-focused campaign as well as a candidate who has made economic inequities and corporate greed her main target. In a May Quinnipiac University poll, Ms Warren edged into third place, with 13 per cent of projected Democratic primary voters calling her their preferred candidate, com-

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pared with 35 per cent who chose Mr Biden and 16 per cent who picked Mr Sanders. In separate poll by Fox News, Ms Warren’s support more than doubled between March and May. A former Harvard law professor who has spent six years in the Senate, Ms Warren rose to fame in the wake of the 2008 financial crisis as a fierce critic of Wall Street. A fiery speaker, she has often been lumped together with Mr Sanders, her fellow Senate progressive. However, unlike Mr Sanders, Ms Warren does not consider herself a socialist and says she believes in the capitalist system. The uptick for Ms Warren comes with several caveats. First, it remains early in the 2020 race. The first Democratic primary debate, in June, is still weeks away. At this point in the 2016 cycle, Jeb Bush led the race for the Republican nomination in some polls and Donald Trump had still not officially launched his campaign. Second, Ms Warren continues to struggle with voters who have an unfavourable view of her, either because of distaste for her hard-charging personality — a criticism supporters dismiss as sexist — or because of controversy surrounding her claims of Native American ancestry. A Quinnipiac poll found that 41 @Businessdayng

per cent of voters had a negative opinion of the senator compared with 32 per cent who had a favourable view. Among the top-tier Democratic candidates she is one of the few who would struggle in a match-up against US president Mr Trump, polls suggest. Still, many Democratic strategists said Ms Warren’s rebound was notable. “The reality of this race — especially from Warren’s perspective — is that it is a marathon and not a sprint, and she’s treating it that way,” said Geoff Garin, a Democratic pollster. “I think she is persistently and patiently laying out a case that she has smart ideas to address the economic inequities and help average families overcome those inequities,” said Mr Garin. On the campaign trail, Ms Warren’s oft-repeated catchphrase, “I have a plan for that”, has become the campaign’s unofficial mantra. Among her top proposals: an ultramillionaire tax on families who have a net worth of more than $50m — a levy her campaign says would raise $2.8tn in revenue over 10 years and help pay for other proposals including the cancellation of student debt, free childcare for children from birth to school age and universal healthcare coverage through the expansion of Medicare.

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Monday 03 June 2019

NATIONAL NEWS

Funerals of two legendary Africans end years of tussle over bodies Tshisekedi and Savimbi laid to rest in efforts at reconciliation in DRC and Angola DAVID PILLING

his weekend, the near-legendary leaders of opposition movements in two of Africa’s biggest nations, the Democratic Republic of Congo and Angola, were laid to rest. The only hitch:the funerals took place several years after the men died. In Kinshasa, the Congolese capital, tens of thousands of mourners flocked to a stadium to participate in the state funeral of Etienne Tshisekedi, who died aged 84 in Belgium more than two years ago. The body, which had been kept in a morgue in Brussels, was flown back to the central African country last Thursday. The two-year delay was caused by a tussle over the corpse, with the previous government of President Joseph Kabila deeming Tshisekedi too potent a symbol of opposition to risk bringing back to the country — even in death. The dispute was resolved after Felix Tshisekedi, the late Etienne’s son, in January won presidential elections to replace Mr Kabila in what critics say was a backroom deal. The two-year postponement of Tshisekedi’s funeral was nothing compared with the 17-year delay in neighbouring Angola, where ruling and opposition parties had battled for years over the body of Jonas Savimbi, founder of the rebel Unita forces. Savimbi’s death in 2002, in a shootout with government troops

in his home province of Moxico, ended a ruinous civil war that had devoured more than 500,000 lives since Angola’s independence from Portugal in 1974. Savimbi had been backed by apartheid South Africa and by the US, which bought into his anticommunist rhetoric. His body had been buried in an unmarked grave. The People’s Movement for the Liberation of Angola (MPLA) has governed the oil-rich country ever since and had for years blocked the release of Savimbi’s body to his family. Its return was negotiated after José Eduardo dos Santos, president of Angola for 38 years and a sworn enemy of Savimbi, stepped down two years ago. His successor, João Lourenço, has made efforts at reconciliation. The Angolan rebel leader had committed atrocities “that made Heart of Darkness look like a vicar’s tea party”, said Fred Bridgland, who wrote a biography of Savimbi, referring to the novel by Joseph Conrad. Allowing the funeral to go ahead, he said, was an effort to make peace with those who still regarded Savimbi as a hero. While Savimbi had been fighting the MPLA for control of Angola, Tshisekedi had been battling the increasingly venal leadership of Mobutu Sese Seko in Congo. Mobuto was finally ousted in a 1997 coup. In later years, Tshisekedi, as head of the main opposition party, became an opponent of Joseph Kabila, president from 2001 until he stepped down in January.

SAA chief quits over lack of political support for turnround Vuyani Jarana says government is ‘systematically undermining’ strategy to revive JOSEPH COTTERILL

resident Cyril Ramaphosa’s attempt to rescue struggling state flag carrier South African Airways has been dealt a blow after the company’s chief executive resigned and launched a broadside against lack of political support for its turnround. In a resignation letter seen by the Financial Times, Vuyani Jarana said a strategy to save lossmaking SAA was being obstructed by government indecision over the airline’s fate. “Lack of commitment to fund SAA is systematically undermining the implementation of the strategy, making it increasingly difficult to succeed,” he said. Mr Ramaphosa’s ruling African National Congress has balked at the high cost to taxpayers of rescuing state-owned companies that fell into mismanagement and corruption on the party’s watch. Mr Jarana’s exit follows last month’s departure of Phakamani Hadebe as chief executive of Eskom, the near-bankrupt state power monopoly hit by years of corruption, creeping blackouts and debt, which Mr Ramaphosa has also pledged to reshape radically. Both men were brought in to turn the companies round after the years of misrule under their previous leadership. The two resignations will cause alarm as the state-guaranteed debts

of both companies threaten to overwhelm strained public finances without decisive leadership to turn their fortunes round. The departures also leave the companies rudderless as Mr Ramaphosa, who led the ANC to victory in national elections last month, is focused on rebuilding key institutions undermined by misrule under his predecessor Jacob Zuma. SAA has not made a profit since 2012 as it plunged into disarray amid years of misrule. It has only survived with state help to pay debts. Mr Jarana was hired in 2017. His turnround strategy involved a plan for the carrier to break even by 2021 with the aid of about R21bn ($1.4bn) in state funds to fix SAA’s chaotic finances. But bailouts for state firms must clear tough hurdles set by Tito Mboweni, finance minister, who has said he would prefer to close down SAA. In his resignation letter, Mr Jarana said: “We have not been able to obtain any further commitment from government, making it very difficult to focus on the execution of the strategy.” Without a clear signal to lenders that the Treasury would stand behind SAA, the airline had struggled to refinance its debt, he said. “We have always maintained the SAA debt levels are unsustainable. However, instead of reducing debt . . . we have increased it,” Mr Jarana added. www.businessday.ng

Trump calls for Farage to join Brexit talks US president criticises Theresa May’s deal negotiations SEBASTIAN PAYNE

onald Trump has again broken diplomatic protocol by intervening further in the battle to succeed Theresa May as UK prime minister. The US president, who arrives in London on Monday for his first state visit, made the case for leaving the EU without a deal, suing the bloc, cancelling the £39bn divorce settlement and sending Nigel Farage to lead negotiations. Mr Trump made the comments a day after he endorsed his “friend”, the former foreign secretary Boris Johnson, in the Conservative party leadership contest. International protocol dictates that foreign leaders stay out of domestic matters. But in a sign of the unpredictability that is likely to dominate the visit, Mr Trump attacked Theresa May’s handling of the Brexit negotiations, stating she had left the EU with “very little to lose” and set out an alternative approach for her successor. “If I were them I wouldn’t pay $50bn. That is me. I would not pay, that is a tremendous number,” he told the Sunday Times. Several of Mrs May’s potential successors have said the UK must

leave the bloc on October 31 with or without a deal — including former Brexit secretary Dominic Raab and former work and pensions secretary Esther McVey. Mr Trump endorsed the view that the UK must be ready to leave without a formal treaty. “If they don’t get what they want I would walk away. If you don’t get the deal you want, if you don’t get a fair deal, then you walk away,” he said. The president praised Mr Farage, leader of the Brexit party and one of his closest political allies in the UK. He said it was “a mistake” not to include him in Brexit negotiations and encouraged the next prime minister to send him to Brussels. “I like Nigel a lot. He has a lot to offer. He is a very smart person. They won’t bring him in. Think how well they would do if they did. They just haven’t figured that out yet,” Mr Trump said. Woody Johnson, the US ambassador to the UK, said that Mr Trump had known Mr Johnson for a “long time” and his tacit endorsement was based on “his knowledge of Boris as a person and all the meetings he’s had.” He also reflected the president’s sentiments on leaving the EU without a deal. “From what my travelling around the country indicates people are ready

to go and move on. Even though the economy is doing reasonably well, it could do a lot better once this Brexit is finished,” he told the BBC. Mr Johnson’s leadership campaign was boosted on Sunday when Liz Truss, chief secretary to the Treasury, joined his campaign as a “policy tsar” — his first cabinet-level endorsement. She said he had “the credibility and oomph to lead at this crucial time and bring Britain with us.” Nicky Morgan, who leads the influential One Nation group of centrist Conservative MPs, announced she was backing environment secretary Michael Gove for the leadership. Mr Gove, the former education secretary said he was “ready to lead the nation” and has vowed to increase the level of school spending. There is speculation that he will soon receive the backing of work and pensions secretary Amber Rudd, another prominent moderate Tory. Ms Rudd was set to run on a joint ticket with Mr Johnson, but the pair ultimately found their Brexit stances to be too far apart. Mr Gove has told other Cabinet ministers that Brexit might have to be delayed until the end of 2020, as the UK is not ready to leave without a deal in October.

US tech groups scour supply chains for China risks

Companies try to identify which businesses could be hit by Trump’s trade offensive KIRAN STACEY

he biggest US technology companies are re-examining their supply chains to identify Chinese groups that may be targeted in the escalating trade war between China and the US. Executives at several multinational tech companies told the Financial Times they were poring through their list of suppliers to work out what they might do if a key business was hit by sanctions either from the US or China. Cisco, the network equipment maker, has already said it had “greatly reduced” its manufacturing in China, while others said they were worried about continuing to buy from Chinese camera makers, drone makers and consumer electronics companies. Most companies did not want to be named, but lawyers and industry groups said they had received requests from the industry to help them identify companies that might fall under the spotlight in Washington. John Miller, vice-president for policy at the Information Technology Industry Council, which represents

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multinational tech companies, said: “A lot of technology and telecoms companies right now are paying close attention to their supply chains. Many are seeking the help of government to identify possible risk factors too.” A senior executive at a global tech group said: “We are going through our supply chain looking for where might it get hit, of course. You would have to be mad not to do so in the current political climate.” Many technology executives were taken aback when the Trump administration announced a series of measures targeting Huawei last month. Though it had been widely expected that the president would ban the Chinese telecoms equipment maker from 5G networks, the scope of his executive order came as a surprise, as did the decision by the commerce department to stop US companies exporting to Huawei. In the wake of that move, many technology companies have been re-examining which other suppliers might be hit. Mr Trump has given Wilbur Ross, the commerce secretary, the power to ban any technology company he thinks might pose a national security risk. Mr Ross is due to make a decision @Businessdayng

about exactly which ones to target in just over three months. George Mathew, the chief executive of Kespry, a US group that makes software for drones, said he might have to change his company’s entire manufacturing policy should the Trump administration take action against DJI, the Chinese drone maker. Last month the US Department of Homeland Security warned that DJI drones were capable of collecting and transferring users’ data to other parties or countries. Mr Mathew, whose company has a partnership with DJI, said he had not experienced any problems or data leaks from the Chinese company. But he added: “If things escalate in a way where DJI is now considered a source of data that is compromised or there are certain concerns around it, that changes the entire dynamic. We have a historic manufacturing base that we were shifting to DJI, but there is a possibility we might have to extend it instead.” Other Chinese companies also appear to be at risk. Hikvision, the surveillance equipment maker, is preparing for the possibility that it will be put on the US export blacklist in the coming weeks.

Monday 03 June 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

SEC’s ‘CryptoMom’ fights for controversial ETF innovation Hester Peirce says the regulator could allow experimentation while still protecting investors CHRIS FLOOD

US financial regulator dubbed “CryptoMom” has called on fellow supervisors to abandon their cautious approach to approving controversial new exchange traded funds and allow innovation to flourish. The Securities and Exchange Commission is overhauling its rules for the US ETF industry, which has expanded massively since the global financial crisis. Assets in US-listed ETFs (funds and products) are up from $500bn in 2008 to $3.8tn, according to ETFGI, a London-based consultancy. Hester Peirce, an SEC commissioner, said the regulator could allow ETFs to facilitate financial innovation and experimentation while still fulfilling its role protecting investors. She said at a conference in New York last month that the SEC was “still smothering ETFs with personalised attention as if they were infants” even though more than quarter of a century had passed since the launch of the first USlisted ETF. Ms Peirce, known as CryptoMom because of her support for cryptocurrencies, reiterated her belief that the SEC was wrong to reject proposals for the launch of a bitcoin ETF put forward last year by the Winklevoss twins. A bitcoin ETF, which would be directly regulated by the SEC, could

encourage more institutional investors to participate in the rapidly evolving cryptocurrency market, Ms Peirce said. She added that it could be “a long time” before the SEC agreed to permit a bitcoin ETF given the regulator’s historically cautious approach. Cyrus Taraporevala, chief executive of State Street Global Advisers, the world’s third-largest asset manager, told FTfm he was concerned about potential reputational damage for the ETF industry if regulators adopted a more liberal attitude. “If something does go awry with them, then the whole industry gets painted with the same brush,” said Mr Taraporevala. “We do not do inverse ETFs or leveraged ETFs. That will be the case as long as I am in my role [at State Street],” he said. The SEC agreed in April to the launch of the first non-fully transparent actively managed ETF, an innovation that had to wait eight years before securing approval. Ms Peirce said the delay seemed “unreasonable” and she hoped actively managed ETFs would now grow at a faster rate. In 2010, the SEC banned leveraged and inverse ETFs that used derivatives to multiply the returns of an underlying index. Leveraged and inverse ETFs can produce unexpectedly large losses and US regulators have warned repeatedly that they are unsuitable for retail investors.

AstraZeneca reports encouraging results for early-stage cancer treatments

straZeneca has unveiled data suggesting that its push into early-stage treatments for cancer is yielding results, as the drugmaker seeks to lead a global race to increase survival rates. Having initially fallen behind competitors in developing immunotherapy treatments for metastatic cancer, AstraZeneca has over recent years sought to carve out a niche in devising approaches effective at earlier stages of the disease. In an interview at the American Society of Clinical Oncology meeting in Chicago, where the company released the results of a series of clinical trials, Pascal Soriot, chief executive, said the strategy is now paying off. He said that new technologies designed to detect cancer earlier — such as liquid biopsy tests — would make a “huge difference”, potentially curing cancer or making it manageable as a chronic disease such as HIV. Mr Soriot added many competitors were still focused on improving survival rates for stage four cancer — often considered a terminal diagnosis — rather than targeting earlier stages where the likelihood of survival is higher. “If you’re diagnosed early, in stage one, two, then your survival rate is 80,

85 per cent,” he said. “So then you can lift that and potentially cure patients.” Among AstraZeneca’s headline presentations at Asco was data showing that Imfinzi, an immuno-oncology medicine, was prolonging the lives of lung cancer patients whose disease had reached the third stage. Astra said that Imfinzi was the only immunotherapy to demonstrate overall survival at three years in “unresectable” Stage III non-small cell lung cancer. The term refers to tumours that cannot be completely excised through surgery. The study showed that 57 per cent of patients were still alive after three years, compared with 43.5 per cent taking a placebo. Both groups had already received chemotherapy. The company also announced the results of a study, carried out jointly with the US pharma giant Merck, on Lynparza, another drug in its cancer portfolio. The study holds promise for treating pancreatic cancer, one of the most intractable forms of the disease. In 2017 Astra and Merck agreed to collaborate in developing and commercialising the medicine. The trial tested Lynparza tablets as a “first-line” — or initial — maintenance treatment for metastatic pancreatic cancer patients with a particular genetic mutation, whose disease had not progressed following chemotherapy. www.businessday.ng

European defence industry wrongfooted by Saudi weapons ban Executives say German response to Khashoggi killing risks undermining co-operation SYLVIA PFEIFER, DAVID KEOHANE AND TOBIAS BUCK

uing one of your biggest customers may seem unthinkable, but the chief executive of Airbus, Europe’s biggest aerospace and defence group, will not rule it out. Germany’s decision last October to ban arms exports to Saudi Arabia following the murder of journalist Jamal Khashoggi threatens a border contract that Airbus has with the kingdom. The company took a €297m provision in the first three months of this year as it is currently unable to complete the contract. The unilateral move by Berlin stopped other defence companies from selling military equipment to Saudi Arabia that was jointly developed with German companies, or from shipping arms that contained German components.

The kingdom has for years been one of the world’s largest arms importers: IHS Markit, the research group, calculated it was the biggest importer of defence equipment and services by value in 2017. Its purchases have risen sharply in recent years as the country has pursued an assertive regional policy, including military intervention in Yemen. “Going legal [over the export ban] is one of the options we have to consider,” said Guillaume Faury, who took over as the head of Airbus in April. The situation, he added on a trip to London last month, “is having a significant impact on the number of contracts that we have with customers”. Airbus is not the only company counting the cost. BAE Systems, which as the lead industrial partner for the four-nation Eurofighter consortium in the Gulf kingdom is responsible for the maintenance

and support of its 72 Typhoon jets, said in February the decision could imperil its contractual obligations. The government-to-government agreement for the jets is BAE’s single biggest export contract. Germany’s Rheinmetall said it was still waiting to deliver 90 military trucks and trailers to the kingdom, worth around €120m. Germany’s decision was widely welcomed by human rights campaigners, but not followed by other European governments whose response to the Khashoggi killing was limited to public condemnation. For Europe’s defence industry, Germany’s move raises a deeper concern. Some executives fear that the cross-border partnerships that have helped the industry thrive in the face of limited national budgets and develop sovereign state-of-the art kit like the Typhoon, could be undermined.

Investors pull money from GAM and Greensill supply chain fund

Drugmaker carves niche in treatments that are effective at earlier stages of disease HANNAH KUCHLER AND SARAH NEVILLE

Jamal Khashoggi at the World Economic Forum in Davos in 2011. Germany’s decision to ban arms exports to Saudi Arabia following his murder threatens a border contract that Airbus has with the kingdom © Virginia Mayo/AP

Withdrawals are the latest setback for the scandal-hit Swiss manager LAURENCE FLETCHER AND ROBERT SMITH

finance firm that employs former UK prime minister David Cameron has seen one of its funds almost halve in size over the past week, as investors continue to pull money from the investment vehicle run in partnership with the scandalhit Swiss asset manager GAM. The GAM Greensill Supply Chain Finance fund, which aims to make money by paying a company’s suppliers early in return for a small premium, has seen its assets drop from €736m to €391m over the week to Tuesday, according to the most recent Bloomberg data. This is a sharp plunge from the over €2.1bn of assets in the fund one month ago. GAM has been in the headlines since last summer, when it suspended star fund manager Tim Haywood, initially with little explanation. Mr Haywood was found to have invested large sums in highly illiquid bonds linked to Greensill Capital, which was set up by Australian financier Lex Greensill. “Supply chain finance investment funds are short-term liquidity vehicles similar to money market funds, and as such investors regularly make deposits and withdrawals,” said a Greensill spokesman.

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“Overall the total AUM [assets under management] in supply chain finance funds into which Greensill assets are exclusively originated have increased materially — to more than $6bn this year.” GAM declined to comment. A close confidant of Mr Cameron’s, who served as his adviser in government, Mr Greensill is a divisive figure. To his supporters, he is an innovative financier helping businesses unlock cheap funding, a reputation that helped win an $800m investment from the SoftBank Vision Fund earlier this month, doubling his firm’s valuation to about $3.5bn. But detractors point to his high tolerance for risk and use of complicated off-balance sheet financing structures. GAM’s Mr Haywood ran into difficulties after investing his absolute return bond funds in a number of unconventional bonds that Greensill arranged for the Indian-born industrialist Sanjeev Gupta, which have proved difficult to sell on. Mr Haywood was dismissed earlier this year for alleged gross misconduct. The company has since stressed that the dismissal was to do with Mr Haywood’s conduct, rather than the assets he invested in. Mr Haywood is appealing against his dismissal, saying he has been made a scapegoat and @Businessdayng

treated unfairly. The Luxembourg-domiciled GAM Greensill fund was set up in summer 2016, and aims for a small return over the London interbank offered rate by investing in assets sourced and structured by Greensill, according to documents seen by the Financial Times. Since launch it has made a total return of just under 0.5 per cent. UK telecoms company Vodafone has been one of the biggest investors in the fund, having parked at least €1bn of its cash there. This investment has attracted some criticism as the fund in turn bought up some of Vodafone’s own IOUs to its suppliers, flattering its balance sheet. The FTSE 100 company is understood to have recently withdrawn much of its investment, having parked cash there temporarily ahead of its now sealed purchase of German assets from Liberty Global. GAM and Greensill have a number of links, with the Swiss asset manager’s former chief executive David Solo a board member and shareholder of the London-based finance firm. An FT investigation found Mr Haywood, who had been suspended after being found to breach GAM’s gifts and entertainment policy, had flown in Mr Greensill’s plane for both business and pleasure.

Monday 03 June 2019

BUSINESS DAY

ANALYSIS

FT German SPD crisis deepens as Nahles resigns as leader

Move follows European poll disaster and reignites debate over future of ruling coalition TOBIAS BUCK

ermany’s Social Democrats were plunged deeper into crisis on Sunday as the party’s leader resigned from her post, raising fresh questions over the durability of Angela Merkel’s coalition government. The resignation of Andrea Nahles was the latest fallout from last month’s European parliament elections, in which a number of the continent’s traditional centre-left and centreright parties suffered big losses. Ms Nahles took over as party chief only last year, with a mandate to restore the SPD’s fortunes after a historic general election defeat in 2017. However, recent polls and ballots have seen the party lose yet more support, culminating in the European election last week, when the SPD’s support

ment in a letter to party members on Sunday. As a party “we decided to take on responsibility for our country as part of the federal government. At the same time, we were working to restore our party and to convince citizens with new positions”, she wrote. “To do both at the same time is a great challenge for all of us. To meet it we need full mutual support. Whether I have this support has been questioned repeatedly and publicly in recent weeks . . . The debate in the parliamentary group and the many responses from inside the party have shown me that I no longer have the necessary support to exercise my functions,” Ms Nahles added. Fears that the SPD’s electoral support was in freefall were fuelled this weekend by an opinion poll that showed the party winning just 12 per cent of the national vote. The poll, by the Forsa research in-

Andrea Nahles, who has resigned as SPD leader, had previously hoped to strengthen her position in a vote on Tuesday © AFP

dropped by nearly 12 percentage points to 16 per cent. Ms Nahles’ resignation is likely to reignite debate over the future of the ruling coalition in Berlin, with many Social Democrats pointing to the SPD’s role as junior partner to Ms Merkel’s conservatives as a key reason for the party’s decline. Some of Ms Nahles’ most ardent critics want the centre-left party to abandon the coalition as soon as possible, in the hope that a spell in opposition will help the SPD regain credibility with voters and develop a sharper political profile. “What is clear is that Ms Nahles’ departure removes the most important supporter of the grand coalition inside the SPD,” said Uwe Jun, a professor of politics at the University of Trier. “Critics of the grand coalition will try to use the leadership debate to also end the coalition.” Ms Merkel’s Christian Democratic Union also performed poorly in the European elections, where its share of the vote dropped by more than 6 percentage points. Both Ms Merkel and Annegret Kramp-Karrenbauer, the CDU leader, came out in support of the grand coalition on Sunday. The chancellor told journalists: “We will continue the work of government with all seriousness and above all with a great sense of responsibility.” Ms Nahles announced her resignation as both party chief and leader of the SPD group in parlia-

stitute, also saw Ms Merkel’s CDU being beaten into second place by the resurgent Green party. Ms Nahles had hoped to strengthen her position by calling a vote confirming her role as leader of the parliamentary group on Tuesday. Intended to clear the air and flush out any internal rivals, the move ended up backfiring on Ms Nahles, who faced a torrent of criticism from SPD members of parliament in recent days. Her resignation leaves the two most important jobs in the party vacant at a time when strong candidates are few and far between. Olaf Scholz, the German finance minister and deputy chancellor, is one of the few SPD heavyweights left with a credible claim to the party leadership. He already served as interim party chief last year. But he is deeply unpopular with large sections of the party, especially on the left. Mr Scholz said he regretted Ms Nahles’ decision to step down, saying both the party and the country had a lot to thank her for. He added on Twitter: “The SPD is in a difficult situation, and not just since the European elections — it is important that we stand together and take the next steps in unison.” Another option would be to go for one of the party’s regional prime ministers, such as Stephan Weil, who heads the government in Lower Saxony, or Malu Dreyer, the prime minister of RhinelandPalatinate. www.businessday.ng

Jeff Bezos and Elon Musk join the satellite space race Several billionaires are investing in new satellites to meet internet demand. But many existing companies in the sector are struggling NIC FILDES

hen Elon Musk’s SpaceX launched its first 60 StarLink satellites from Cape Canaveral in Florida last month, it triggered dozens of sightings of unidentified flying objects. Mr Musk took to Twitter to defend the project from accusations that SpaceX was creating “space debris” that could hamper astronomy. “There are already 4,900 satellites in orbit, which people notice about 0 per cent of the time,” the Tesla billionaire complained. “Starlink won’t be seen by anyone unless looking very carefully & will have about 0 per cent impact on advancements in astronomy.” The launch was the first stage in an effort to build a megaconstellation of potentially 12,000 satellites. It is also part of a move into the business by a group of billionaires who believe that smaller satellites can play a vital role in connecting the almost 4bn people who are still not on the internet. Jeff Bezos, Amazon’s founder, has already invested in the space race via his Blue Origin rocket company. In April, Amazon also unveiled a plan, known as Project Kuiper, to launch its own constellation of satellites. Other billionaires are also eyeing the sky. Masayoshi Son’s SoftBank and Richard Branson’s Virgin Group have backed the OneWeb start-up which has raised more than $3bn to build its own 650-strong constellation. Mike Pence, US vice-president, captured the mood at a satellite industry conference in Washington last month. “As President Trump said memorably once, ‘Rich guys . . . love rockets’,” he joked. Another satellite veteran rolled his eyes and said: “Space is the ultimate train set for boys.” The billionaires are making two separate bets: first, that there will be explosive growth in the satellite sector over the next decade as the demand for communications in places such as Africa grows sharply. And second, that they can grab a significant share of that market using a new generation of microsatellites that operate at lower orbit levels — hence the UFO panic. Yet there is one big problem facing the billionaires looking to move into the satellite business: many of the biggest existing companies are struggling. In a deal expected to be com-

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pleted by year-end, Inmarsat has been sold to a private equity consortium for less than half of its value three years ago as its bullish growth outlook could not stop its shares slumping to a 12-year low. Avanti Communications, a smaller British company that, like Amazon and OneWeb, is targeting African broadband, was forced into a debt-for-equity swap last year and had to raise $55m this year from the hedge funds that control its debt. Eutelsat, the French satellite company, has halved in value since 2015 and Luxembourg-based SES trades at a third of its 2015 levels. After shaking up cars, retail and a host of other industries, some observers believe the billionaire investors could revolutionise the satellite industry. Chad Anderson, chief executive of venture capital firm Space Angels, says the sector was dominated by less than 10 companies until SpaceX won a contract in 2009 with Nasa, the US space agency. Since that time, more than 435 space companies have received a total of $20bn in investment as satellite start-ups have blossomed. “Telecoms is just the latest sector to be disrupted and it has happened before the satellites have even become operational,” he says. Mr Anderson believes the space race is entering a new phase led by Mr Musk and Mr Bezos who both own rocket companies as well as nascent satellite businesses and have eyes on prizes beyond basic communications. That could upset the established players. “None of the big (satellite) telecoms companies are really solvent and haven’t been for a long time,” he says. “The majority have been tossed around between owners like a hot potato and that is going to start happening again.” However, the travails of some of the existing companies suggests there could be another reading: that the satellite business is already crowded and has a history of false dawns. Rupert Pearce, chief executive of Inmarsat, argues that whenever new entrants emerge, the established players remember the lessons of the industry’s boomand-bust in the early 2000s. “We have seen this movie before. It is a horror movie,” he says. The fact that the trail of light from the Starlink launches were visible to UFO spotters on the ground illustrates how the industry has changed. Companies @Businessdayng

traditionally launched gigantic geostationary satellites the size of a London bus high into orbit to cover large swaths of the world not covered by traditional telecoms lines. Smaller satellite models, called low earth orbiting satellites, have emerged in the past decade as a lower cost alternative and have proved ideal for earth observation and academic projects. SpaceX and Amazon are investing in these smaller satellites. SpaceX has raised $1bn for the launch and Mr Musk has bullishly predicted that Starlink could eventually generate $30bn a year in revenue. OneWeb, backed by a range of investors including SoftBank, Qualcomm, Airbus and Coca-Cola, also launched its first microsatellites in February. It then raised $1.25bn to fund the completion of its global network by 2021. Amazon has now entered the fray with plans to launch more than 3,000 satellites at altitudes between 590 and 630km. The project, named after the Kuiper Belt region of the solar system, has a similar aim to both SpaceX and OneWeb in targeting parts of the world that 5G technology and fixed-line broadband connectivity will not reach. “There are billions of people around the world who lack access to broadband internet. Our vision is to provide low-latency, high-speed broadband connectivity to many of these unserved and underserved communities around the world,” the company says. Companies including France’s Leosat and Canada’s Telesat are also planning launches although Boeing, which had applied to launch microsatellites, has cooled its interest. The new space race to launch swarms of satellites is part of a steep rise in space investment. Northern Sky Research says $17.8bn was poured into 600 companies from 2000 to 2018, with $7bn of that sum raised in the past two years. Yet the rush to build new constellations has also provoked a sense of déjà vu. The satellite industry crashed spectacularly at the turn of the century and wiped out billions of dollars in investment in the process. Iridium, which was spun out of Motorola, spent $6bn building a satellite network in a bet that the clunky satellite phone would take over the world. It launched its first handset in 1998 but within a year had filed for bankruptcy protection and was sold in 2000 for $25m.

Monday 03 June 2019

BUSINESS DAY

cityfile Lekki residents want FG to tackle flood

Wharf Road, Apapa: Still in search of solution to the persistent gridlock.

Pic by Pius Okeosisi

Over 70,000 driver’s licences unclaimed in Lagos, says FRSC JOHN SALAU with agency report

he Federal Road Safety Corps (FRSC), zone 2 command says there are no fewer than 70,000 driver’s licences still unclaimed in Lagos State. Before now, the Lagos sector command of the FRSC had complained about the reluctance of thousands of applicants to come forward and claim their licenses which had long been ready. As follow-up, the command last week began what it called “operation show your driver’s licence,” aimed at ensuring that only motorists with genuine driver ’s licences operate on the roads.

But speaking on Friday during a visit to the palace of the Oba of Badagry, Samuel Obayemi, Assistant Corp Marshall, and head of zone 2 command, comprising Lagos and Ogun, said about 70,000 licenses were still unclaimed in Lagos. He expressed concern that Lagosians who had gone to check their driver’s licences and discovered that they were not ready often refuse to go back for rechecking. “Truth is that FRSC is in charge of driver’s licences but different licence offices do the distribution. Since people are not forthcoming, we are now working with various boards of internal revenue to see that these

unclaimed licences are collected. The idea behind “operation show your driver’s licence” is that when we stop them and find out that they don’t have licences, we encourage them to go to various licence offices to collect their licences. “As I speak to you, some of these licences have expired because they did not collect them after three years. Some people would have died while some would have relocated to other states, but there are still some who are around who are yet to collect it.” Obayemi urged people who were yet to collect their licences to visit different licence offices in Lagos for collection. The

commander said that he was in Badagry to see the FRSC unit there and familiarise with the personnel and seek the support of the traditional institution which the Oba (Akran) of Badagry represents. “We run into problems with road users in Badagry and every road user is a subject of Akran. So, we know that when there is problem, we run to Akran for solution,” he said. The Akran of Badagry, on his part, assured him of the support of the people of Badagry. Tunde Giro, the Depegan of Badagry Kingdom urged the zonal commander to give more patrol vehicles to the FRSC unit in Badagry in order to be more effective.

42 suspected kidnappers, robbers arrested in Adamawa

he police in Adamawa have say they have arrested 42 suspects in connection with kidnapping and armed robbery in various parts of the state. A u d u Ma d a k i , t h e Commissioner of Police (CP) in charge of Ad-

amawa command, who paraded the suspects before newsmen in Yola, weekend, said that 31 out of them were arrested for alleged kidnapping while 11 for armed robbery. Madaki said the suspects were arrested in six different operations involving Inspector General www.businessday.ng

of Police (IGP) respond team, operatives of antikidnapping unit of the state command and special anti-robbery squad. Madaki said some innocent citizens were rescued but did not disclose the number of persons rescued, adding that weapons recovered from the

hoodlums included some AK 47, pistol, pump action and double barrel guns. Madaki said that the constant patrol and raids on criminal hideouts across the state embarked upon by the command was in line with directives from police high command.

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esidents of Lekki Estate and Stakeholders Association (LERSA) have called for a collaborative concerted effort between the Federal Government and Lagos State to address recurring flooding in the locality during rainy season. President of LERSA, Olorogun James Emadoye, made the call in Lagos on the need to tackle immobility, loss of lives and property caused by flooding in the area. Emadoye urged the government to utilise the ecological funds to provide help for Lekki and its occupants before the flooding got worse. “The threat of flood and the resultant effects is the beginning of wisdom if you live around this axis. The region has become one of the most populated areas of Lagos due to the influx of businesses, the ongoing refinery, new airport and deep sea port, we need to be able to account for lives and property. “If you recall, three years ago, we had a situation and before it gets to that stage again. We are appealing that the government should do something by deploying the ecological funds because the challenge is really staring us in

the face.” Emadoye implored the government to invest more in the development of the coastal roads and railways to minimise usage of the single Lekki-Epe expressway. He further advised that instead of the continuous tolling of the Lekki Epe Expressway, a new coastal road should be built and tolled. “Road transportation alone cannot serve Lagos and the nation at large. The road carries all sorts of heavy machineries and loads, as a result cannot last the duration for which it was built.” He said a single train would lift about a 1000 trucks at a time and so the road becomes less burdensome. Emadoye urged the residents to look out for each other by calling the attention of the association and emergency services to blocked drainage along their residences. He said LERSA has set up an environment committee to tackle major problems confronting the area. He reiterated the association’s commitment to partnering with the Babajide Sanwo-Olu’s administration in achieving its goals at making Lagos a model megacity as planned.

Groups stage rally for Obaseki IDRIS UMAR MOMOH, Benin

collection of int e re s t g ro u p s, comprising market women, pensioners and members of labour groups under the aegis of the Concerned Citizens of Edo, have added their voices in support of Governor Godwin Obaseki-led government. The groups embarked on a solidarity rally which took off at the Museum Ground on Friday, moving through Kings Square, Airport road, Ezoti, Reservation road, to Government House, Benin, the state capital, with protesters calling on the governor to keep the good works. They assured they were in support of the administration’s policies, urging him to “ignore those they described as greedy politicians.” Addressing the protest@Businessdayng

ers at Government House, commissioner for communication and orientation, Paul Ohonbamu, appreciated the groups for conducting themselves in an orderly manner. He assured that Governor Obaseki would not be distracted rather he would continue to deliver the dividend of good governance to Edo people. At the Edo State House of Assembly, the deputy speaker, Justin Okonoboh, commended them for identifying with the Obaseki-led government and assured that the assembly would do e v e r y t h i n g t o e n s u re continued the success in Edo. Chairman of the National Union of Road T ra n sp o r t Wo rke r s (NURTW), Odion Olaye, said the solidarity rally was organised to show support for Governor Obaseki

Monday 03 June 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 31 May 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. 216,825.88 6.10 -2.40 195 16,512,310 UNITED BANK FOR AFRICA PLC 213,746.38 6.25 -5.30 200 43,969,967 ZENITH BANK PLC 631,069.53 20.10 -2.19 357 11,212,331 752 71,694,608 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 253,061.81 7.05 -1.40 151 10,273,323 151 10,273,323 903 81,967,931 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,778,391.03 136.50 0.37 252 1,099,443 252 1,099,443 252 1,099,443 BUILDING MATERIALS DANGOTE CEMENT PLC 3,399,581.23 199.50 -0.15 71 1,237,103 LAFARGE AFRICA PLC. 162,688.73 10.10 -5.61 72 1,327,748 143 2,564,851 143 2,564,851 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 323,585.66 549.90 - 17 4,371 17 4,371 17 4,371 1,315 85,636,596 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 - 1 180 1 180 1 180 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 1 180 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 70,589.34 74.00 - 6 23,298 PRESCO PLC 58,000.00 58.00 - 2 120 8 23,418 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 1 100 1 100 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,770.00 0.59 - 17 482,700 17 482,700 26 506,218 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 794.19 0.30 - 0 0 JOHN HOLT PLC. 182.90 0.47 - 1 2,730 S C O A NIG. PLC. 1,903.99 2.93 - 1 100 TRANSNATIONAL CORPORATION OF NIGERIA PLC 47,151.67 1.16 -1.69 67 6,458,320 U A C N PLC. 19,592.82 6.80 -2.86 57 4,921,294 126 11,382,444 126 11,382,444 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 31,482.00 23.85 - 10 7,418 ROADS NIG PLC. 165.00 6.60 - 0 0 10 7,418 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,897.59 1.50 - 7 69,500 7 69,500 17 76,918 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 7,907.79 1.01 -8.18 8 198,500 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 106,233.57 48.50 -3.96 39 1,810,960 INTERNATIONAL BREWERIES PLC. 171,917.24 20.00 - 68 13,505 NIGERIAN BREW. PLC. 463,820.32 58.00 -3.33 71 747,760 186 2,770,725 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 84,250.00 16.85 5.31 69 942,049 158,400.00 13.20 -1.12 142 4,027,494 DANGOTE SUGAR REFINERY PLC FLOUR MILLS NIG. PLC. 55,765.16 13.60 1.49 80 874,131 HONEYWELL FLOUR MILL PLC 8,723.22 1.10 -3.51 27 1,191,071 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 1 100 NASCON ALLIED INDUSTRIES PLC 43,053.37 16.25 -4.41 41 794,323 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 360 7,829,168 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 20,566.31 10.95 - 7 6,317 NESTLE NIGERIA PLC. 1,149,351.57 1,450.00 -0.31 44 157,918 51 164,235 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 5,316.09 4.25 - 21 936,495 21 936,495 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 32,160.86 8.10 - 13 154,973 UNILEVER NIGERIA PLC. 178,095.17 31.00 - 27 253,095 40 408,068 658 12,108,691 BANKING ECOBANK TRANSNATIONAL INCORPORATED 204,597.50 11.15 - 26 87,734 FIDELITY BANK PLC 48,677.66 1.68 -4.55 133 15,672,101 GUARANTY TRUST BANK PLC. 930,025.26 31.60 -1.25 207 25,632,756 JAIZ BANK PLC 13,553.55 0.46 2.17 23 1,469,736 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 66,217.96 2.30 2.22 328 2,593,752 UNION BANK NIG.PLC. 199,477.16 6.85 - 13 51,079 UNITY BANK PLC 8,299.43 0.71 - 0 0 WEMA BANK PLC. 24,687.66 0.64 -3.03 22 1,758,451 752 47,265,609 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,573.93 0.66 1.54 19 1,400,054 AXAMANSARD INSURANCE PLC 20,790.00 1.98 10.00 8 540,030 CONSOLIDATED HALLMARK INSURANCE PLC 1,869.90 0.23 - 0 0 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 0 0 GOLDLINK INSURANCE PLC 909.99 0.20 - 1 10 1,228.00 0.20 - 1 100 GUINEA INSURANCE PLC. INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 - 5 194,000 LAW UNION AND ROCK INS. PLC. 2,062.24 0.48 - 1 10,000 LINKAGE ASSURANCE PLC 4,000.00 0.50 4.17 10 912,919 MUTUAL BENEFITS ASSURANCE PLC. 2,458.00 0.22 - 9 233,182 NEM INSURANCE PLC 12,461.99 2.36 - 19 235,913 NIGER INSURANCE PLC 1,547.90 0.20 - 5 109,481 PRESTIGE ASSURANCE PLC 2,691.28 0.50 - 2 20 REGENCY ASSURANCE PLC 1,333.75 0.20 - 2 16,000 SOVEREIGN TRUST INSURANCE PLC 1,918.39 0.23 - 7 2,019,220 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 2,800.00 0.20 - 2 600 SUNU ASSURANCES NIGERIA PLC. UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 2 120 WAPIC INSURANCE PLC 5,353.10 0.40 -2.44 13 532,459 106 6,204,108

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MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,086.96 1.35 - 6 52,050 6 52,050 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 1 1,000 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 - 1 1,000 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 2 2,000 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,260.00 3.63 2.54 63 1,072,473 CUSTODIAN INVESTMENT PLC 35,585.28 6.05 4.13 7 20,684,944 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 31,882.36 1.61 -2.42 86 5,848,225 ROYAL EXCHANGE PLC. 1,131.98 0.22 - 7 50,723 STANBIC IBTC HOLDINGS PLC 430,103.22 42.00 -2.33 20 1,435,140 UNITED CAPITAL PLC 13,500.00 2.25 -2.17 55 2,587,358 238 31,678,863 1,104 85,202,630 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 852.75 0.24 - 1 120,000 1 120,000 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 593.50 0.60 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 7,575.00 5.05 - 1 1,900 GLAXO SMITHKLINE CONSUMER NIG. PLC. 10,164.95 8.50 - 9 56,740 MAY & BAKER NIGERIA PLC. 3,933.54 2.28 - 8 36,624 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,063.53 0.56 - 1 500 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 19 95,764 20 215,764 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 852.48 0.24 4.35 22 1,912,181 22 1,912,181 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 648.00 6.00 - 2 22,878 TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 0 0 2 22,878 PROCESSING SYSTEMS CHAMS PLC 1,784.50 0.38 2.63 36 4,760,987 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 2 5,500 38 4,766,487 62 6,701,546 BUILDING MATERIALS BERGER PAINTS PLC 1,927.33 6.65 - 6 8,720 21,770.00 31.10 - 9 32,781 CAP PLC CEMENT CO. OF NORTH.NIG. PLC 197,152.51 15.00 7.14 30 540,687 FIRST ALUMINIUM NIGERIA PLC 844.14 0.40 - 0 0 MEYER PLC. 313.43 0.59 - 3 1,300 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 0 0 1,156.20 9.40 - 1 10 PREMIER PAINTS PLC. 49 583,498 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 1 200 CUTIX PLC. 2,818.12 1.60 3.13 18 570,860 19 571,060 PACKAGING/CONTAINERS BETA GLASS PLC. 37,497.90 75.00 - 3 10,040 GREIF NIGERIA PLC 388.02 9.10 - 0 0 3 10,040 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 1 6 1 6 72 1,164,604 CHEMICALS B.O.C. GASES PLC. 1,731.58 4.16 - 1 5,000 1 5,000 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 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. 88.00 0.40 - 2 1,010 2 1,010 3 6,010 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,753.56 0.28 3.70 28 1,131,008 28 1,131,008 INTEGRATED OIL AND GAS SERVICES OANDO PLC 52,211.93 4.20 -9.68 133 6,949,645 133 6,949,645 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 63,104.17 175.00 - 8 1,415 CONOIL PLC 15,266.95 22.00 - 12 34,175 ETERNA PLC. 4,760.13 3.65 - 17 188,754 FORTE OIL PLC. 35,818.23 27.50 2.23 29 377,232 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 1 50 TOTAL NIGERIA PLC. 55,002.54 162.00 - 29 24,359 96 625,985 257 8,706,638 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 1 1,000 1 1,000 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 - 6 7,220 TRANS-NATIONWIDE EXPRESS PLC. 342.26 0.73 - 2 300 8 7,520 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 5 500,000 5 500,000 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 0 0 IKEJA HOTEL PLC 3,014.25 1.45 - 9 9,244 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 41,042.18 5.40 - 0 0 9 9,244 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 1 10,000 1 10,000 PRINTING/PUBLISHING ACADEMY PRESS PLC. 151.20 0.25 - 0 0 LEARN AFRICA PLC 1,033.74 1.34 9.84 9 359,130 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 776.54 1.80 - 3 1,230 12 360,360 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 464.16 0.28 - 1 4,400 1 4,400

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Monday 03 June 2019

BUSINESS DAY

abujacitybusiness Comprehensive coverage of Nation’s capital

Relief for Nyanyan-Mararaba commuters as Apo-Karshi Road reaches 70% completion James Kwen, Abuja

elief is on the way for commuters on the usual traffic gridlocked Nyanyan-Mararaba road of Abuja linking Karu, Jukwoyi, Karshi and Kurudu settlements as ApoKarshi road reached 70% completion. Tanko Yamawo, former Coordinator of the Federal Capital Territory Administration Satellite Towns Development Department (STDD) disclosed this while presenting progress report on the road during his handover ceremony at the STDD Head office in Karshi. “On Karshi-apo road, I think that we have gone about 70 something per cent on that road. I do not know when last you passed through that road, but I can tell you that we have achieved over 70 per cent on that road. “The only portion left on that road is about three kilometers and it is mainly the portion with rocks so as soon as that portion is done it will pave way for quick completion of that important road”, he said. Highlighting other achievements of the Department in the past two year, Yamawo said, “we were able to bring back all the contractors that had abandoned projects awarded to them at the satellite towns before our

appointment “Today, I can tell you that we have completed some projects, such as the Gbagalape road, Karu Embankment, Byazhin road in Kubwa, one in Dagiri,

n a move to expand investment opportunities between Nigeria and the Russian Federation beyond $300m, the Abuja Chamber of Commerce and Industry (ACCI) hosted a delegation of Russian Business men at the Nigeria-Russia Business Forum (NRBF) in Abuja. Adetokunbo Kayode, ACCI President and Chairman of the Nigeria-Russia Business Council (NRBC) said the essence of the business forum is to reintroduce Russians to Nigerian business, revive and deepen bilateral relations. Kayode noted that the economic relationship on both sides has over the years been very low and faced challenges regarding trade information on each others’ business environment as well as accompanying elements of Ease of Doing Business (EODB) which according to him has created

ellite the way it has never been funded in the past and I want tell you that what we achieved within this one year and six months is something that some people cannot achieve in many years.”

James Kwen, Abuja

he Permanent Secretary, Federal Capital Territory Administration Chinyeaka Ohaa has conveyed the appreciation of the people of the Federal Capital Territory (FCT) to the Government of the Republic of Korea for its contribution to the educational development of the Nigeria’s Capital, Abuja. The Permanent Secretary gave the message of appreciation at the Nigeria/Korea Model School Piwoyi, Abuja during the visit of the Deputy Speaker of the Korean National Assembly, Lee Ju Young to the School. Ohaa also lauded the Country Director of Korea International Cooperation Agency (KOICA), Woochan Chang for her efforts towards the timely completion of the Nigeria/Korea Model School. He said, “I will like to use this opportunity to appreciate the Government of the

Republic of Korea and International Cooperation Agency (KOICA) for their continuous collaboration and cooperation with the FCTA. I commend especially the Country Director of KOICA for her determination to see to the completion of this school on schedule”. Describing the establishment of Nigeria/Model school as a proof of fruitful and beneficial relationship that exists between both countries, Ohaa said, “It is also my pleasure to welcome you to the NigeriaKorea Model School which is the result of a very fruitful relationship between the Government of the Federal Republic of Nigeria and the Government of the Republic of Korea”. In his remarks, the Deputy Speaker who described the relationship between Nigeria and Korea as mutually beneficial also disclosed that Government of Korea would take charge of the maintenance of the school on permanent basis.

Nigeria tops list of unregistered children - UNICEF Cynthia Egboboh, Abuja

Ahmed Idris (l), Accountant-General of the Federation, with Momodou Lam Bah, Accountant -General of the Republic of Gambia during a visit to the Treasury House recently in Abuja

ACCI to expand investment opportunities between Nigeria, Russia beyond $300m Harrison Edeh, Abuja

Gwagwalada, and many others. Today if you go round the six area councils, you must see the presence of STDD. “We thank the Hon. Minister for giving us the needed support by funding the sat-

FCTA thanks Korea for support to educational development

a condition of uncertainty among business partners and investors. The ACCI President however explained that the forum will ensure interactive business communication, signing of Memorandum of Understanding (MoUs), access to potential buyers, presentation of innovative products and will provide an ideal setting for both Nigeria and Russia to improve their economies and promote consumption of locally produced products between the countries. “There will be Business to Business (B2B) meetings to provide the perfect opportunity to network and cultivate lasting relationship and strategic partnership. “Nigeria is very anxious to do business with the world and we believe that unless we are doing business with Russia we are not complete. Russia is a very big economy and they are interested in investing in Africa.

Surveyors seek review of COREN Act Cynthia Egboboh, Abuja

he Nigeria Estate Surveyors and Valuers (NESV ) has called for a comprehensive review of the Council for the Regulation of Engineering in Nigeria (COREN) Act as it contains provisions that conflict with their own roles. Acoording to the 2018 COREN Act, “the functions of Engineers include portfolio management valuation; merger and acquisition valuation; corporate financing valuation; valuation for legal and tax purpose; valuation for insurance purposes and valuation for determination of utility rate”. But the Surveyors claim that these are their functions as valuers and not those of the Engineers as the Act states. Nweke Umezur uike, NESV National Chairman at the press briefing in Abuja said that the promotion of the 2018 COREN

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Act by the government is not proper as it seeks to empower Engineers to evaluate assets, thereby conflicting the duties of the both bodies. He said, “it is the duty of the Estates Surveyors and Valuers to determine the economic worth of assets, and not the Engineers, we fix and monitor the worth of assets but the engineers through the COREN act are claiming to do the same, this is not proper”. Umezuruike explained that the Estate Surveyors have practiced estate valuation credibly well for over 50 years adding that the government should give them the exclusive recognition they deserve and retrieve the COREN act. Rowland Abonta, National president, NESV said that there is an urgent need for the federal government to review the COREN act as it seen as an illegal law that contradicts the responsibility of the two.

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he United Nations Children’s Fund, UNICEF has lamented the need for improved child birth registration in the country as Nigeria topped list of unregistered children. Sharon Oladiji, Child Protection Analyst disclosed this at the media dialogue at the convention on the rights of a child held in Lagos, stating that Nigeria has the highest population of unregistered children leading to uncontrollable population. Oladiji explained that the importance of child birth registration cannot be over emphasized as apart from it being a legal acknowledgement of a child’s existence, the registration of births is

fundamental to the realisation of the rights and practical needs of the child. She said, “child birth registration is essential as it helps in the realization of the rights of a child and aids the provision of the basic need of the child, but it so disheartening to note that most children in Nigeria are not registered “Registration of children at birth enables the child access to health care, access to immunization and ensures that children enrol in school at the right age. “Child registration empowers the government in enforcing laws relating to minimum age for employment, effectively countering the problem of girls forced into marriage before they are legally eligible, without proof of age.

2019 Teachers professional exam holds Friday, Saturday Cynthia Egboboh, Abuja

he Teacher Registration Council of Nigeria (TRCN) has announced that the nationwide 2019 teacher’s professional examination will hold Friday to Saturday, 7-8 June, 2019. Josiah Ajiboye, TRCN Registrar at a press briefing in Abuja on Friday said the professional examination has come to stay as one of the benchmark process for registering teachers in Nigeria. He said, “there is no pro@Businessdayng

fession that does not have control of entry. This is a means of placing control and checking the quality of our teachers in Nigeria. We started this examination in 2017 and since then, we have recorded tremendous success in the process and it has come to stay”. Ajiboye added that the 2019 examination will be the fourth examination since its inception and it has succeeded in training most teachers to become computer literate as the examinations are computer based test (CBT).

Company IN FOCUS

BUSINESS DAY Monday 03 June 2019 www.businessday.ng

PZ Cussons Nigeria plc: 120 years of value addition amid headwinds Israel Odubola & Segun Adams

Overview he origin of PZ Cussons Nigeria Plc, a subsidiary of Manchester-based PZ Cussons, dates back to 1800s when George Paterson and George Zochonis established a trading post in Sierra Leone to transact business between United Kingdom and West Africa amid a slow and difficult journey. The business model of the company revolves around manufacture, distribution and sale of personal healthcare goods and electrical products, with strong brands in Imperial Leather, Cusson Baby, Morning Fresh and Thermocool in the Nigerian market. PZ Cusson Nigeria Plc operates in five segments, personal care, beauty, home care, electrical and food & nutrition. The company operates a joint venture electrical superstore in Lagos, and also operates in Ghana and Kenya, and was listed on the Nigerian Stock Exchange (NSE) in 1972. The parent company, PZ Cussons, listed on the London Stock Exchange (LSE), has a presence in 11 countries across Africa, Europe and Australia. The group has a staff size of 4, 486 worldwide. PZ Cussons celebrated its 120 years of doing business in Africa’s most populous nation a few days ago, having begun operations in 1899. Corporate governance Information from PZ Cussons 2018 full year report states that the company has a board consisting of ten (10) Directors: Five Non-Executive Directors and Five Executive Directors. In line with best practices, the company separates the position of the Chairman of Board from that of the Group Chief Executive Officer. Chief Kolawole B. Jamodu, CFR, is the Chairman Non-Executive Director of the Board, while Christos Glannopoulos is the company’s Chief Executive Officer. Glannopoulos boasts of almost 17 years of engagement with PZ Cussons Nigeria Plc where he has risen through the ranks, starting as Head of Sales in 2002. Glannopoulos holds a degree in Business Administration from South Trafford College and his long list of alma maters include Athens College, Conconcord College, University of Derby and Institut Européen d’Administration des Affaires (INSEAD). Prior to his time with PZ Cussons Nigeria, Glannopoulos had spent four years as Managing Director of PZ Cussons East Africa Ltd and another four years as Regional manager across East and West Indonesia. Other current members of the board include Non-Executive Directors: L. Batagarawa, and Paul Usoro SAN, Independent Non-Executive Directors: E. Ebi, Mallam and D. Muhammed, while the Executive Directors are J. Coker, A. Goma, P. Baretto and G. Sotiropoulos. David Petzer resigned from the board on February 20, 2018. Corporate history The journey of PZ Cussons in Nigeria began in 1899 when it’s first local branch office was set up. This landmark was about 15 years after George Henry Paterson and George Basil Zochonis had established commerce between West Africa and the United Kingdom from a trading post set up in Sierra-Leone. With the advent of the 20th century, PZ Cussons was able to expand rapidly and establish bases across Africa, Europe and Asian. The company opened its first soap factory in Nigeria by 1948 and incorporated it on December 4 of 1948 under the name of P.B. Nicholas & company limited although it changed the name to Alagbon Industries limited in 1953, then Associated Industries Limited in 1960. As a testament to its growth, PZ Cussons successfully listed on the London Stock Exchange in 1953 and even expanded its production activities in West Africa to Ghana in 1970. The period coincided with the oil boom in Nigeria which took off in the early 1970s and

saw a substantial improvement in purchasing power of households. PZ Cussons took steps to take advantage of growing opportunities in the Nigerian market and establish its presence as a reliable household brand. Consequently, PZ Cussons listed on the Nigeria Stock Exchange in 1972 to bolster operations and introduce more products line that would serve the need of the Nigerian consumers. The expansion plan saw PZ Cussons play in the detergent and refrigerator market in Nigeria, acquiring the Greek food business Minerva and UK Company Cussons which brought the premium household soap brand Imperial Leather under its banner. On November 24, 1976, the company’s name was changed from Associated Industries Limited to Paterson Zochonis Industries limited, before Paterson Zochonis Industries Plc was adopted in 1990 in accordance with the Companies and Allied Matters Act. As yet another century ended, PZ Cussons upped its game to remain competitive and continue in its tradition of value-addition to the consumers. In 2002, the company changed from Paterson Zochonis Plc to its familiar name-PZ Cussons Plc- and within the first decade of the new millennium acquired a number of brands including Original Source, Charles Worthington premium hair care business and leading UK spa brand Sanctuary Spa.

PZ Cussons Plc also created Nutricima – a joint venture with Glanbia plc – to supply evaporated milk and milk powder in Nigeria. But there was no slowing down for PZ Cussons which in 2010 acquired leading sunless tanning brand St Tropez, and established PZ Wilmer, a joint venture with Wilmar International, building a palm oil refinery in Nigeria and establishing a food ingredients business. The list of brands added to the PZ portfolio would grow between 2012 and 2015 to include Fudge hair care brand, Rafferty’s Garden- an Australian baby food brand, five am organic yoghurt and TOP vinegar to add to its Food & Nutrition range under the Greek Minerva family brand. PZ Cussons in the marketplace PZ Cussons has been able to establish its brand to meet the basic daily needs of the Nigerian consumer. The manufacturer has strategically developed product lines that include soaps, detergents, toiletries, feminine hygiene products, pharmaceuticals, cosmetics, packaging materials, refrigerators, freezers, and air conditioners to appeal to the quality and price requirement of households. Brands like Mamador Oil, Yo, Nunu, Bliss, Coast, Minerva, Zip detergent, Radiant detergent, Morning Fresh wash, Venus and Joy luxury soaps, Carex, and the range of Haier Thermocool electricals (refrigerators, freezers, air conditioners, fans, air coolers, washing machines, water dispensers, water heaters, gas

cookers and microwaves, among others) show a strong market presence of PZ Cussons Plc. Performance still below pre-recession level The company’s earnings figure post-recession is nowhere compared to pre-recession level. A snapshot of its 5-year financial performance revealed that although revenue trended northwards, it grew at a very slow pace. Revenue hits a 5-year high at N80.5 billion in the full year 2018 but dipped 12 percent in 2017, and 3 percent in 2018. Net income was at its lowest level in 5 years at N1.9 billion in 2018, compared with N3.7 billion in 2017, N2.1 billion in 2016, N4.6 billion in 2015 and N5.1 billion in 2014. Operating margin of PZ Cussons Nigeria Plc stood at 10.21 percent in 2018, 6.71 percentage points lower than 16.90 percent reported in 2017. This implies that the personal healthcare market retained N102 from every thousand naira generated as revenue in 2018 after settling indirect expenses, compared with N169 in 2017, N47 in 2016, N91 in 2015 and N90 in 2014. After meeting indirect expenses, tax and interest, PZ Cussons Nigeria kept N24 as profit in 2018, N47 in 2017, N31 in 2016, N63 in 2015 and N69 in 2014. The assets have been expanding except for 2018 when it dipped some 2 percent to N88.6 billion, but the company was less efficient to utilize assets to generate earnings. PZ Cussons Nigeria earned N21 in 2018 from every naira investment in assets, N41 in 2017, N29 in 2016, N68 in 2015 and N72 in 2016. PZ Cussons cost efficient improved post-recession, with the cost of production accounting for 69 percent in turnover in 2018, compared with 64 percent in 2017, 72 percent in 2015 and 74 percent in 2014. In nine months ended to February 2019, cost-of-sales ratio surged 77 percent as the firm expended more on marketing expenses to increase awareness of its retail-focused pack sizes across key brands, which pressurized earnings. Investors’ sentiment towards the company’s stock is weak on the back of its unexciting earning numbers. Shares of PZ Cussons have returned 34 percent losses year-to-date, underperforming the equity market (-0.4%) and consumer goods index (-15%). Resilience, commitment to value addition amid headwinds PZ Cussons Nigeria Plc is not enjoying its best days at present. Despite numerous headwinds ranging from tough operating conditions, consumers’ switch to unbranded products, stifled consumers’ disposable income, intense market competition and goods clearance challenges at the port, the company is not weary to continue adding value to consumers. The company’s woes began in 2016 when the Nigerian economy contracted for the first time in 25 years. This saw the company’s bottom-line dipping some 53 percent in 2016 full year, and top-line down 5 percent. Despite numerous headwinds, the personal healthcare goods maker has been consistent in paying dividends, delivering returns to shareholders for straight three decades, and elevating market share through promotional and value-adding activities. Four months ago, news broke on the social media that PZ Cussons was considering pulling out from Nigeria due to tough business conditions. The company admitted it was going through a tough time, but denied the news, stressing that Nigeria remains a key market for them. “Looking at the last three or four years, it has been challenging. We have been able to retain and grow our market share. We are still at the forefront of consumers. We are not leaving Nigeria.” said Christos Giannopoulous, Chief Executive Officer, PZ Cussons Nigeria Plc, at an interview commemorating the company’s 120th anniversary. Speaking further, “We will continue to invest if we see the opportunities that exist in the future. Our sales at this moment give us valuable thing in terms of giving us the confidence to continue”

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.

NIGERIA’S OFF-GRID REVOLUTION

THE NIGERIAN ENERGY REPORT 2019

Contents Foreward

Overview

Sterling Bank lights Nigeria’s path to accelerated development

Policy and Regulatory Environment

Funding Models

Technology and Skill Transfer

Value Creation

Top Ten Off-grid Renewable Energy Companies

Commercial and Industrial Solar

Solar Energy System

Sector Enabler

Solar Home System

Future Prospects

Prepared by Businessday Energy Intelligence Team Isaac Anyaogu (Team Lead) Dipo Oladehinde Stephen Onyekwelu Segun Adams Graphics Aderemi Ayeni Emmanuel Akapo

Foreward The Light at the End of the Tunnel

he power sector is always front and centre on the minds of Nigerians. Within the last few weeks; many of the headlines of leading national dailies once again told the story of how bad things are with the on-grid power sector. In The Nation, we read that “Nigeria loses $29.3 Billion Yearly to Erratic Power Supply”, while The Punch tells us “The Nation’s Power Firms are Weak, Technically Bankrupt – TCN Boss.” In The Vanguard we are told, “Economy Bleeds as Power Generation Drops to 2,039 MW”. This is a shockingly poor on- grid power supply statistic for a country with almost 200 million people. To put that in perspective, the small Caribbean twin island nation of Trinidad and Tobago has 2,200 MW on their national grid for a population of 1.35 million people, equivalent to the combined populations of just three LGAs in Lagos State-Mushin, Surulere and Eti Osa. While the problems continue to mount for Nigeria’s on grid power sector, opportunities are on the rise for companies operating in the country’s off grid power sector. Backed by a sound regulatory environment, strong government support from the centre, and increasing capital from investors and donors, the off-grid energy sector is

fast emerging as one of Nigeria’s most exciting new sectors. With over 90 million Nigerians off the grid and another 30 million with less than four hours a day of grid power, the opportunity is enormous. In this special report on Nigeria’s off grid energy sector, BusinessDay is helping to create awareness about the companies providing solutions to Nigeria’s perennial power problems. More importantly, the report highlights the tenacious entrepreneurs who are leading the way to address the country’s foundational socio-economic development challenge. Currently, only one off-grid company in Nigeria is a household name – Lumos. But there are many more coming up behind them ranging from Solar Home Systems to larger standalone systems to minigrids to small IPPs, and everything in between. A handful of these companies are positioned to become the MTNs of power in Nigeria, and several of these entrepreneurs will be among Nigeria’s next generation of billionaires. The good news for Nigerians is that there is literally light at the end of the tunnel of our current power sector morass. These are the companies that are making it happen.

Dr. Wiebe Boer, CEO, All On Dr. Boer is the CEO of All On, an off-grid energy investment company funded by Shell. He is also a member of the BusinessDay Editorial Advisory Board.

NIGERIA’S OFF-GRID REVOLUTION

THE NIGERIAN ENERGY REPORT 2019

Overview

ernment. It should , hence be reviewed to create a structurally divided regional grid, with the ability to take energy from diversified sources.

Nigeria - The Off-Grid Opportunities - How Big is It? 88.5m

182m

Reliable energy acces

84%

On-grid

Unreliable energy acces

16%

61m

Off-grid

40m

39% 81m 45% 61%

Rural

Urban

No energy acces

81m

~126m (66%) underserved or unserved

Total

Sources: NPSP Team Research

ccording to the Nigerian Meteorological Agency (NIMET), Africa’s biggest economy is endowed with an annual daily sunshine that averages 6.25 hours. This means Nigeria has boundless opportunities to tap from the power of the sun for energy and indeed a quiet revolution is afoot. The rise of solar as a renewable energy source and the various technological advances to improve battery technology and photovoltaic capacity is changing the lives of millions of people in rural communities and even in cities where grid power is insufficient. When it comes to hydro, Nigeria also has vast untapped potential. The Federal Government has committed to completing huge hydro power projects including the 3,050 MW Mambilla projects, 700-MW Zungeru and 30MW Gurara. There are several smaller hydro projects lying idle. A 2013 study by the United Nations Industrial Development Organisation (UNIDO) showed that six hydro power sites including: Ikere Gorge Dam, Oyan Dam, Bakalori Dam, Tiga Dam, Challawa Dam, Doma Dam have huge hydro power potential. Revamping these abandoned dams around the country will deliver 350MW of hydro power which can serve about 350,000 people. The Power Sector Recovery Plan, a document that outlines reforms required to

ramp up grid power states that the national economy is losing $29.3 billion annually, due to the lack of adequate power. Imagine a situation where the vast potentials of solar, wind, and hydro power are harnessed to help close Nigeria’s energy gap. The possibilities are endless. There are over 80 million people in rural areas without access to power and over 40 million people in semi urban areas with limited supply from a failing national grid. The national grid is so fragile that both too much generation and too little generation triggers a collapse. The only way to get out of this logjam is to seek viable alternatives. In terms of access, thirteen states in the country still have access rates below the 40 percent mark. According to World Bank statistics, Nigeria still ranks second worst in the global electricity access charts. Gas constraints and liquidity challenges often cut a third of output in a country where 75 percent of power is generated through gas-fired plants. According to the Power Sector Performance Report of the Presidential Task Force on Power, in September 2018, the power sector witnessed a power loss of 107,340MW, (about N51.519 billion in monetary terms) due to insufficient gas supply, distribution and transmission infrastructure. In 2018, the number of idle power plants increased from seven to 15, as a result of gas limitations, resulting in a revenue shortfall of N52.45 Billion in October last year.

This situation brings to the fore the quiet revolution in the off-grid market in Nigeria. The size of the problem and the grit of these companies blazing the trail to offer solutions to this national malaise demands more than just a passing interest in their work. It demands careful introspection about the models that work, the game plan of the operators and the connection between policy and market conditions. Nigeria is very attractive for off-grid energy. It has the largest economy in Sub-Saharan Africa (GDP of $397 billion), , and a population of 201 million according to the latest data from the United Nations. Over 80 million of these are without adequate access to energy. A significant part of the economy is powered largely by small-scale generators (10–15 GW) and almost 50 percent of the population have limited or no access to the grid.

101m (55%) 93.5m

The reality is that Nigeria’s current transmission grid structure does not reflect the goal of energy mix touted by the gov-

As a result, the Rural Electrification Agency (REA), a government agency under the Ministry of Power says Nigerians and their businesses spend almost $14 billion (N5 trillion) annually on inefficient generation that is expensive ($0.40/kWh or N140/ kWh or more), of poor quality power, noisy, and polluting. In a country with a weak national grid, the market opportunities lie in developing off-grid alternatives to complement the national grid. According to a study by the Rocky Mountain Institute and REA, supported by the Rockefeller Foundation, providing energy access could create a $9.2B/ year (N3.2Trllion/year) market opportunity for mini grids and solar home systems that will save $4.4B/year (N1.5T/year) for Nigerian homes and businesses.

Poor Power Sector

Transmission Capacity

Installed Capacity

8,100Mw 2019

12,522 MW

Highest Generation 5,375Mw attained on February 7th, 2019

Energy Demand 98,000Mw

Available Capacity, Thermal 10,142Mw, Hydro: 2,380Mw

Real Time 4,000Mw

THE NIGERIAN ENERGY REPORT 2019

NIGERIA’S OFF-GRID REVOLUTION

Sterling Bank lights Nigeria’s path to accelerated development I

magine a world without electricity? Without it, our lives would be radically different, and in almost every instance a whole lot harder. Regrettably, access to electricity for Nigeria’s over 100 million rural inhabitants is estimated at 36% while it is almost 60% for urban dwellers.

It is not surprising that the World Bank has ranked Nigeria as the second largest country in the world after India and the first in Sub-Saharan Africa with the highest number of people deprived of electricity. Ironically, electricity generation started in Nigeria in 1896 with her first electric utility company established in 1929. As it stands, between 500,000 to 800,000 new households would have to be connected to electricity sources every year between now and 2030 for the country to achieve her target of universal access to electricity for all its citizens. Certainly, life without electricity is tortuous and has been aptly described as living in the dark. It deprives excluded people or communities every basic comfort and fuels migration. For instance, residents of Unguwar Dogo, a village in northern Katsina, travel 40 minutes to another village to charge their mobile phones. This community is limited to the use of traditional sources of energy such as firewood, animal dung, and crop residues for heating and cooking which are effective causes of harmful indoor air pollution. In contrast, access to electricity improves the quality of life and accelerates development of rural communities by enabling access to safe potable water, improved sanitary and health conditions, food security, as well as lighting and information. Access to electricity is not only critical for improving living standards but regarded as indispensable for eradicating poverty. To bridge the country’s gaping electricity deficit estimated at more than 20 million homes, Sterling Bank Plc has identified renewable energy as an alternative form of energy which can be easily and conveniently delivered to millions of Nigerian homes, small, medium and large enterprises in both urban and rural areas. Affirming this, Abubakar Suleiman, Chief Executive Officer, Sterling Bank, disclosed that the bank has committed itself to be at the heart of Nigeria’s accelerated development by focusing on five critical sectors of the economy namely Health, Educa-

tion, Agriculture, Renewable Energy and Transport. Taking the first letters of these sectors, one is pleasantly surprised to see them form the word HEART. Abubakar calls these five critical sectors, the HEART of Sterling. According to the Bank Chief, Nigeria’s power problem affects businesses and communities, and must be solved to ensure quality life for all citizens as well as accelerated economic development. He believes that resolution of the power problem through decentralized renewable energy solutions will lead to rapid industrialization, job creation, quality education and healthcare delivery, among many other benefits. The bank’s three-pronged approach to achieving this are financing, trading and partnerships. It has set aside funds for large projects that provide electricity to communities and businesses. From the trading perspective, it is creating a platform that enables the sale of renewable energy solutions between electricity generators, distributors and users. Finally, Sterling Bank is creating partnerships to encourage the flow of foreign investments into the renewable energy space in order to bridge the service gaps which currently exist in market. Remarkably, the bank has signed an agreement with the Kaduna State Government, Kaduna Business School and Blue Camel Energy to deliver a renewable energy solution called ‘Solar-fi hub.’ The hub was developed by a start-up incubated by the Kaduna Business School. Dr. Dahiru Sani, Rector, Kaduna Business School, said the mini accelerator project was created to improve access to electricity with the invention of Solar-fi hub as outcome. “The Solar-fi hub is powered by solar energy to meet the day-to-day needs of the average citizen who may want to listen to news, watch football matches, or boil water for domestic use”, Sani disclosed. According to the Rector, the Solar-fi hub can be used by farmers in rural communities to power grinding machines and water pumps for irrigation while also bridging small power needs like charging of phones in homes where there is no power. He added the partnership between the Kaduna Business School, Blue Camel Energy and Sterling Bank to deliver the Solar-fi hub will improve the quality of life and earning potential of rural dwellers.

Commending Sterling Bank for believing in the renewable energy dream, Yusuf Suleiman, Managing Director, Blue Camel Energy, said solar energy is the future of electricity in developing countries. He added that Blue Camel Energy is laying the foundation for the democratisation of electricity to homes, businesses and schools ensuring that they can generate their own cost-effective electricity using solar energy. Yusuf disclosed that Blue Camel Energy initiated and completed its assembly plant and academy within eight months. The plant has the capacity to assemble over 10,000 units of clean, affordable and reliable solar products in a year while the academy has the capacity to provide energy entrepreneurship training to about 3,000 youths within the same period. “We are ready to lead in solving energy-related problems across different sectors of the economy. So far, we have invested over $1 million and would be investing another $5 million in the next 24 months to ensure delivery of solar-generated power to factories”, Suleiman informs. Similarly, Sterling Bank partnered with Zola Electric, a for profit social enterprise, to make distributed renewable energy accessible to Nigerians businesses and households in need of constant and clean power supply. Adaptable to energy need and income, Zola’s renewable energy solutions can be easily accessed through consumer finance from Sterling Bank.

commitment to bridging the funding gap hitherto faced by would-be adopters of renewable energy solutions. This indicates that Nigeria will eventually tap the potential of its abundant renewable energy resources for socio-economic benefits. International development agency, Oxfam, believes renewable energy solutions are more reliable, effective and affordable for poor people in developing countries who do not have access to electricity. This is especially true for northern Nigeria where the electricity grid does not extend to remote areas and the distances between villages are significant. Apart from being generally clean and pollution-free, renewable energy sources are sustainable natural forms of energy which require less maintenance than traditional generators. Truly so, renewable energy facilities are more suitable for community management and ownership because they can be set up in small units. By investing heavily in renewable energy solutions, Sterling Bank is lighting Nigeria’s path to development. It is apparent that the bank has its HEART in the right place.

Chief Executive Officer, Zola Electric, Mr. Bill Lenihan said the company has studied the Nigerian electricity market and figured out a way to proffer lasting solution to the country’s electricity needs. “Our solutions are designed to solve every level of the energy access problem. And while financing has been identified as one of the key limitations for consumers to acquire renewable power solutions, our partnership with Sterling Bank ensures access to product finance for interested customers.” Despite the commitment of Nigerian Electricity Regulatory Commission (NERC) to stimulating investment in renewable energy, little progress has been made in the sector. Existing investments in power grids built on fossil fuels keep players tied to costly and pollution inducing energy sources regardless of the obvious advantages of renewable energy solutions. However, all of this might become a thing of the past considering Sterling Bank’s

Abubakar Suleiman MD/CEO, Sterling Bank

NIGERIA’S OFF-GRID REVOLUTION

THE NIGERIAN ENERGY REPORT 2019

Policy and Regulatory Environment

tion within an emerging industry, cause prices to rise to uncompetitive levels for rural dwellers who constitute the bulk of solar energy users and negates the country’s clean energy ambition. To effect this new tariff review, the Nigerian Customs argued that solar panels are made up of minute photovoltaic cells which when put together can be used for power generation. Hence it changed the classification and imposed 5 percent Value Added Tax and 5 percent duty. This re-classification effectively puts solar panels used to generate electricity in the same class as diesel generators. Operators however fault this classification on the ground that panels are not mechanical components with moving parts. They also said that even if the Customs wants to reclassify panels, it should give them a moratorium of at least 6 months instead of arbitrarily imposing duties without regards to their business model. The Customs as well as some analysts have argued that imposing the tariff will encourage local manufacturing. But Nigeria currently does not have capacity to manufacture solar panels but does limited assembly in volumes that cannot meet up to 10 percent of market demand by only two plants – Auxano in Lagos and Blue Carmel in Kaduna. NASENI, a government agency set up to assemble solar panels, does not produce to meet commercial demand.

igeria’s power sector has not been short on policy ideas but they have consistently failed to address energy poverty in the country. The key reason is because the focus of national policy has always been on centralized conventional power generation. Subsidies on grid power and petrol/ diesel have hampered investments in alternative energy solutions creating an uneven playing field.

agency indicating a misalignment. This is the case with the tariff on solar panels introduced last year by the Nigerian Customs at a time when the Ministry of Power, Works and Housing and the Nigerian Electricity Regulatory Commission (NERC) were writing regulations that offered incentives to improve alternative power through solar.

Worse still, there have been contradictions in both policy formation and implementation. Some of the finer policies introduced by one government ministry could be scuttled by the actions of another government

Sticking point - Tariff on solar panels Stakeholders in the sector interviewed for this report are unequivocally against the

Perspectives

RENEWABLE ENERGY ASSOCIATION OF NIGERIA (REAN) ...How we’re helping shape policy in Nigeria’s off-grid sector When your mission statement boldly states that you want “to be the umbrella association for all Renewable Energy promoters enabling and encouraging the sustainable development of the Nigerian economy through Renewable Energy”, you cannot afford to be complacent. Renewable Energy is Nigeria’s new trendy byword; it is receiving untold attention. This is in part due to the government’s Vision 30:30:30 which aims at achieving 30,000MW

introduction of tariffs on solar panels. In fact, they argue that tariffs on all equipment related to delivering solar power – including batteries, should be tax exempt. “This has grave implications for Nigeria’s quest to improve the ease of doing business and deepen energy access for over 70million people with inadequate access to power,” said Segun Adaju, president of the Renewable Energy Association of Nigeria (REAN), a trade group of renewable energy operators in the country The concern was that the imposition of arbitrary tariffs will accelerate value destruc-

of electricity by the year 2030 with renewable energy contributing 30 per cent of the energy mix. This target has redirected focus to the sector and in part because in solving the country’s energy access gap, renewable energy solutions must play a large part as existing power infrastructure cannot alone do this. We cannot allow it to be a fad; renewable energy must serve as a long-term solution to taking 90 million Nigerians out of the darkness and into the light, both literally and figuratively. At the Renewable Energy Association of Nigeria (REAN), in recognition of the socio-economic advantages that will come with reducing the gap in access to energy, we continue to work strategically and tirelessly towards building a robust renewable energy sector. What will this entail? There needs to be an enabling environment across the entire value chain; increasing Nigeria’s ease of doing business that will include improved access to finance for RE developers is a fundamental action that has seen REAN

“Locally we don’t even have capacity to assemble enough panels to meet demand. Nigeria cannot live in isolation in comparison with other West African countries, imposing this kind of tariff will only move investments to other countries,” said Chuks Umezulora co-founder of Auxano Solar Nigeria Llimited, a company that assembles solar panels in Lagos. The new duty has increased acquisition cost of solar panels and made other African markets attractive for new investments. East African countries are already miles ahead of Nigeria in terms of solar adoption attracting tens of millions of dollars in new investments. Ghana recently abolished VAT and duties on solar panel, Nigeria should too.

collaborate with the finance sector and potential investors to increase opportunities across board; to give an example, exploring single-digit interest rates for developers, or tax holidays for local assembly of RE components; partnering and engaging with the bodies responsible for regulating and standardising the sector for quality and assurance that meets global expectations. Creating awareness and increasing capacity within the sector is key to sustainable growth. REAN is in collaboration on public and private sector initiatives to move this forward. What will support these efforts? Policy documents and Bills without rigorous implementation are useless. REAN is at the forefront of multi-stakeholder activities to ensure that legislation supports policies and initiatives set out by the government. Legislation must focus on protecting the industry from opportunists, must protect existing players in the sector, must include long term sustainability initiatives that will support local manufacturing, must recognise that the RE sector is an evolving one and needs to meet the

NIGERIA’S OFF-GRID REVOLUTION

THE NIGERIAN ENERGY REPORT 2019

industry needs decades from now. We are confident that our commitment to this process will deliver advantageous results. Our vibrant membership includes players in biomass, hydropower and solar energy all contributing their quota despite a sometimes-challenging terrain. Ultimately, reducing Nigeria’s energy poverty cannot be tackled by any one agency or company. It must be a collaborative effort. Access to clean, reliable and affordable power is essential to nation-building: we will be reducing unemployment by invigorating the economy, reducing pollution, contributing to improved health and education as only a few of the socio-economic benefits. The positive impact cannot be over emphasised. Without growth in the energy sector, the growth of the nation will be limited. Renewable Energy is the way forward.

Perspectives RURAL ELECTRIFICATION AGENCY

‘What we are doing at REA’ Introduction Decentralised energy solutions through renewable energy technologies have proven to be the most viable option in reducing energy access deficit for unserved and underserved locations in Nigeria. The Nigerian Government has therefore prioritized the exploitation of renewable energy sources to complement the limited power generation and supply and to provide clean and cost-effective electricity especially to unserved and underserved rural areas, economic clusters and federal universities. The Rural Electrification Agency (REA) has developed and is implementing the off grid strategy. This paper provides an insight to some of the key milestones achieved in deepening renewable energy in Nigeria.

REA Program The REA is currently implementing multiple off grid electrification programs with the support of the World Bank, African Development Bank and the private sector, mostly through the deployment of solar power to electrify, homes, communities and businesses. The following programs are currently being implemented.

Energizing Economies InitiativeDecentralized Energy Programme (DEP) The EEI program has been developed to support the rap-

id deployment of clean and sustainable off-grid electricity solutions to economic clusters in Nigeria. The aim of the EEI is to increase energy access and economic growth by assisting private sector developers provide clean, reliable and affordable power to economic clusters across Nigeria. The aim of the initiative is to provide sustainable and affordably power to 500,000 SME’s. The EEI project is divided into Phases; Phase 0, which is the pilot phase has powered and commissioned 3 markets in Sura Market in Lagos, Ariaria market in Aba, and Sabon Gari market in Kano. Under Phase 0, about 8000 shops are currently receiving uninterrupted power supply. Phase 1 of the EEI have identified 13 more markets. Currently, power has been provided in 6 more markets in Iponri market Lagos, Nepa 1, Nepa 2 and Isinkan markets in Ondo State, Edaiken Market in Edo State and Ita Osu market in Ogun State. Cumulatively, around 2000 shops are currently receiving power across these markets and pilots running in BIIBCO market Oyo State as well as Kantin Kwari market in Kano.

Energizing Education Programme (EEP) The EEP is expected to provide adequate power supply (89.6MW in total) to thirty-seven (37) Federal Universities and seven (7) University Teaching Hospitals across Nigeria. It also aims to provide streetlights to promote and facilitate safe, secure and productive learning environments as well as to develop and operate training centers to build capacities of university students in renewable energy technology innovations. The REA has been mandated to implement the EEP. The EEP has been divided into phases to ensure effective implementation. Phase I of the EEP is fully funded by the Federal Government of Nigeria, while Phase 2 and 3 will be funded through the World Bank and the African Development Bank respectively. Phase I involves the

powering of nine (9) Federal Universities across the six (6) geo-political zones. 1.

University of Petroleum Resources (Delta State)

University of Lagos (Lagos State)

Obafemi Awolowo University (Osun State)

Nnamdi Azikiwe University (Anambra State)

Ndufu Alike University (Ebonyi State)

University (Kano State)

Abubakar Tafawa Balewa University (Bauchi State)

Usmanu Danfodiyo University (Sokoto State)

University of Agriculture (Benue State)

These sites are at various stages of completion, with the first site expected to be commissioned by the end of June, 2019.

Nigeria Electrification Project (NEP) The Nigeria Electrification Project (NEP) is an innovative programme to catalyse off-grid development in Nigeria, through the provision of grant funding, detailed market data and technical assistance. To support this effort, FGN has secured funding from both the World Bank ($350m) and the AfDB ($200m). The NEP is broken into the following four components: I.

Solar Hybrid Minigrid Developer solar hybrid mini grids to serve >2 million people and >100,000 SMEs

II.

Rural Standalone Solar Home Systems (SHS) - Deploy Solar Home Systems to 1.5 million households, this includes solar panels, batteries, fans, TV, lights etc

III. Energizing Education Phase 2- Develop solar hybrid independent power plants at 7 universities IV. Technical Assistance The applications for the bids to build and operate mini grids have been launched. Additionally, the REA is receiving applications from eligible companies to build and operate mini grids in their choice locations through the performance-based grants funding. Suleiman Babamanu, Senior Technical Project Manager, REA

NIGERIAâ&#x20AC;&#x2122;S OFF-GRID REVOLUTION

THE NIGERIAN ENERGY REPORT 2019

Excerpt from a study commissioned by All On, undertaken by PwC Nigeria, titled Strategic Fiscal Incentives to Unlock the Off-Grid Clean Energy Sector in Nigeria: Opportunities & Recommendations.

NIGERIAâ&#x20AC;&#x2122;S OFF-GRID REVOLUTION

NIGERIA’S OFF-GRID REVOLUTION

THE NIGERIAN ENERGY REPORT 2019

ing the sector attractive especially in Nigeria where market opportunities are huge. However, there are local investors such as Verod Capital and All On as well as local commercial banks such as Sterling Bank and FCMB deploying capital in the sector.

Funding Models

When the grants run dry

he Nigerian off-grid market has been able to attract massive support within the last three years in the form of grants, low interest loans and equity investments. Our analysis show that the sector now attracts the biggest foreign direct investments into Nigeria

In the last three years, organisations like the USAID Power Africa, United States Africa Development Foundation, African Development Bank, GIZ, DfID, Heinrich Boell Foundation (a German Foundation), and Shell-funded All On have ramped up funding and advocacy about the prospect of off grid to deliver energy access to Nigerians without power. These organisations have provided both material and technical support to off-grid energy companies in Nigeria. There is another $80 million in debt capital coming through the EU/ AFD’s SUNREF program through Access Bank and United Bank for Africa.

“80 percent of investment flows into the off-grid sector are coming from outside the country and local investors run the risk of getting into the game late,” warns Ify Malo, Nigeria Campaign Manager for Power For All, a decentralised renewable energy advocacy organisation, citing the African Progress Report, at a capacity development workshop for energy reporters in Lagos last year.

While grants and low interest funding can help the industry get off its feet, these are not sustainable investment approaches. Unlike the banking sector which has withstood shocks and continued to thrive, the off-grid energy market has not been sufficiently tried and tested. This brings to the fore the concern of how the industry will sustain itself after grants funding and concessional debt finance dries up.

All On has provided funding for nationwide Challenges for the incubation of early stage of grid energy companies through the Co-Creation Hub and the Nigerian Climate Innovation Center.

Malo said that no investor will come into any sector without a promise of value hence the sector offers vast opportunities waiting to be tapped. The danger is that local investors who get in the game when the market has become saturated would have to play catch up.

Limited local content

Many Nigerians are yet to be weaned from the false narrative about solar being unreliable and unable to power heavy equipment. There is also the concern that solar is too expensive. However, the falling cost of solar panels and battery systems is mak-

Femi Adeyemo, one of the founders of Arnergy, a leading indigenous distributed solar energy provider, said the industry is moving past grants and donor funding though it remained a critical funding model. Some are gradually expanding and helping their customers in local communities to use the energy provided for productive purposes. Haven Hill Synergy in Abuja, for example, also provides soft loans to local people to run small businesses.

Bank of Industry (BOI), a Nigerian development finance Institution and All On, signed a financing agreement which offers N1billion to off-grid project developers in the nine states of the Niger Delta. In 2016, BOI signed a $2 million agreement with the United Nations Development Programme, (UNDP) to provide solar-powered electricity to six communities in six states of the federation.

However there have been concerns that mostly foreign investors are taking important position in investments in the off-grid energy sector.

The dollar rain

Verod Capital Management and Persistent Energy Capital LLC $10millin investment in Daystar Power

GIZ -500,000 euros to Rubitec Solar for 85kwh solar minigrid in Gbamu Gbamu Oyo state

World Bank - $350m and AfDB $200 million for off-grid projects under the NEP

USADF -$10m for various offgrid projects, including a 3-year partnership with All On to co-finance 10 Nigerian off grid energy businesses per year.

ElectriFI $30million fund for mini-grids, commercial solar and solar home systems

All On, AfDB, Nordic Development Fund, Global Environment Facility (GEF) and Calvert Impact Capital Fund - $58million Offgrid Energy Access Fund

European Union (EU) and the German government through German Federal Ministry for Economic Cooperation and Development (BMZ) are supporting the Nigeria Energy Support Programmme (NESP) with over 33 million euros.

THE NIGERIAN ENERGY REPORT 2019

Perspectives

FUNDING THE OFFGRID SECTOR: THE NEW NARRATIVE FOR POWER IN NIGERIA Like many others in the growing off grid energy sector in Nigeria, I left a comfortable role in an established industry (gas and power) to join the investment team of All On, a company seeded by Shell to invest in off grid energy companies in Nigeria. We all have different motivations for making a move to the emerging off grid energy sector, but for most of us, it’s based on personal experiences as well as a desire to impact on the quality of life of other Nigerians. My decision was a combination of both. I remember my time studying at a Nigerian Federal University where we had to use rechargeable lamps (if you could afford one) or candles to study a lot of nights when the central diesel generator was switched off; or the frustration I felt working on some national grid-connected power projects due to the unrelenting sector challenges. Beyond my own personal experience, it’s about impact. I want to ensure that more children/ students are able to study at night; that more lives are saved at clinics – fewer women dying at childbirth, and vaccines preserved for longer. I want to give premature babies that need to be kept in incubators a chance at life; and businesses an opportunity to generate more income by staying open longer hours. I want to see unemployment reduced since fewer factories have to shut down permanently due to the cost of running inefficient sources

of electricity; and fewer people die from fumes from “I better pass my neighbor generators” ... and so on. The transition to All On was an easy decision for me as it brought me closer to making an impact through access to energy. At All On, we invest in early and growth-stage businesses in Nigeria’s nascent off-grid energy sector spanning solar, wind, hydro, biomass and gas technologies deployed by both foreign and local access-to-energy companies that complement available grid power across Nigeria and help bridge the significant energy gap. It has been an interesting journey so far providing funding and support to these energy businesses. I believe that although all stakeholders along the value chain are crucial (investors, donors, regulators, etc.) the project developers (i.e. the businesses that deploy the solutions to these customers) are clearly the MVPs. They have taken the risk to start innovative businesses solving one of the most difficult problems in Nigeria – they engage with the users, raise funding, deploy the solutions in this huge but challenging market. In the last few months, we have worked with some of the most innovative businesses in the sector – Lumos, the biggest solar home system company; GVE, the pioneer mini-grid company in Nigeria founded by 3 young men when they were university students; Cold Hubs, a company that provides cold storage hubs that prolongs the quality and shelf life of perishable fruits and vegetables in Nigerian markets; Auxano, an indigenous solar panel assembly company, and many more. It is inspiring to see the level of dedication by these companies. Given how new the industry is, it is

NIGERIA’S OFF-GRID REVOLUTION

a learning process for everyone involved. Developers are learning to make their businesses investment ready, build their teams adequately and give up some control to become more sustainable. Investors are also learning to be patient, to hand-hold the developers where necessary while tailoring solutions to meet the needs of these businesses. Regulators and government agencies are putting in place the right policies and enabling environment for the sector to flourish. As always, where there is a huge challenge, there are great opportunities - in this case, to make both economic and social impact. There is an influx of international energy companies who want to take advantage of the size of the market and the various support programs being put in place. Impact investors are seeking investment opportunities in the off-grid energy sector such as Breakthrough Energy Venture (the $1 Billion fund to invest in innovations that mitigate climate change by Bill Gates and Richard Branson), ElectriFI, funded by the European Union who recently launched a dedicated €30 Million for Nigeria, Acumen moved its West Africa operations from Ghana to Nigeria, Persistent Capital, SunFunder, etc. Then there are donor programs such as the World Bank ($350 million) and AfDB ($200 million) support for the Rural Electrification Agency’s (REA) Nigerian Electrification Program, EU/AFD $80 million SUNREF program through local commercial banks, GIZ technical support programs, etc. Most remarkable however is the emergence of indigenous clean energy entrepreneurs who are set to drive the sector. Indeed, recent studies show that developing off-grid alternatives to complement the

Ujunwa Ojemeni (Senior Investment Associate), All On

grid creates a $10B/year market opportunity for mini-grids and solar home systems that will save $6B/year for Nigerian homes and businesses. I am excited about the next few years in the industry and looking to see the transformational impact this sector will have on Nigeria. I am tired of living with the statistic that “120 million people are living without access to reliable and affordable power in Nigeria” – the country with the second highest number in the world after India with a much larger population. The stage is now set for us to collectively change this narrative, and I am proud to be right in the middle of it.

NIGERIA’S OFF-GRID REVOLUTION

THE NIGERIAN ENERGY REPORT 2019

Technology and Skill Transfer

he World Bank says that progress is being made in closing energy access gaps in Africa and Asia. “For the first time ever, the number of people gaining access to electricity in Sub-Saharan Africa is outstripping population growth. More than 700,000 home solar systems have been installed in Kenya alone and another 240,000 poor, rural households are expected to be connected soon under a new $150 million off-grid project backed by the World Bank. A key reason for this growth is falling renewable energy costs, which have made home solar systems, mini-grids and other distributed renewable energy (DRE) solutions a viable option for providing first-ever electricity in remote, rural areas far removed from electric grids. Yet, technological and skill transfer has not grown at the same pace. There is a growing shortage of job-ready talent to finance develops, install, operate and manage these systems especially in Sub-Saharan Africa.

The World Bank says there are only 76,000 jobs in the renewable energy sector on the whole continent. This compares poorly with India which has half of as many people without electricity and 10 times more people working in the Solar PV sector alone.

Re-skilling as a game plan In Nigeria, there is an acute lack of skilled capacity for the off grid energy sector, meaning that renewable energy firms worry about losing their best talent to competitors. In light of the capacity gap, development agencies like the GIZ have organised training sessions for installers to improve their skill set. Staff who benefit from these trainings have been mandated to train others. “As a company our focus has always being to develop the very best technical talents we could ever have which is why we are very focused on training or standardiza-

tion,” said Anu Adasolum, chief operating officer at Rensource during an interview for this report. “So we bring in people and train them to a level that is expected. What that will do to the ecosystem in general is that the more we train the more we grow. Although we admit that some people will leave our company or join other companies however we can only control what we can by ensuring only the best people works with us and in doing that we are helping the ecosystem in general.” Arnergy’s strategy is to build critical elements used in the business in-house. “So what we have done as a company from the onset is we have designed and developed what we see as critical components to our business model,” said Femi Adeyemo.

Trainings There are also local training programmes

organised by operators. For example in April 2019 All On partnered with Rubitec Solar to train up to 120 professionals affiliated to the Niger Delta to give them skills to deploy and manage solar installations. In March 2018, Asteven Group launched a Renewable Energy Academy and Cenre of Excellence in Ogun state. Sunny Akpoyibo, company CEO said the Academy was borne out of the necessity to develop local capacity, change the course of power access in Nigeria and increase job creation. Blue Carmel Energy, a renewable energy firm based in Kaduna State, has built a renewable energy production plant and a training academy seating on a 3 hectares piece of land to roll out trained technical personnel for the deployment of solar solutions, entrepreneurs in the industry and project developers, customized products through research and development and other numerous lines of activities which present investment opportunities for both local and foreign investors.

THE NIGERIAN ENERGY REPORT 2019

NIGERIA’S OFF-GRID REVOLUTION

Value Creation

munities where electricity & clean water is not available have relocated to Kigbe where there is 24 hours power supply. Electricity truly brings life and development.” Since rural communities have limited purchasing power, the decision on where to site a mini-grid is usually based on the availability of capacity to use energy generated for productive uses. So investors during scoping engagements, look for communities where processing of agricultural produce, fish farming or poultry activities are undertaken and these small businesses serve as anchor customers for the minigrid business. To remain profitable, some investors have gone out of their way to provide the means to generate economic activity in the community. Some provide interest-free loans for women to start business centers selling cold drinks or iced fish. This helps to create economic value in these communities.

Case Study

“YOU CAN CALL OUR PLACE SMALL LONDON” The journey to Kigbe community, in Kwali Area Council of Abuja from the Central Business District will take you nearly over four hours, two you have to spend on a motorcycle because the road looks like it was modeled after the path of a tornado. It is unpaved, rugged with deep gullies and miles of jagged edges.

s part of this report, we visited locations around Nigeria where some of these projects are sited and found that a quiet revolution is taking place in rural Nigeria. Girls attendance in local schools is rising, children can read in the night using solar lamps rather than dirty kerosene stoves, some women have replaced charcoal stoves with cleaner alternatives, there are now fans at night and

even young men avidly follow the English premiership in the backwaters of Kigbe, four hours away from the Abuja airport. “In the rural areas, the living conditions of community residents have greatly improved. There has been drastic reduction of CO2 emission due to unsafe and hazardous means of energy generation (generators),” says Olusegun Odunaiye of Havenhill.

“We have been able to stimulate a few businesses that even operate at night. School children can study at night, clean and potable water is available to all. We are steadily and critically addressing the United Nations Sustainable Development Goals 6 & 7.” “We have witnessed firsthand rural – rural migration, some residents from rural com-

But arriving Kigbe village made it all worth it. There is no grid connection in the community. To make a phone call, residents travel about 20 minutes to the next community. There are as many mud houses complete with thatched roofs as there are buildings made of cement. But unlike the seven other communities you pass on your way, only Kigbe has electricity, thanks to a mini grid set up by HavenHill Synergy Limited. And this has made all the difference. Residents in Kigbe have stopped going to streams a kilometre away to fetch water due to solar-powered borehole constructed by the company. The local school has reported improved attendance as parents are willing to let their children especially girls go to school since they can read in the night. A local business center provides cold drinks along with groceries due to soft loan provided by the mini grid company and even youths avidly follow the English premiership through a local viewing center. “We call our place small London,” says Sule Bamaiye, the 56 year old Kpandanki or second in command to the traditional ruler. Bamaiye has four wives and sixteen children all housed in five houses ringed to allow a square at the middle where the women sit in the night under the glare of solar powered bulbs. Bamaiye says that Kigbe has become some type of truck stop as truck drivers who move logs of wood, the main business in the communities, now stop by at Kigbe for cold drinks.

NIGERIAâ&#x20AC;&#x2122;S OFF-GRID REVOLUTION

THE NIGERIAN ENERGY REPORT 2019

Bamaiye pays between N1000 or N2000 every month for electricity depending on usage. Electricity from the mini grid powers his 14-inch colour television and home theatre electronics. There is a standing fan in the five houses and five bulbs.

to the sound of an afrobeat tune with his seven year old daughter humming to the latest Davido track. London may be over 6,500 kilometres away via the Trans-Sahara highway, Bamaiye has London right there in his community.

I entered his sparsely furnished living room

HavenHill Synergy constructed the 20kW

Perspectives

CLEANTECH HUB: OFF-GRID ENERGY ADVOCACY THAT IS IMPACTING LIVES

Ify Malo

Although renewable energy is yet to enjoy widespread adoption in Nigeria with less than 30MW of installed capacity, it is clearly making enormous impact on the lives and businesses of those using it. For example, companies who invest in large solar projects for their businesses (commercial and industrial solar) tend to benefit from cost savings, especially in the long-run from huge costs associated with alternative power generation from diesel generators. Also, individuals and businesses using renewable energy solutions ranging from pico-solar products and solar home systems to stand-alone solar systems and productive-use systems enjoy not just the cost-savings but also get a better standard of living - devoid of toxic fumes from kerosene lamps or fossil-fuel generators as well as a noise-free environment.

Mark Amaza

There is ample evidence to support this: SoSAI Renewables, a Kaduna-based renewable energy company deployed an innovative solar tunnel dryer for drying vegetables in a village in Makarfi Local Government Area of the state for a womenâ&#x20AC;&#x2122;s cooperative under a lease-to-own model; for as little as N200, farmers in the community and beyond dry a bag of pepper, extending its shelf life and enabling

mini grid in the community along with a 3km grid line distribution to power about 145 households in the community. It is anchored around five business including agricultural processing facilities and business centres. Sun rays captured by solar panels are stored in 115kW battery storage capacity and are distributed to the community.

The company as part of its support initiative provided a 20,000 litres solar powered borehole for the community. Following the benefits of electricity at Kigbe, two of neighbouring communities have also asked to be connected. The company is currently on a scoping mission to connect six communities in the country.

them to earn more income.

sector as entrepreneurs in significant numbers.

Also, ColdHubs which is based in Owerri is pioneering walk-in solar-powered cold stations for use in off-grid farming communities, allowing the farmers to store their perishable produce for as little as N100 a day, which extends the shelf life rather than selling it quickly to avoid spoilage. Also, communities such as Bisanti in Niger State who have had uninterrupted power supply from mini-grids, are experiencing a new lease of life, with an explosion in the number of micro-businesses, better school performances by children, as well as more family and social cohesion.

Our organization, the Clean Technology Hub has held two workshops for grassroots women on the potentials of renewable energy not just to provide cleaner, cheaper and more sustainable energy but also on how it can open a vista of income-earning opportunities. These workshops were well-received with several women signing up to be retailers with renewable energy companies such as Solar Sisters (a social enterprise that engages only women as its last-mile retailers), AStevens and SoSAI Renewables.

Renewable energy in Nigeria is also impacting lives by opening up opportunities for micro, small and medium businesses and enterprises particularly at the grassroots level. There is a growing collage of small solar retailers as well as operators of solar kiosks for charging mobile devices and selling cold drinks in off-grid communities across the country.

Clean Technology Hub has also held broader workshops for communities in a bid to democratize access to renewable energy through raising their awareness of solutions available and the benefits. These workshops were attended by a large number of participants including women, which has led to new markets for renewable energy solutions.

There is ample evidence to show the absence of energy access across Sub-Saharan Africa - including Nigeria, is felt more by women than men. It is important that the sector creates opportunities for women to not just benefit from using renewable energy products, but to also earn income both by being distributors of renewable energy products and by employing them for productive use.

The outcome has been more retailers and distributors, with the customers enjoying constant electricity for their needs at savings, when compared to using fossil-fuel alternatives.

Evidence has shown that when women are exposed to the benefits and methods of renewable energy that they flock into the

As the adoption of renewable energy increases, there is no doubt that there will continue to be clear and measurable impact of its usage on lives and businesses across the country, which will motivate more individuals, families and businesses to adopt it as their primary energy source.

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THE NIGERIAN ENERGY REPORT 2019

Top Ten Off-grid Renewable Energy Companies Segments In Nigeria’s Off-Grid Space

Independent Power Producers – Between 10MW and 25MW capacity and uses gas as energy source (Rensource, Solad

Commercial & Industrial (C&I) – From 50KW – 5MW, can be sourced from gas or solar. Major customers include bank branches, factories etc (Starsight, Dayster Power, Rensource)

Solar Home Systems – PayGo solar ranging from 20W to 150W systems (Lumos, Azuri, PAS Solar etc)

Solar Energy Systems – Standalone solar systems with 1KW capacity for large households & SMEs – Arnergy, Zola Pyrano

n this report we have chosen to profile renewable energy companies operating in the off-grid space. While these companies are blazing a trail in the different segments they are playing, be it the commercial and industrial (C&I) energy space, mini grids and solar home systems solutions, we realise that there are many others equally adding value. The challenges, struggles and success of these companies we have profiled mirror their counterparts everywhere else in Nigeria. However, the vast majority of companies in the off-grid space in Nigeria are in the Mini Grid, Commercial & Industrial and Solar Home systems segments. Many companies operate in one or more.

Focus Mini-grid • • •

Green Village Electricity (GVE) Projects Ltd Havenhill Synergy Limited Rubitec Solar Limited

Commercial & Industrial • • •

Rensource Distributed Energy Limited Starsight Power Utility Ltd Cold Hubs

Solar Energy Systems •

Arnergy Solar Limited

Nigeria has created a plethora of policies to enable the takeoff of off-grid energy development in the country. But the NERC’s Mini Grid Regulation of 2017 has been the most potent, driving investments into the sector. The government has increasingly committed to off-grid development and electrification. This commitment has ranged from enabling regulation and policy to direct investment through budgeted funds and facilitating development partner loans and grants. A study by the Rocky Mountain Institute found these mini-grids could drive a significant economic change in rural Nigeria. It also reports that accelerating development of this market will require building on the foundation in place and addressing key challenges that may slow progress. There is a need to provide more clarity on policy by addressing overlapping mandates and competing frameworks, as well as to more consistently enforce existing regulation. The government can also continue to improve the ease of doing business, considering customs issues and supporting finance development in particular, the report said.

Mini grid tariffs Metric

Range

Median

Tariff

N120 -N300/kWh (US$0.34 - $0.86/kWh)

N200/kWh (US$0.578/kWh)

System size

16-100kW

45kW

Capture expenditure

N30 -N100 million (US$90,000 - $300,000)

N50 million (US$140,000)

Operating expenditure (per annum)

N300,000 -N2.4 million (US$900 - $6,900)

N690,000 (US$2,000)

Load

16-300kWh/day

218kWh/day

Capacity utilisation

2%-100%

19%

Collections

98-100%

99%

Solar Home Systems • •

Lumos Nigeria Smarter Grid International

Sector Enabler •

Auxano Solar Limited

Mini grids The Nigerian mini grid market today has reached an inflection point - costs are competitive with alternatives like diesel and petrol generators, and projects are moving away from grant funding to commercial investments. Nigeria currently has about 20 mini grids but there is a large potential for installing 10,000 mini grids of 100 kW each by 2023. Yet this will only meet 30% of anticipated demand. In the last few years, the Federal Government of

Mini grid costs are becoming more competitive as operators seek new supplies and embrace new technologies. Tariff rates vary from site to site with many having a flat tariff structure (a single fixed price per unit of electricity) for all customers. Some operators mirror tariffs along close substitutes especially diesel generators and some charge residential and commercial users different tariffs. For most projects, tariffs were developed in agreement with the host community and community members say they spent less on electricity from the mini grid now than they did on energy alternatives before the mini grid’s installation. Cost-reflective mini grid tariffs are typically near N200/kWh (US$0.57/kWh), which is less expensive than the cost to run a small diesel or petrol generator set. Although this cost reflects the small scale and risk of a nascent market, minigrid tariffs are expected to continue falling and can be reduced by 60% by 2020, the report said. In comparison to diesel, the report said that “the levelised cost of electricity (LCOE) from a small diesel generator is at least N250/kWh (US$0.71/kWh).” To build a mini grid, operators spend between N20 –N100 million but as they build new grids, they gain more experience and, cost come down as they scale.

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THE NIGERIAN ENERGY REPORT 2019

Profiles of top firms in the minigrid space GREEN VILLAGE ELECTRICITY (GVE) PROJECTS LIMITED Incorporation Date:

Registered Address:

Vision:

Mission Statement:

Management:

Products/ Services:

2012-10-12

Winorac Engineering Building, Plot 34 Boskel Road, Port Harcourt, Rivers State Nigeria

To be the first choice renewable energy enterprise sought globally

To create an enterprise focused on deploying clean, reliable, affordable and sustainable renewable energy solutions to clients.

Ifeanyi B. Orajaka (Chief Executive Officer), Chinedu Azodoh (Chief Financial Officer) Chuka P. Eze (Dir. Technology& Operation)

PV Solar Installation, Solar EPC, Renewable energy project development, Clean Energy Financing, PV Solar O&M

History GVE was founded by three Nigerian undergraduates of the Federal University of Technology Owerri (FUTO). While conducting oil field inspections during an internship, the FUTO cohorts observed how poorly electrified the surrounding communities were. “We started formally in 2009 as undergraduate students in FUTO but we got incorporated in 2012, and we distributed our first mini-grid which happened to be the very first in the West African region in 2013,” said Orajaka. The discovery inspired the trio to kick start an initiative to provide energy access solutions to small under-served communities. What began as a social project in one community quickly evolved into a viable business. Backed by market research, GVE discovered that the rural dwellers were willing to pay for electricity – and more notably, GVE’s proposition could cut energy expenditure in rural communities by 70% GVE’s pilot project, a 6kW solar mini-grid in Egbeke Rivers State, was launched in 2013. GVE has since expanded to 12 locations across the country. The company has partnered with local and international organizations like the Bank of Industry (BOI), Institute of Electrical Electronics Engineering (IEEE) and the United States Africa Development Foundation (USADF). GVE raised its first funding from angel investments, family and friends; it has since received grants and concessional debts from donors and DFIs. The company is now in ad-

Ifeanyi B. Orajaka CEO

Chuka P. Eze Executive Director: Technology & Operation

vanced discussions with impact investors to raise capital for future expansion. The company plans to install 20MW of solar power to supply electricity to over 500 communities by 2022. From this humble beginning, the company has built 13 minigrids around Nigeria and now serves about 7000 households with cumulative solar energy capacity of 0.65 megawatts. “Our target in the medium-term is by 2023 to impact 3.6 million Nigerians,” Orajaka said. “It is a very herculean task but currently we have been able to attract the right partnerships from both the investment and the financing and business development world to help us achieve that goal. Currently we have the Bank of Industry as shareholders, member of the board of the company. Most recently we also on-boarded All On and we are also working with ElectriFI.”

Operating Model GVE sells power to communities through a network of vendors who purchase electricity in bulk and resell to consumers. The vendors act as GVE agents and facilitate access to payment in remote areas. Residential consumers are required to pay a one-time connection fee of NGN 6,000 (USD20). This fee covers installation of a prepaid meter and load limiter to track consumption. Subsequent payments are based on applicable tariffs and depend on consumer type. Discounted tariff for small to medium enterprises (SME) forms part of GVE’s strategic objective of stimulating growth of rural businesses, improving productivity and boosting profitability.

Success Factors Corporate governance. It has a diversified board and maintains a long-term relationship with critical stakeholders. This is important when you are running a business in your mid-20s having to manage millions of dollars in funding and revenues. GVE has an active corporate board comprising of the three chief promoters, a C.F.O with professional experience at Barclays Capital New York, three seasoned non-executive directors, All On, and the Bank of Industry Nigeria. The management team is led by a Chief Executive Officer who has a strong entrepreneurial spirit and three Executive Directors who are all founders and shareholders of the business, and are professional engineers. An advisory board also exists due to the dynamic and complex nature of energy projects as well as the risks associated with the infancy stage of the overall RE industry in the country. Its role is to provide expert advice on technical issues and management of risk within the organization and its business. This implies that a strong corporate governance structure has been put in place to effectively manage risks and ensure best practices within the organization Community Engagement. GVE projects are preceded by

Chinedu Azodoh C.F.O

extensive community engagement to ensure full buy-in from all stakeholders, educate them on the benefits of the solution, and to build a strong sense of ownership among locals. The company also hires maintenance officers locally, thus ensuring community involvement in the day-to-day running of the projects. OEM Partnership. Partnership arrangements with original equipment manufacturers allows GVE source its installation materials at low prices. Tax Breaks. The company benefits from a five year tax holiday owing to its pioneer status. Continuous Learning and Improvement. GVE has a strong learning and improvement culture. Deliberate efforts are made to transfer lessons from past projects to future ones. For example, while the first Egbeke plant was completed in 72 weeks, other plants subsequently installed by GVE were completed within an average time of 4-6weeks. Early stage Funding. Low-cost long-term funding from development organizations and donor agencies enabled the company to make reasonable a profit during its formative years

CEO Comment From the pilot projects we have deployed, our business model has proven sustainable and scalable. Our fee structure is designed to give customers the best service at the lowest possible rate, making off-grid electricity provision reliable and affordable. This ambitious plan will sustain GVE Projects, Ltd., if all goes well. One of our major drivers has been the satisfaction we take in creating value and the socio-economic uplift in the lives of the indigenes of our host communities. We are agents of change, for the common good. I asked one of my customers to describe the impact of reliable, affordable electricity on his life. How did he light his home at night? How did he charge cell phone batteries?

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RUBITEC SOLAR NIGERIA LIMITED

Incorporation Date:

2016-05-10

Registered Address:

5 Talabi st, off Adeniyi Jones Avenue, Ikeja

Vision/ Mission Statement:

To be an Integrated Renewable Energy company and Independent Power Producer providing electric power from Renewable Energy Technologies, RETs, for the benefit of rural and urban communities.

Management:

Bolade Soremekun, founder and managing director

Products/ Services:

Solar and Inverter, Backup Systems, Small Hydro Power, Biomass energy systems, Waste to energy plant, Land-Fill Gas Plants and Wind Energy.

History Rubitec Solar was founded by Bolade Soremekun, a trained pharmacist with over two decades of experience, locally and internationally, from multinational organisations like Johnson and Johnson; Glaxo Smith Kline, and others. He was head of the pharma division of Glaxo Smithkline up till May 1996 and went on to become a director for West Africa. “Originally there was no plan to do solar because I am a pharmacist and had been a director for West Africa for GlaxoSmithkline. I left and started my own business. It was during that time I was trying to supply vaccines to the Federal Ministry of Health for a national programme on immunisation when I was asked if I could supply solar-powered refrigerators because vaccines have to be in a cold chain from manufacture to supply,” Soremekun told BusinessDay in an interview.

the mini-grid to homes and businesses that have paid for a connection. The investment comprises 50% grant from GIZ, 39% loan from Bettervest of Germany, and 11% equity from Rubitec Nigeria Ltd. Customers are charged N175 per kwh as tariff.

Key Project Rubitec commissioned its first mini-grid in Gbamu Gbamu community in Ogun State Nigeria in February 2018 and will be using this expertise to train successful candidates in solar PV installation, mini-grid design, installation and operation amongst others. Funding - €500,000 Source - GIZ, a German development agency and USAID, under the Nigerian Energy Support Programme Capacity - 85kw solar hybrid mini-grid Launched – February 9, 2018

Success Factors

CEO Comment

Grant funding. Rubitec like many other renewable energy firms in Nigeria has benefitted from grants and concessional debt finance.

Rubitec emerged successful out of 70 companies that responded to a request for proposal by The Nigerian Energy Support Programme (NESP) funded by the European Union and the German Federal Ministry for Economic Cooperation and Development (BMZ) and is implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH in close collaboration with the Federal Ministry of Power (FMP) and five (5) selected State Governments (Cross River, Niger, Ogun, Plateau and Sokoto). Winrock, the implementing partner of USAID, also supported the project by promoting access to finance workshops and initiatives.

Government contracts. In 2005, it was awarded a contract to install 500 solar refrigerators across local government areas in Nigeria. It also secured contracts from REA and the Energy Commission of Nigeria to install street lights and solar pumping systems for rural areas. Diversification. The company has moved from solar home systems to own a huge mini grid plant. It also set up Rubitec Academy in 2019 and partners with academic and training institutions in Nigeria and abroad to improve capacity of installers.

Operational Model

We were still sceptical, but we went along and began to develop the business plan, and through several workshops over the next two years, we developed the many skills – technical, business development, financial and business modelling to build a mini grid.

Rubitec built the Gbamu Gbamu mini-grid, composed of more than 300 large solar panels on a compact plot of land. A small powerhouse is lined with imported inverters and batteries that can store enough energy for electricity, even during the rainy season. Wires on wooden poles run from

We spent time in several finance workshops supported by our partnering agencies and presented our project to local and international banks and financial institutions. With time we were able to put together a financing package that consisted of our equity, a loan from a Bettervest, a German

Crowdfunding organization, and a Grant from GIZ. Winrock/USAID provided the crucial connection with Bettervest. The village of Gbamugbamu has a population of 3,500 people. The village is well organized with a Baale, sectioned into zones with a leader for each zone. It is mainly an agrarian village growing and processing economic crops including cocoa, palm oil, plantain, kolanuts, cassava, yam, and maize. Our mini grid will serve 487 metered customers, with 462 1phase connections, and 25 3phase customers. The PV system will generate >190,000kWh/year of electricity, transmitted and distributed across 5.2 Km of grid for different categories of consumers – businesses and households. We have installed pre-paid meters. We encourage the people of Gbamugbamu to pay for their electricity as this will make the project sustainable. The village has grown rapidly, from the time of our first research up until now. We shall be deploying very soon to connect the new customers and houses being added as we speak. The Baale, Chief Adekunle Fayomi and his team have been very cooperative, and have supported all the work we have done,” says

Bolade Soremekun

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THE NIGERIAN ENERGY REPORT 2019

HAVENHILL SYNERGY

Incorporation Date:

Nigeria’s mini grid regulation is a good one but we do not need tariffs on solar panels. If you go to other countries you would see that they have completely removed duty on the importation of solar products.

2010-02-23.

Registered Address:

Suite B-12&13, Kenuj 02 Mall, Kaura District, Abuja.

Vision:

To be among the top five leading renewable energy service providers in Africa by providing lease-to-own Solar financing service to over 10,000 urban homes and Solar Mini-grids in rural communities all by 2023.

Mission Statement:

To use solar energy to generate clean, safe, cost effective and sustainable electricity in urban and rural areas within the Federal Capital Territory of Nigeria and other states of the Federation.

We cannot have a country that is producing 4,000-6,000 megawatt of power for 180 million people and then you have South Africa which produces 40,000-45,000 megawatts for 55 million people which is 15 times what Nigeria is producing and for a quarter of Nigeria’s population and then the government is discouraging people are trying to get power through other sources while claiming to be supporting local production. Olusegun Odunaiya

CEO Comment Management:

Olusegun Odunaiya, (Chief Executive Officer)

Products/ Services:

Solar Mini-Grids Development / Rural Electrification - Solar Installations for Homes & Organizations Engineering Procurement and Construction - Solar Powered Street Lighting Systems - Solar Powered Water Pumping Solutions - Site Assessments & Pipeline Development - Energy Management and Audit

Projects •

40kWp Solar EPC for a HealthCare Institution in Ogun State, Nigeria

•

Kwaku Solar Mini-Grid Project, Abuja, Nigeria

•

2KW Solar Hybrid System for twin bungalows @ Citec, Abuja, Nigeria

•

3.84kW – 10KVA Hybrid Solar System for a 5 bedroom duplex in Life Camp, Abuja, Nigeria

•

Solar Mini-Grid Project at Kigbe

•

6KVA Xantrex Power Backup System in Abuja, Nigeria

•

10KVA Power Backup System in Wuse 2, Abuja, Nigeria

•

12.5KWP Fully Off-grid Solar Power in Kuje Nigeria

History Havenhill Synergy is an Abuja-based green energy technology utility company founded in 2010 by Olusegun Odunaiya. It started as a power backup system installing inverters and batteries for homes and from there it started installing small solar systems, rooftops, 1kw, 2kw solar installations.

Operating Model HavenHill builds mini-grids in off-grid communities and vends power to residents who pay a fee between N1000 and N2000 depending on usage. The company puts some of revenue generated back into the community to do appliance finance and help residents set up businesses which help them repay loans.

The company does not play in the minigrid space alone, it also have projects in the commercial and industrial space. “In fact we have C&I projects that are operational and we also have a pipeline of almost 2 megawatts that we are currently fundraising for because at the end of the day you want to balance your business model,” said Odunaiya.

Success Factors The company received $100,000 from USADF as seed capital which helped finance the first mini-grid it built. It has a system where it revenues from the minigrids are used to maintain the plant and service its loans. It banks on profits after scaling the business. The company also has a strategy to spend less on capital expenditure so as to reduce tariff paid by customers. “If you build expensively, your tariff will be high and there is no way the community will pay. If you look at eastern African countries like Tanzania and Kenya, they charge as much as between $1 and $2 per kilowatt hour because the project we might build for $150,000 in Nigeria they might build for say $300,000. Here we don’t charge for construction in our company so the cost of our engineers we don’t put it on our projects especially when we have an obligation to an investor, our goal is to first of all, meet that obligation and then we can make profit afterward. Tariff. In Nigeria today you would find that tariff ranges N120 to N180 per kilowatt hour that’s where you find almost all developers but our own tarrif is between N120 and N140. We have never exceeded N140.

The first 3 to 5 years were very challenging. In 2014 I applied for the Mandela-Washington Young African Leaders Initiative by president Obama and I was selected and that was a turning point in our organisation and changed everything. We got involved with USADF they practically held our hands to achieve things we couldn’t achieve with the government of Nigeria or banking institutions became possible.

People need to go to the rural area to appreciate the work being done in those areas. If you stay in the urban area and put 10 percent duty on panel, you would make your money. However in rural areas people are requesting for instalment payments and things like that but we have had a case where a client asked for a solar system and we couldn’t finance it but we spoke to an individual who was willing to finance it at 3 percent interest every month and the client agreed and paid over 9 months. You cannot do that in a rural community so a lot needs to be done if we are going to achieve our vision 2030 goal.

NIGERIA’S OFF-GRID REVOLUTION

THE NIGERIAN ENERGY REPORT 2019

Commercial and Industrial Solar modules with bypass diodes must pay a 5 percent import duty plus 5percent VAT. There are also very high transaction costs for customs handling. Merchandise can often sit in the port for weeks, at a high cost to the importer. Developers also mentioned that there are often delays in evacuating merchandise from the port. Major barriers are financial, from debt availability to credit risk and foreign exchange hedges.

ccording to the 2019 report by research company BloombergNEF (BNEF), Nigeria’s market is very distributed, with the majority of installations being smaller than 30kW while sites

over 30kW are estimated to add up to just 8.9MW.

Retail power tariffs have not been updated to their indexed formula since year-end 2014, leading to under-recovery of costs and an expectation that they are more likely to rise than to fall in coming years.

The report acknowledged that the government’s efforts to encourage local solar module assembly are not working as solar

Commercial banks are largely absent from the C&I solar market, offering debt that developers consider too costly mostly over

RENSOURCE ENERGY

25 percent and only for tenors up to two years. Rooftop solar in major systems is lacking and the land for ground-mounted installations is often too expensive. Industrial off-takers are often preferred because they have plentiful land for on-site solar installations. The report said the cost of C&1 project will decline to $0.10/kWh by 2030, the cost today for C&I solar with battery storage is $0.19/kWh is 67percent higher than the industrial grid tariffs and 63percent above the commercial rate, but lower than electricity from a diesel generator, which generally costs $0.28-0.32/kWh. Some big C&I solar projects in Nigeria was 2.35MW Tulip Cocoa Processing Plant developed by Alfen BV, designed by Solarcentury, and built by Solarmate. Next is the 1.2MW Usuma Dam Solar Power Plant built by Japan International Cooperation Agency (JICA) in Abuja, followed by the 1MW project built by Enerwhere for Bayero University in Kano state. In Nigeria, captive independent power producers with a generating capacity of over 1MW must hold a captive generation permit issued by the Nigerian Electricity Regulatory Commission (NERC).

The company looks at the current cost or client power consumption and sets a lower tariff. It builds financial models that allow for innovations in ensuring that it provides enough value to customers.

Incorporation Date

2016-02-23

Registered Address:

3B, Tiamiyu Savage Street Victoria Island, Lagos Nigeria

Technical skill. Rensource invests in training progammes for technical staff which has helped it to deliver better service. Experience with Energizing Economies Initiatives (EEI)

Vision/Mission Statement:

Management:

Products/Services:

Rensource Energy is a leading provider of off-grid energy. It is using best-in-class technology, financial innovation, and a robust operational infrastructure to build West Africa’s largest portfolio of microutilities.

Ademola Adesina (Founder &CEO) & Jussi Savukoski (Co-founder executive director)

Advanced lithium-based battery technology integrated with robust battery management systems

History Rensource, a distributed energy company was founded in 2015 by Ademola Adeshina. It is based in Lagos but has operations in Kano and Abuja. The company has set up a system that uses a combination of long-lasting lithium based batteries and solar energy offered through a mobile based user interface that allows its customers to pay their bills, and to understand how they use their power.

Operational Model The company offers a subscription model

to its customers. It is active under the Energizing Economies Initiative of REA which involves being able to start more micro utilities in markets, providing traders with access to energy. It plans expansion into more markets in Nigeria.

What the REA has done is to encourage players by identifying prospects; which was why they went out to evaluate the best players who can execute projects. Also, what makes the REA stand out is they engage with whoever they need to get the job going. They work with players to make sure the job is done efficiently well. For example if you’re going to the market you don’t need to do an end to end geographic design, you might just be verifying the design which would have been done already after which the private player raise the money itself so there is no government at all in EEI. Also if you run into difficulty with communities issues, the REA always come to the rescue, they also help with project management capacity which they are doing with several companies.

Success Factors

View on Tariff

Financing. In 2018, Rensource raised $3.5 million in a bridge financing round. The round was led by Amaya Capital with participation from the Omidyar Network and CRE Venture Capital. This funding round adds to the $1.1 million seed round previously raised from CRE Venture Capital and Sissili Limited, among others

Of course, it wasn’t a good idea because we don’t manufacture solar panels here in Nigeria, so what market are you trying to encourage here in Nigeria by increasing tariff ? With this increase, landing cost would be a lot higher than normal which will definitely affect retail price, and even increase cost of operations for producers.

Ademola Adesina Founder / CEO

Part of the issues with panels in particular is because of the need for extreme scale. The depth of capital you will need to have local assembly that will match international prices must be huge, because the Nigerian market will not be sufficient to sustain the manufacturers as there must be demand from multiple countries. Unlike the local players; foreign solar panel assembly plants have access to credit at low interest rates and operate in multiple countries which allows them to scale, it is the same here. The government is doing its best to encourage solar in certain areas for example there are areas that are easy to align and there are also areas that involve more complex alignment. For instances we have DFI’s or other government agencies coming together to try and encourage a lot in solar space due to the strong movement coming from renewable energy.

THE NIGERIAN ENERGY REPORT 2019

NIGERIA’S OFF-GRID REVOLUTION

COLD HUBS LIMITED

vide them both local and international training to improve their skill helping to cut down cost on hiring foreign expertise. Turnaround. If it fills up its cold rooms from day one, it generates income within 12 months but due uncertainties exchange rates it can breakeven in 24 months.

Incorporation Date

2015-07-30

Registered Address:

1, Umugakwo-Umuoba Road Off Mcc Uratta Road

Vision/ Mission Statement:

Reduce Food Waste, Increase Local Farmer Income, Create Jobs for Women, Reduce Malnutrition and build SelfSustainable Business Model

Management:

Nnaemeka Ikegwuonu (CEO) & Bright Benjamin Igbokwe (Chief Operating Officers)

Products/ Services:

Modular, solar-powered walk-in cold room, for 24/7 off-grid storage and preservation of perishable foods

Impact

Nnaemeka Ikegwuonu Founder ColdHubs

while the UKAID funding is helping to build seven new cold rooms Smart marketing. It developed educational comics, translated into Igbo, Hausa and Yoruba which it used to conduct training sessions with market women and small holder farmers on market to farm strategies and managing post-harvest losses. This helped to build relationships, cultivate trust and enhanced acceptance. Expertise. Coldhubs has gone from exporting expertise to building its own cold rooms. It hires installers locally and pro-

History Coldhubs started out as a Small Holder’s Foundation which helped rural farmers maximize yield by giving them information on new techniques, strategies to cut down post-harvest loss and use of pesticides through radio programmes and townhall style- interactions. It took off when it secured funding from the MIT Solve initiative and the Microsoft Airband Grant Fund. ColdHubs was launched in December 2016 and became commercially operational on March 8 2017. It was able to fill up its first cold hub on August 18 2017. Since then, the company’s cold rooms have been operating at maximum capacity.

Operational Model It deploys an energy efficient monoblock refrigeration unit is connected to an inverter that enables the solar-powered batteries to supply energy for night cooling. Each ColdHub can fit approximately three tonnes of perishable food, arranged in at

least 150 units of 20kg plastic crates stacked on the floor. The concept is relatively simple, a 120mm thick insulating cold room panels to retain cold, with energy provided by solar panels mounted on the roof. Cold hubs provide small holder farmers, retailers and wholesalers storage and preservation facility for fresh fruits, vegetables and other perishable foods. The cold rooms are strategically located in markets and traders store agricultural produce in crates for a fee of N150. One cold hubs cost $27,000 to build which include cost of power infrastructure, solar panels, battery, inverters, shipping, clearing from custom and bringing from Onne seaport which will move to our warehouse and many more.

Success Factors Value. The company has been able to increase its customers income by an estimated 50 percent helping to build trust. Grant funding. Through funding from All On it was able to build two ColdHubs

The company has been able to increase its customers income by an estimated 50 percent. ColdHubs has deployed five operational ColdHubs -three in Imo state, two are in Kano State and plans a fresh set of 35 which will serve an estimated 3,500 farmers, wholesalers and fishermen. It has created 10 new jobs for women by recruiting and training them to be hub operators and market attendants.

CEO Comment We have a 40 feet container filled of batteries at Onne port and part of our challenges is that we pay 20 percent duties on those batteries; we also pay duty on imported solar and imported inverter. The point is the regulatory environment does not encourage small and medium scale enterprise in any way, because you are going to pay a credible amount of money to clear goods which you could have use to support the deficient power sector in Nigeria or support National development, because it’s

NIGERIA’S OFF-GRID REVOLUTION

THE NIGERIAN ENERGY REPORT 2019

actually power that drives the economy or key to industrialization.

a businessman. Frankly speaking it’s very difficult to do business in Nigeria and the government can do better by easing the ease of doing business by making policies and program friendly.

Unlike everywhere else in the world were its always friendly, regulatory environment its seems harsh in Nigeria and when I talk about regulation am not talking about Nigerian Electricity Regulatory Commission (NERC) or Ministry of Power am taking about these little agencies that we interface with every day in the course of doing business. Part of what we are doing at ColdHubs is we are building lot of refrigerated warehouses across the country.

Better approach What the government needs to realize is that all the volume of containers coming from the off grid sector is at the first phase which is installation, no company in Nigeria can beat its chest and say we are breaking even or we are on profit, so what we have over the last three years is people bringing in tons of solar batteries or panels because we are building mini-grid whether they are profitable or not we don’t know. As we all know they are raising debt financing, they are raising equity they are raising tons of grants to build these things, we will know in the next five years if they are profitable or not because for me I don’t see their profitability.

The second phase of our development is food logistics, which involves bringing food in a safe and hygienic model from the north to the southern part of Nigeria and also takes apples and grapple imported from South Africa from the southern part of Nigeria up to the northern part of Nigeria. For example from Kano to Owerri there are more than 30 checkpoints from touts, community youths, police, civil defense among others waiting to harass businessmen. So it’s like everybody is against

tern as a guide to provide bespoke solution and also price fairly.

STARSIGHT POWER UTILITY Incorporation Date:

2015-07-23

Registered Address:

9 Ondo St, Osborne Foreshore Estate, Ikoyi, Lagos.

StarSight deploys the solution at zero asset cost to the consumer for the full tenure of the power and cooling agreement. StarSight provide around the clock support to the customer from its monitoring and control centre to ensure that full value is transferred to the end-user.

Impact Vision/ Mission Statement:

StarSight has 200 operational projects in 33 states across all geo-political zones in Nigeria with 99.9% uptime life to date.

To achieve signiﬁcant and measurable cost savings for our clients whilst being the catalyst to deliver a substantial reduction in Carbon Emissions for their business. Tony Carr

Management:

Anthony Carr (CEO)

Products/ Services:

Solar Solutions, Battery Storage, Energy Efficient Cooling Solution.

History

StarSight provides cooling solutions for clients across different industries. The energy firm optimum cooling solution for your facilities, ensuring a clearly deﬁned guaranteed comfort level for work environments.

The company was set up in 2015 when Helios Investment Partners, a private equity investing firm operating in Africa and based in London, United Kingdom acquired assets of SNL and renamed the business StarSight Power Utility Limited and deployed additional capital and human resources in the energy company, one year after to enable a 30 site pilot. African Infrastructure Investment Managers (AIIM), together with Helios Investment Partners acquired stakes in StarSight through a $30m a funding round led by the duo and the investment allowed StarSight to scale units operations, developing projects in 33 states in Nigeria in 2018. The renewable company in 2019 expanded to 200 operational projects across the

cific need of the consumer. The panels and control systems deliver results without unscheduled outages or damage.

Success Factors

country with its budget for the year at $40m.

Operational Model StarSight delivers both roof mount and ground mount solar system to meet spe-

StarSight proposes a sustainable solar power and cooling service to help customers enjoy green energy without concerns of carbon emission, noise pollution, and unnecessary cost from inefficiencies. The solution involves installation of cutting edge technologies and provision of support services to provide cost savings option for end-users at a fixed rate. The green energy company visits the consumer to gather intelligence on current and potential future energy consumption pat-

The energy company has 14.5 MW Installed Generating Capacity; 7.5MW Solar capacity and 7MW Diesel Generator. Starlight also boasts of 12.5 MWh of Installed Battery Storage and 5,000 HP Installed Cooling Capacity “Whilst off-grid solar-diesel hybrid remains in its infancy in Nigeria, it is rapidly gaining acceptance as a competitive and more reliable solution than the current alternative energy sources on the market, provided the companies servicing the sector have the financial capacity and technical support to ensure O&M forms an integral part of the value chain. “Key to acceptance has been the emergence of Power as a Service such as that provided by StarSight eliminating the upfront capital cost for clients. Following our success in the SME space and the additional USD30m investment from Helios and AIIM we are now poised to expand our service offering to the industrial sector in Nigeria which is lacking a viable alternative to diesel,” explains Tony Carr, CEO of StarSight

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THE NIGERIAN ENERGY REPORT 2019

Solar Energy System

manufacture its products.

Impact The company’s has seen its biggest impact in healthcare and education. It is also hoping to get traction in the hospitality business helping to power hotels and resorts.

tem like the Inverter, the charge controller, the AC bypass switch and the system control panel in a single box made us achieve smaller footprint at higher efficiency.

Operational Model Arnergy started out in the solar home systems space but has gradually moved towards mini grids, commercial and industrial side of business. It also has connections in solar energy systems space. Arnergy is now providing electricity to hospitals as part of its strategy to deepen penetration in the commercial and industrial solar space. So far, 20 hospitals have been connected and is expanding to provide power to 35,000 businesses in the next five years and 20 percent of that in the healthcare sector In order to be competitive, the company has modelled tariff against its biggest competitor - generators. It has also created three models to sell its products and services: energy as a service which basically gives a customer access to the facilities while he pays rental for use as would a subscription, a lease to own model which can be settled between 12 – 48 months and outright acquisition.

ARNERGY LIMITED

For example, its Arnergy 3000, a 3 kilowatts system, customers pay N36,000 monthly as rental which comes to N1500-N1600 per day within 30 days. Customers would fork over N2.4 million to buy the facility with a 5 year warranty.

Incorporation Date:

2014-07-22

Registered Address:

Head Office: Plot 91, DDPA Estate, Core Area, Null, Asaba, Delta

Vision/ Mission Statement:

Providing sustainable solutions to energy reliability issues across emerging markets. Our mission is to deliver energy solutions for productive use by deploying products, services and systems that power business operations and improve economic outcomes for our clients.

Management:

Femi Adeyemo (founder and CEO), Kunle Odebunmi

Products/ Services:

Arnergy 3000, a micro-grid ready, modular, stackable system available in single and multi-phase (Sold on ES, OS and LO packages). Arnergy 5000, a micro-grid ready, modular, stackable system available in single and multiphase (Sold on ES, OS and LO packages).

History Femi Adeyemo, an engineer, returned to Nigeria in 2013 and formed Arnergy along with Kunle Odebunmi to help improve energy access for millions of Nigeria. The company started by supplying affordable solar energy solutions to homes and busi-

Success factors Funding. The company has benefite from grant funding and concessional debt finance. Technical skill. The company does its design locally but contracts OEM abroad to

“We have not less than 20 hospitals at the moment, however, we are in a very good position and in general we will power about 35,000 businesses in the next 3-5 years and our target is to have at least 20 percent of that in the healthcare sector. Arnergy has built more than 2 megawatts of installed capacity of solar PV capacity. “We have done almost the same size in distribution capacity and in storage capacity more than 5 megawatts hour. I can tell you all of those figures would be doubled at least in the next 12 months,” Adeyemo said in an interview for this report.

CEO Comment Ghana recently said they are changing form being a tax focused economy to a production focused economy. The argument could be let everybody manufacture in Nigeria but even if I bring cells. I am sure everyone would confirm that even the solar cells are being taxed. So we actually need our government and policy makers to have a more holistic view about import duties and it has to be strategic but the way it is now seems like a “ on the fly” decision. Because it could be another conversation, they could say if one is brining cells and putting it together in Nigeria, bring it at zero if at all you then want to tax, it should be the people importing the system whole. If you don’t bring battery together as a whole but as cells and you assemble locally, you can bring it at zero. This should be the case. But the tax on raw materials takes away the incentive of people to manufacture. This is the conversation we should be having, not that government should make money because if you look at the investment and all that, most of the investment is from outside Nigeria and if the investor sees more returns on investment in Ghana, s/he would take investment there.

nesses in the form a plug and play box that guarantees power half the day at the cost of less than N200 daily. Arnergy partnered with reputable manufacturers from Europe and Asia to bring in its own OEM products, integrating the vital hardware of a complete Solar energy sys-

Kunle Odebunmi and Femi Adeyemo Founders, Arnergy

NIGERIAâ&#x20AC;&#x2122;S OFF-GRID REVOLUTION

THE NIGERIAN ENERGY REPORT 2019

NIGERIAâ&#x20AC;&#x2122;S OFF-GRID REVOLUTION

THE NIGERIAN ENERGY REPORT 2019

Sector Enabler

installations for solar components. Though solar was yet to go main stream, he recognised early the potential that existed in the industry and stayed. Ten years later he is still working in the renewable energy sector and has grown from merely installing solar components for customers of importers who sell at Alaba market to assembling the solar panels for operators in Nigeria.

AUXANO SOLAR LIMITED

COO Comment Incorporation Date:

2014-07-22

Registered Address:

Dunamis House, 367 Old Ojo Road Finniger Satellite Town Lagos.

Vision/Mission Statement:

To become the preferred renewable energy solution provider in Nigeria. To make Auxano Energy a household brand in Nigeria.

Management:

Chuks Umezulora (Co-Founder and Chief operating Officer)

Products/Services:

The impact concessional debt finance has had on our business is that it has given us the opportunity to begin to actualise some of our dreams. This includes increasing our working capital and with more working capital we have been able to improve our profitability and our numbers now look better than what it used to be. We now have more raw materials to produce more finished products, profitability has gone up as we are still using the same workforce to do more.

Chuks Umezulora COO, Auxano

Designs, Solar Installations, Sales, Maintenance of Solar and Inverter Systems, Solar Panel Assembling, Residential &Commercial Solar, Solar power plant Design &Construction

The outfit employs 25 people who have been trained through all the stages of the companyâ&#x20AC;&#x2122;s operations.

History Formerly known as Chume Integrated Services Co. Ltd incorporated in 2005, Auxano Solar Nig Ltd was registered in 2014 specifically for Solar Business. It runs the biggest solar assembly plant in the country and last year began plans to set up small sized operations scattered across different locations in Nigeria to reduce haul-

age costs and losses associated with moving panels across Nigeria due to bad roads.

Operational Model Auxanoâ&#x20AC;&#x2122;s operation from a warehouse roughly 120 square meters, is fitted with all sorts of machines and equipment for cutting, welding, resizing and assembling the components required to build solar panels.

Let me give a simple example, before when we were doing manual restringing we can do maximum of 20 panels in a day but with the auto stringer we can do 100, even up to 150 in a day. You can see the jump, so that has made a lot of difference and also it has eased off the pressure on me because when you know what to do but lack the resources it can be very depressing.

Importation Critical success factors Low labour cost. In the early stages of the business, the company hired labour from local technical schools and involved them in training sessions it had with the Chinese developers. These low-paid but better skilled workers helped it cut down on costs and compete in a highly technical and labour intensive field. The downside was that there was higher employee turn-over with many leaving within a year to pursue higher education. Grant funding and concessional debt finance. Auxano won $100,000 energy challenge organised by USADF and All On. So far the company has received between N40-50 million in funding support. Advanced machinery: The company recently acquired an auto stringer that helps to automate processes and has increased output seven fold.

Challenges Absence of support systems like what is obtainable in China to assist local manufacturers through consistent exchange rate policy, access to finance and working capital and implementation policies to improve ease of doing business has hampered growth. Distribution gaps. Umezulora says it is cheaper to import panels from China than to move them across Nigeria due to poor road network and extortive activities of traffic officials. Starting out, Umezulora asked to be on the technical team of Sky Resources Nig Ltd where he was happy to work without pay just so he could work with a team doing

Yes, but its going to take some time because the honest truth is that most of the activities you seen in the Nigerian energy sector is being done in the downstream so maybe about 10 percent at the mid-stream but nobody has gone upstream, so it might take some time.

Policy quick wins Based on my studies I have found out that the Chinese did a solar concession for 10 megawatts, sponsored it and took it as a case study for other 100 megawatt, 150 megawatt and so on. What I recommended is that government do a tender for a smaller system , maybe 10 megawatts, sponsor it, take the risk, pay for it assume the risk so we can use it for a case study and iron out all the issues that have to do with costing. This approach would give the government the opportunity to know what the actual cost per watt that this thing was delivered at; forget theoretical and paper calculations, what is the actual watt in the Nigerian context. Then what are the technical challenges faced which includes infrastructure, how much did it actually cost us because most of what the government add/had was actually learnt from other places. We need to upgrade our grid infrastructure what is the cost? We can now say we did for 10MW his is how much it costs and then extrapolate and say if we do 100 megawatts this is how much it is going to cost but if the government wants the company to take all the risk and get the guaranty it is not going to work.

NIGERIA’S OFF-GRID REVOLUTION

THE NIGERIAN ENERGY REPORT 2019

Solar Home System plague economic development and quality of lives. It is even worse in rural communities where many do not have in access to energy. This challenge is creating a market opportunity for solar home systems installations across Nigeria. Pico Soar uses small compact and light weight solar photovoltaic panels to generate just a few watts of power in a wide range of small and portable applications. Pico Solar Systems are becoming more common place with firms like Lumos, Azuri and many others offering the service. Pico (small) solar systems are much smaller and cheaper than traditional solar systems but have the potential to provide useful amounts of electrical power to charge the increasing number of low power gadgets such as calculators, toys, cameras, mp3 players, cell phones, tablets, and other portable electronic devices etc, as well as a variety of chargers all use pico solar cells to charge batteries.

ccess to basic electricity in Sub-Saharan Africa is a recurring challenge. A vast number of

homes, businesses and firms do not have access to on-grid electricity due to lack of infrastructure and this has continued to

LUMOS NIGERIA Incorporation Date

2013-05-06

Registered Address:

8, Bodeola Jumoke off Olufemi Pedro Street Parkview estate, Ikoyi, Lagos

Vision/Mission Statement:

Lumos believes everyone has the right to enjoy a better quality of life offered by access to clean, affordable and reliable electricity.

Management:

Houssam Azem (CEO)

Products/ Services:

Large 80W solar panel unit and solar cable, Solar control unit with 8 sockets DC 12V max, USB mobile phone adapter, 2 powerful LED bulbs, Easy self-installation mounting kit.

Pico solar systems are much smaller than traditional solar home systems generating just a few watts to power light emitting diode (LED) lights and a wide range of energy efficient portable devices. They have power outputs ranging from as little

History Lumos was established to provide sustainable and affordable electricity directly to off-grid consumers. Lumos was founded by two partners, one with experience in solar project development and the other with experience with emerging market mobile operators. The Lumos’ payas- you-go home solar systems idea was borne out of two major trends: the explosion of mobile payments in Africa and the dramatic decrease in prices of solar technology. The Lumos founders believed that they could do to electricity access what mobile phones did to traditional landlines in Africa; which is to sell directly to customers, and use prepaid technology to make the service affordable.

as 0.1 watts-peak (Wp) to 5 watts-peak for powering smartphones, portable devices or recharging batteries while systems up to 15 or 20 watts-peak are used for powering larger devices, multifunction systems and home use. Traditional solar PV systems can save homeowners a great deal of money over time, the upfront cost involved in purchasing and installing a system is often too much preventing people from adopting solar power. Pico even saves costs for low income users. Also being small and portable, pico solar systems are relatively easy for non-specialist shops and distributors to physically stock and sell pico solar products plus you do not need specialist technicians to install. Just buy, plug-in and switch on. Pico solar systems come in a range of shapes and sizes, with a typical system being made up of the following components: •

Rechargeable dry-cell battery or batteries of less than 12 volts to store the solar power for use when needed.

•

Some form of charge control and battery management circuitry to protect the battery or batteries from overcharging or deep discharging.

•

Power plugs and cables to connect and power devices such as phones, tablets and external lights.

•

Internal lighting as most pico chargers now come with small highly efficient LED lighting built-in as standard.

across the country. Customers sign up for the service by paying a one-time commitment fee, after which they purchase prepaid electricity bundles. Customers pay for electricity using their MTN airtime accounts just the way they currently purchase airtime or data for their phone. The Lumos proprietary technology locks the system remotely, and only turns the system on after payment. After five years of electricity usage, customers gain ownership of the system, and Lumos unlocks the system so that customers can have free electricity.

In 2016, Lumos signed a partnership with MTN Nigeria to access MTN’s mobile payment infrastructure and retail distribution network. Lumos also secured $50M in debt financing from the Overseas Private Investment Corporation (OPIC), the U.S. development bank. This amount was at the time the largest debt facility in the off-grid home solar industry.

Operating Model Lumos systems are supplied in MTN stores

Houssam Azem

NIGERIA’S OFF-GRID REVOLUTION

THE NIGERIAN ENERGY REPORT 2019

Success Factors

Financing

High Capacity Systems. Whereas most of the major solar off-grid home solar systems are 8-20W, the Lumos system is 80W, giving enough power for lights, fans, TV and cell phone charging all at the same time. This attracts customers who prefer Lumos systems as it can be used to power more appliances than the conventional smaller solar home system.

Access to long term finance is key to succeeding in deploying pay-asyou-

Strategic Partnership. The Lumos partnership with MTN allows it to leverage MTN’s nationwide retail footprint to sell its products to customers across Nigeria. MTN also offers Lumos its mobile payment infrastructure that is easy for customers to use and adopt. After Sales Support. Lumos provides a five-year guaranteed repair service to its customers.

go solar home systems. Cutting Edge Technology. Lumos’ backend technology controls each of the solar home systems remotely. It also receives hourly data on consumption and functionality of the system. Every system sends a statistical report on generation and consumption to the Lumos database at the end of each day. The Lumos customer center can also monitor the status of any system in real time. This helps provide timely after sales services to their customers. Funding. Lumos global deepened its business in Nigeria in 2016 having raised $90 million to support Lumos Nigeria as well as pursue opportunities in other countries. The fund comprised $50 million debt capi-

tal from Overseas Private Investment Corporation (OPIC) and $40 million in equity from a group led by Pembani Remgro In-

CEO Comment

SMARTER GRID Incorporation Date

2016-08-24

Registered Address:

24b A.J Marinho drive Victoria Island

Vision/Mission Statement:

We are a leading Nigerian company, developing and distributing solar systems, appliances and services for homes and businesses in emerging economies. Our mission is to improve the quality of the life of Africans by bolstering energy security that leads to enormous social-economic growth.

Management:

Anthony Onoh (Chairman), Heather Onoh (Chief

A country like Nigeria with epileptic grid electricity supply requires favorable policies to drive the adoption of renewable energy. Tariffs on solar products will discourage businesses in the sector and business that continues must be profitable and as such the increased cost of the products is transferred to the end users. It is an established fact that the people at the base of the pyramid are mostly affected with no accesses to electricity and that they have low purchasing power to afford renewable electricity due to the pass-through cost from tariff. Putting import tariff on renewable energy products is tantamount to the government sabotaging its efforts to increase access to electricity.

Executive Officer)

Products/Services:

Smarter Energy Storage device, Multipurpose Smarter Kiosk, Smarter LED TV 19 , 24 ,32 and 42 , Smarter Portable Radio, Smarter Fan, Smarter Charging Hub, Smarter Led Bulb, Smarter Public Address System, Smarter Clipper, Smarter POS, Smarter Cooler, Smarter Fridge, and Smarter Tube.

History Smarter grid was conceived in 2015 Heather Onoh, it did a pilot work in 2016, and started major distribution in 2017.

Operational Model To solve the problem of energy access, Smarter Grid International (SGI) is using distributed energy resource to provide renewable and affordable electricity to the energy deprived populace in sub-Saharan Africa. SGI finances and provides various flexible payment options such as Pay -As- YouGo and Lease to Own as well as payment platforms such as ‘Paga’ and ‘Angaza’. This has enabled low income earners and micro businesses with minimal or no purchasing

frastructure Fund, existing investors, and Nigerian investor All On.

power to purchase solar products for productive use.

Success Factors Strategic partnerships. The company has built partnerships with the Telcos and Banks and cooperatives. This relationship provides end to end business solutions from the point of off take of SGI’s renewable energy solutions to its customers conducting its business and providing effective payment solutions. Product mix. SGI product mix consist of smart technological devices that guarantees stable electricity for both the smart business owners, Telcos and banks in perform businesses such as Know Your Customer (KYC), effective communication

between the Telco’s and Banks and their respective agent networks especially in the rural areas.

Import of renewable energy products should be duty free. An example is Kenya which has zero percentage on importation of renewable energy products and the country has recorded success rate in the adoption and use of renewable energy. There should also be policies regulating the standard and quality of solar products imported into Nigeria and policies that will drive and increase the manufacturing or assembling of solar products in Nigeria.

Technical competence. The company has set up a Rural Women Technical Squad. These are trained female technicians who make installations of solar equipment and provide after sales support of the equipment. They are trained in collaboration with the International Financing Company, (IFC) and Lighting Africa.

Impact In the short while Smarter Grid International (SGI) has been in business it has installed over 7,000 solar systems and products across the nation. As a Millennia company, SGI has established its mobile smart business hub known as the SGI Solar Multi-Purpose Kiosk fitted with smart solar devices to enable businesses operate optimally and efficiently.

Heather Onoh Chief Executive Officer

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THE NIGERIAN ENERGY REPORT 2019

Future Prospects

ne good way to gauge where a sector is headed is to measure trends another is to understand the plans of the operators. In preparing this report, we asked both operators and regulators where they think the sector is headed, and analysed local and international trends. The off-grid sector in Nigeria is fueled by optimism and a passion that is almost zealotry. It is uncommon to see start-ups who are yet to break-even, who are yet to record their first profit carry on with the enthusiasm you will find around Jack Ma. Sometimes, for most of these operators, it is a mission, they intend to execute without letting an absence of profit get in the way. Interestingly, they are building structured businesses because they cannot afford not to do so when the bulk of their financing is grants and donor funding. Companies like GVE who have benefited from millions of dollars’ worth of investments have seasoned professionals on their boards.

We observed that adherence to corporate governance is high in the sector. Board approvals are required for major expenses and investors actively participate in the boards of these start-ups. This may eventually prove to be the redeeming value of this sector. In the next five years, we expect the sector to significantly move the needle on energy access for millions of Nigerians, especially in rural areas. We expect that operators will begin to record modest profits from mini-grids as energy for productive use gradually becomes the norm. This will lead to increased economic activities and dent rural-urban migration in Nigeria. Of course, chances of these happening are largely dependent on government getting out of the way of business people. Many operators interviewed condemned the tariff on solar panels because it seems akin to pulling up the roots to see how the plants are coming on. It is more pragmatic to grant tax waivers to grow the sector

and then tax economic activities generated through off-grid projects in rural communities. This will even assist states to improve their internally generated revenue. But to have reasonable policies, those who draw them up must be capable of sound reasoning and sadly, this is not always true in Nigeria. Currently, the resilience of operators compensates for the unwise policy of tariff on solar panels but that may not be sustainable in the long-term. Nigeria already has one of the world’s best off-grid policies in the 2017 Mini Grid regulation which both local and foreign experts including the World Bank have said is the best in developing market. Nigeria does not need to ruin it with thoughtless actions by government agencies that lack understanding about the sector. Nigeria’s 2017 Mini Grid regulation is now a benchmark across the African continent. “I feel so impress with the Offgrid sector so far, in ten years I think up to 30 percent of

Nigeria power will be renewable generated. There are massive mini grid projects across the country, at the last count there are close to 50 to 100 of them so it’s very promising but again it’s still an early call its still a business without the right figures yet,” said Nnaemeka Ikegwuonu of Cold Hubs. The team at Rensource said, “It’s not a quick money market, its capital intensive and there are no quick solutions to it. Proper Off grid solutions takes a while to recoup investment and you have to be more innovative .you have to work really hard to get your money market but it is the solution to Nigeria’s energy problem.” We agree with these assessments and predict this quiet revolution will not remain so quiet for long. In the words of a Bassem Youssef, a revolution is not an event. It is a process. The process for Nigeria’s off-grid revolution is already underway and it looks headed in the right direction.