BusinessDay 03 Sep 2018 by BusinessDay

Stanbic IBTC gives point by point rebuttal in letter to CBN

L-R: Bola Onadele. Koko, managing director/CEO, FMDQ OTC Securities Exchange, and Theresa May, British Prime Minister, during the Prime Minister’s visit to FMDQ’s offices, Exchange Place, as part of her tour in Nigeria to discuss crossborder opportunities in the finance, fintech and infrastructure spaces in Lagos.

... says no basis for refunds or fine imposed STEPHEN ONYEKWELU

tanbic IBTC has written a letter to the Central Bank of Nigeria (CBN), giving point by point rebuttals of accusations that it issued irregular capital importation certificates to

MTN Nigeria. The letter which was dated 30, August 2018, signed by the CEO Demola Shogunle and addressed to the CBN Governor Godwin Emefiele, said Stanbic IBTC had considered the allegations by the CBN and that they are based on fac-

tually incorrect premises. “At no time did the Bank use irregular Certificates of Capital Importation (CCIs) to make remittances on behalf of MTN Nigeria Communications Nigeria Limited (MTNN) Continues on page 46

news you can trust I **MONDAY 03 SEPTEMBER 2018 I vol. 15, no 131 I N300

CBN cleared MTN, 4 banks to transact on now flagged CCIs in 2017 Nigeria’s poor struggle Bank shareholders lose N144bn in 2 days

DIPO OLADEHINDE & DAVID IBIDAPO

he Certificate of Capital Importation (CCI) saga between the Central Bank of Nigeria (CBN) on one hand and MTN Nigeria limited and four banks on the other, seemed to have been settled ear-

ly last year, according to a letter seen exclusively by BusinessDay. The letter from the CBN addressed to the chief executive officer (CEO) of MTN Nigeria

See CBN letter to MTN on page 46 with Reference number TED/ PFIO/CON/PRC/01/036 dated February 22, 2017, agreed to lift

the suspension on CCIs issued in favour of MTN Nigeria communications Limited. Continues on page 46

ANTHONIA OBOKOH & MICHEAL ANI

igeria’s fragile economy is affecting the health of its poorer citizens as the number of people visiting hospitals is increasing on a daily basis, BusinessDay investigations show. Economic growth in Nigeria

Nigeria’s pensions potential attracts foreign interest

Continues on page 46

Inside

JENNIFER THOMPSON, FT

ension savings in Nigeria average out at just over $2,700 per saver. It is a dismal figure, but these people are the fortunate ones: most of the country’s workers do not belong to a retirement scheme at all. A Nigerian who is in a scheme and retires at 50, the age set by Continues on page 46

to meet healthcare needs as economy deteriorates

UBA appoints four new P. 45 board members L-R: Ayo Gbeleyi, managing director, GA Capital Limited; Wura Abiola, managing director, Management Transformation Limited; Bola Onadele. Koko, MD/CEO, FMDQ OTC Securities Exchange; Tumi Sekoni, associate executive director, capital market, FMDQ OTC Securities Exchange; Frank Aigbogun, publisher/CEO, BusinessDay Media Limited; Kaodi Ugoji, associate executive director, corporate development, FMDQ OTC Securities Exchange, and Boason Omofaye, head, business news, Channels Television, at a ceremony in honour of Aigbogun for his contribution to the financial market Pic by Olawale Amoo development in Nigeria, by FMDQ OTC Securities Exchange in Lagos, at the weekend.

THE WEEK AHEAD: Politics to dominate, banks bleed, NSE bear market beckons P. 2

BUSINESS DAY

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NSE

Brent Oil

Biggest Gainer

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$77.42

Okomuoil N76.95

Total N189.7

Cocoa

US $2,336.00

8.08 pc

34,848.45

-1.20 pc

₦2,467,566.64

FMDQ Close

Everdon Bureau De Change

Bitcoin

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+0.97 pc

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Foreign Exchange

$-N 357.00 360.00 Market Spot ($/N) £-N 460.50 468.50 I&E FX Window 362.64 €-N 412.00 419.00 CBN Official Rate 306.15

3M 6M -0.46 0.11 11.24 13.11

0.15

10 Y 0.07

20 Y 0.00

14.96

15.13

15.07

Slow PMI expansion signals weak economic growth in Q3 HOPE MOSES-ASHIKE

he “go-slow” kind of expansion in the Purchasing Managers Index (PMI) reading of the manufacturing sector may be signalling slow economic growth in the third quarter. The Central Bank of Nigeria (CBN) on Friday released the PMI reading, which shows the manufacturing sector of the economy grew at 57.1 index point in August compared to 56.8 recorded in the month of July. A review of the manufacturing PMI since April 2018 to the current level indicates that growth has been minimal, indicating that the Gross Domestic Product might likely not be above 2 percent in the next three months. In April, the manufacturing PMI stood at 56.9 point. It dropped by 0.4 points to 56.5 in May, rose to 57.0 in June, but declined to 56.8 in July. “We would not be surprise to see the economy grow at a slower pace in Q3:2018 relative to Q2:2018 due to the delay in the implementation of the 2018 budget. We have not seen any drastic policy announcement to bolster economic performance in Q3:208 especially for the manufacturing sector,” said Ayodeji Ebo, managing director, Afrinvest Securities limited. Ebo said the new CBN policy to advance loans to the manufacturing and agriculture sectors at single digit

still looks very sketchy and that focus is shifting to the upcoming general elections with less economic activity by the principal actors. In the review period, 13 out of 14 sub-sectors reported growth in manufacturing sector while 14 out of 17 sub-sectors grew in the nonmanufacturing sector, the report indicated. Nigeria’s GDP grew at by 1.5 per cent year-on-year in real terms to N16.58 trillion in the second quarter of 2018 according to the National Bureau of Statistics (NBS). Another six months of politicking lies ahead before the elections. Analysts anticipate a pick-up in government spending, a likely increase in the minimum wage and a rise in inflation in the months to come. “We do not accept the argument that business investment grinds to a halt in the uncertainty. Granted it is not strong at present but the election outcome will not lead to dramatic policy changes,” analysts at FBNQuest said. FBNQuest said unappetising growth ahead underpins its expectations of 2.2 percent and 2.5 percent GDP expansion this year and next, both short of the FGN’s forecasts and population expansion. Investment in a few business areas and a pick-up in crude output should be the secondary drivers of this modest growth. The likely rise in the minimum wage will give a welcome boost to household spending.

AIICO insurance responds to new rules, plans N25bn capital raise Modestus Anaesoronye

nderwriting firm, AIICO Insurance Plc has announced plans to raise additional N25 billion through private placement, to enable it play in higher tier capital level in the nation’s insurance industry. The insurer through a notice to the Nigerian Stock Exchange on Friday informed the country’s bourse of a proposed Extra Ordinary General Meeting (EGM) for October 5, 2018, where it will seek the approval of its shareholders to raise fresh funds. AIICO is raising additional capital through the issuance of up to 4,400,000,000 ordinary shares at 0.50 kobo each at N1.20 kobo per share by way of special/private placement. As at the end of 2017 financial year, AIICO Insurance Plc (the group) had total assets of N92.4 billion and a shareholders fund of N10.547 billion. AIICO Insurance Plc, is a leading life insurer in Nigeria. Founded in 1963, AIICO provides life and health insurance, general insurance, investment management and pension management services as a means to create and protect wealth for individuals, families and corporate customers. AIICO has the largest agency workforce in the industry and has branches in 20 states across Nigeria. The recent announcement by the insurance regulator, the National Insurance Commission (NAICOM)

for Tier-level solvency capital has ignited a new challenge among insurance companies in Nigeria, requiring operators to raise additional capital or embark on mergers and acquisition to boost their capital level to be able to play in top tier, where high profile risks are domiciled. NAICOM in a circular last Monday gave October 1, 2018 as take off-date for the Tier-Based solvency capital requirement for insurance companies. In the new Tier-Based Minimum Solvency Capital, Tier 3 companies are those that fall within existing paid up capitals of N2 billion for life business; N3 billion for non-life business and N5 billion for composite business. Companies in this category will be limited to underwrite only risks in life business in the following areas - Individual Life, Health Insurance, Miscellaneous Insurances; while for non-life they will be limited to underwrite risks in these areas - Fire, Motor, General Accident, Engineering (only classes covered by compulsory insurance), Agriculture and Miscellaneous Insurances. Tier 2 companies are those whose paid up capital has increased by 50 percent above the existing minimum capital. For life business, their paid up capital will be N3 billion and they are to underwrite all Tier 3 risks and Group Life Assurance (GLA); while for nonlife, their paid –up capital base will be N4.5 billion and they will underwrite all Tier 3 risks, Engineering (All inclusive), Marine, Bonds Credit Guarantee and Suretyship Insurances.

Currency Futures ($/N)

fgn bonds

Treasury Bills

NGUS OCT. NGUS JAN. NGUS JUL. 30, 2019 24, 2019 31, 2018 0.00 363.05

0.00 363.50

0.00 364.40

President Muhammadu Buhari (l), exchanging pleasantries with Akinwunmi Ambode, Lagos State governor (r), at a parley with Nigerians living in China, yesterday. With them is Rochas Okorocha, Imo State governor (2nd r).

As Voters’ registration ends over 40m Nigerians risk disfranchisement ODINAKA ANUDU, Iniobong Iwok & JONATHAN ADEROJU

s the continuous voter’s registration (CVR) to acquire the Permanent Voters Card (PVC) ended on Friday, no fewer than 40 million eligible voter’s country across may have been disenfranchised over poor handlingoftheexercisebytheIndependent NationalElectoralCommission(INEC) finding by BusinessDay has revealed. The exercise which begin last year April has been plagued by several problems, ranging from shortage of personnel’s, logistic and operational machines which have limited the commission operations across several states in the country. There have been wide spread criticisms over the commission’s poor handling of the exercise from groups and political leaders across the country. It was initially scheduled to close on the 16th of August but was extended August 31th to August.

However, despite repeated assurances by the commission that it was tackling the challenges which have plagued the voters exercise since it began the reverse seems to be the case in several states across the country. Investigation at some registration centres in Lagos shows that several people had to wake up as early as 2am to be in the queue so they could be registered. It also was gathered that in some centres INEC officials were ordering hooligans in the area to help them coordinate the crowd, while only 50 forms where issued for registration every day, with a crowd of over 1000 people on the queue. A middle aged woman Lola Ogunbola told BusinessDay that she had been coming to the centre for several weeks to register without any success. “I have been coming here for the past one month but I have not done my own registration. I leave my house every day around 4am risking my life, what if I get raped? Please the govern-

ment should do something about it,” a frustrated 34-year-old lady, who could not register on Wednesday, said. On Tuesday and Wednesday when Ladipo Market, shut down, many traders rushed for the registration but could not register. “Many people paid up to N5, 000 that day,” said a man called Madueke, who waited for six hours on Wednesday, but could not register. An INEC official in Ikeja who spoke on the condition of anonymity, denied knowledge of sharp practices by its staff in the local government, while adding that it had deployed more logistics to the three centres in the local government which are public schools. “It is not true what they are telling you, go to the three centres in Ikeja we have provided more logistic we have a stand by generator, we are not asking anybody to wake up and come and take number by 4am , we start registration here by 10am.” The Chief Press Secretary to INEC Chairman, Rotimi Oyekanmi, said:

THE WEEK AHEAD: Politics to dominate, banks bleed, NSE bear market beckons Emeka Ucheaga Politics ambuwal expected to announce Presidential ambition After Saraki and Kwankwaso declared their intent to contest for the Presidential ticket under PDP this past week, all eyes are now on Tambuwal to declare his intent to join the race to clinch the priced ticket. It will not be surprising if he announces that he will be running for the highest seat in Nigeria just as he intended in APC in 2015 before dropping out of the race later on. With the PDP presidential ticket zoned to the North, the presidential race is shaping up to be an allnorthern affair. Aspirants to pick up nomination forms, set up campaign committees Presidential and gubernatorial aspirants are expected to begin picking their nomination forms

in their respective parties this week. Less dramatic than the announcements of their presidential ambition but more important than just talking about their desire, politicians are expected to pick up their forms and begin campaigning aggressively at the grassroots to secure their party’s ticket. The aspirants will also begin setting up their campaign committees as we enter the last four months of 2018, when the political race is expected to heat up. Defections to continue among PDP and APC politicians Politicians continue to swap parties as uncertainty over who will be victorious continues to cloud their judgments. As their lips move so will their feet as they seek to remain relevant in any party possible. Loyalties will surely be tested in the coming week. Moghalu may lose credibility after breaking pact Nigerians will begin to question

the credibility of Kingsley Moghalu, a presidential aspirant of YPP after breaking a pact he initially agreed to when a group of young political parties came together to select one leader to back for the Presidential race. It initially looked like he had an outside chance to win; now his chances appear even slimmer as Nigerians are now wondering if his act displays worrying signs of untrustworthiness or the rationale behind his participation in the pact in the first place. Either ways, it throws his credibility into question. Nigerians without PVC to seek another extension The countdown to the election is set to begin as voter’s registration closed last Friday. However with thousands of Nigerians still without PVC, INEC will be under pressure to once again extend voter’s registration whether they succumb to the pressure, we will wait and see.

•Continues online at www.businessdayonline.com

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6 BUSINESS DAY NEWS

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Report shows Senate exonerated MTN of $14bn forex transfers OWEDE AGBAJILEKE, Abuja

Senate report dated November 8, 2017, actually exonerated MTN Nigeria of an alleged illegal repatriation $13.92 billion to its headquarters in South Africa between 2006 and 2016, BusinessDay findings indicate. The report rather urged the Central Bank of Nigeria (CBN) to sanction one of the banks for infractions in the foreign exchange transfer deal, but was silent on the activities of three other commercial banks: Stand-

ASSBIFI assures of commitment to defence of workers JOSHUA BASSEY

ssociation of Senior Staff Banks, Insurance and Financial Institutions (ASSBIFI) says it remains committed to the defence of Nigerian workers, especially within the financial sector. Oyinkan Olasanoye, president of ASSBIFI, gave the commitment while speaking with labour writers in Lagos, as part of activities to mark the 40th anniversary of the senior staff union, just as she harped on the need for employers within the sector to recognise and respect the right of workers to belong to unions. Olasanoye, who decried the inclination of employers, especially the banks to standing workers, said it was also disturbing that several banks in the country not only operate with a mass of casual workers, but many of the workers were denied their basic rights as workers. According to the first female ASSBIFI president, while casualisation of workers seems to have become a global trend, the manner it is, however, being done in Nigeria leaves much to be desired. Olasanoye said the association was concerned about the development, because in some cases, frauds within the financial sector had been linked to casual workers. “We’re worried as a union and therefore call on the management of the banks to give the so-called casual workers direct employment or in the least treat them with dignity and allow enjoy the benefits that befit a worker.” On the 40 years of existence of association, the president said “That ASSBIFI is 40 years is no big deal; but what ASSBIFI has been able to achieve in this turbulent and capitalist ridden economy is a big deal. I am proud to say that ASSBIFI has come of age, we have a robust and intimidating image within the shores of Nigeria and the diaspora.

ard Chartered Bank, Citigroup and Diamond Bank, which the apex bank fined on Wednesday. The Senate specifically mandated the CBN to sanction the bank for improper documentations in respect of capital repatriation and loan repayments amounting to $338,195,183 and $199,440,925, respectively, on behalf of MTN. It also ordered the apex bank to sanction the activities of the bank’s Nominees in the matter of shares transfer and splitting for the purpose of dividend repatriation. The Senate recommenda-

tions followed the adoption of the report of the Committee on Banking, Insurance and other Financial Institutions on the alleged violation of the Foreign Exchange Monitoring and Miscellaneous Act by the mobile company. The report was contained in the Votes and Proceedings of Wednesday, November 8, 2017, which had since been approved in Senate plenary on November 9, 2017. It would be recalled that in September 2016, the Senate agreed to investigate whether Africa’s biggest telecoms firm unlawfully repatriated $13.92 billion from Nigeria – its most

lucrative market, which generated a third of its revenue – between 2006 and 2016. But in July 2017, the apex legislature rejected an earlier version of the report, asking the committee to carry out extensive work. The allegations first appeared in a motion proposed by Dino Melaye (PDP, Kogi State), to launch an investigation into MTN’s illegal transfer of $13.92 billion. The Senate motion said Stanbic IBTC, Standard Chartered Bank, Citigroup and Diamond Bank were involved in the alleged illegal transfers, while trade and investment minister, Okechukwu Enel-

amah was among people used by MTN to help repatriate the funds. But in its report on November 8, 2017, the panel directed the apex bank to sanction one of the banks, while the other financial institutions as well as MTN, were exonerated. The document, which was signed by 10 of the 13-member panel, also rebuked the CBN for its failure to monitor fund transfers to and from the country. “The Committee condemns the CBN for failing in its duty to bring forth those observed deficiencies of Federal Exchange Monitoring

and Miscellaneous Act (FEMMA) for amendment, rather than granting extensions and exemptions which became prone to abuses. “It directs the CBN to forthwith render periodic status reports to Senate on the performance of foreign investments inflows and outflows,” the report seen by BusinessDay stated. It also mandated the CBN to come up with a proposal for the amendment of FEMMA with a view to ensuring the growth of the economy through massive foreign capital inflow and greater retention of foreign exchange.

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Tribute to Sir Edet Amana on his 80th birthday BASHORUN J.K RANDLE Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

rom his first term in the sixth form at King’s College, Lagos, the celebrant served notice that he was a genius. He was one of the invaders from a school somewhere in Eastern Nigeria which none of us had ever heard about. Nevertheless, he turned the examination questions in Mathematics, Additional Mathematics, Physics and

Chemistry (plus the compulsory General Paper) into an effortless stroll in the park – with distinctions in all the subjects at the Higher School Certificate (HSC) level. The college could not get rid of him quickly enough! He spent only two years and became a Floreat. He had no time for distractions – sports, picnics, films, and least of all, chasing girls. He was totally focused on his daily routine of classroom, library and back to the classroom. The only exception was church on Sunday. He was disturbing everybody with his immense brilliance regardless of the fact that virtually all his classmates had been admitted on the basis of their excellent academic performance at the school certificate level. As confirmation that the celebrant’s excellent performance at King’s College was not a

‘

He turned the examination questions in Mathematics, Additional Mathematics, Physics and Chemistry (plus the compulsory General Paper) into an effortless stroll in the park – with distinctions in all the subjects at the Higher School Certificate (HSC) level

’

fluke, he inflicted the same punishment on Imperial College, London where he scored stratospheric distinctions as an undergraduate in Civil/Structural engineering followed by masters and doctorate degrees to the astonishment of his world class lecturers, professors and mentors. There is not much else to add other than to record the cele-

brant’s venture into professional practice, business, politics, community service and religion. Alas, all things bright and beautiful, Nigeria frustrates, contaminates and destroys them all! Thankfully and fortunately, Dr. Edet Amana survived and triumphed. To God be the glory. Now

at the glorious dawn of eighty having firmly established his unassailable credentials as a husband, father and grandfather, Sir Edet Amana is a more rounded personality with outstanding achievements as well as recognition locally and internationally––as an icon in science/engineering; captain of industry/banking; a pillar of the Methodist Church and formidable politician/community leader. At the Metropolitan Club, Victoria Island where he sits at Table 2, his unassuming manner, friendly disposition and engaging intellect have conspired to shield him as the quietest billionaire in the club. Wishing you many more years in good health and the abundant blessings of the Almighty, “Floreat”!! Send reactions to: comment@businessdayonline.com

It does not really matter

ANTHONY OSAE-BROWN Osae-Brown is the editor of BusinessDay @osaeB

o we really need investors in Nigeria? What can investors do for us that we cannot do for ourselves? After all we are Africa’s most populous country and the most youthful. We are a country with a population of 198 million people. It makes no difference that 86 million of our people are extremely poor and that 95 percent of our people live below US$5.5 per day, which means that we can hardly afford anything that is really affordable in many parts of the world. It also does not matter that every minute, at least six more Nigerians fall into extreme poverty.

We have the fastest growing population in the world. In fact, the world has acknowledged that by 2050, we would be the world’s third most populous country with a total population of about 400 million people. We will also be indisputably the most populous country in Africa. With such a huge population, why should we rush after foreign investors? Foreign investors should be the ones rushing us. It does not really matter that our population is growing at an average rate of 2.5 percent, while the economy grows at less than two percent. It does not really matter that we have the highest number of children below 10 years anywhere in the world who are out of school and that by 2050, these 10 million children who are out of school will be adults in a world where knowledge is the basic tool for survival. It also does not matter that we have a largely youthful population where more than 40 percent are below the age of 18. It does not really matter that most of these young people are receiving education in a public school system that is largely dilapidated. It also does not matter that most of the teachers in our pub-

lic school systems are poorly trained, poor paid and poorly motivated. The youths are our future even if they come out of our school system not fit for the purpose they were trained for. It does not matter that they do not have employable skills. We can deploy them to other uses that are fit for our political interest disguised as national interest. Those that get fed up can trek through the Sahara Desert for all we care. It also does not matter that the quality of healthcare delivery in the country is well below standard. It does not matter if our hospitals are not hospitals but holding bays for a passage to the world beyond. It does not really matter if all our qualified doctors are now finding greener pastures outside the shores of the country. It also does not matter if we are losing an average of 13 doctors every week to the US and the UK or that we have more doctors and medical personal outside the country than we have inside. Such high level of migration is a clear evidence that we have some of the best medical training schools in the country. It is the only reason why the US and the UK are rushing our doctors and nurses. It does not re-

ally matter if the doctors left behind are overworked and under paid and that they are also just waiting for the first opportunity to leave the country. Look at the bright side. Our exported doctors send money back home. What also matters is that politicians can get the best medical treatment abroad. They need to be healthy before they can think of how best to ensure that we are healthy. After all, a sick president cannot help a sick nation. It also does not matter if we do not get enough in foreign direct investment (FDI). If all the FDI we get in a year is less than a billion dollar while Ghana, with an economy the size of Lagos, gets three times more FDI than we do. It does not really matter if Ghana is now the gateway into West Africa while our commercial capital is rated among the worst cities to live in the world. What matters is to ensure that our most successful foreign investors are slammed with fines that are not payable. It does not matter if the size of the fines makes it look like an attempt at extortion. We are the biggest economy in Africa and they have to behave themselves or get out. It does not matter if our oil

sector has remained largely stagnant for years because we cannot pass a law to guide how players in the sector can operate their businesses. It does not matter that we are losing an average of US$15 billion annually for not being able to put in place some clarity around operations in the petroleum sector. It does not matter that we have been talking about expanding our gas production for more than 16 years without taking it beyond talk. It does not matter that we are essentially a gas territory with little gas production. It does not matter that as we fiddle with our oil and gas industry, our African neighbours are discovering oil and gas at an alarming rate and technology is developing fast enough to make oil obsolete in the nearest future. It does not matter that we have gas but not water or abundant land without enough food. What we hold dear and non-negotiable is our politicians without visions and our political parties without ideologies. We hold dear our march into a future we cannot define and look illprepared for. Send reactions to: comment@businessdayonline.com

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Some considerations on the choice of an institution for doctoral study

MOHAMMED DAHIRU AMINU Dr. M.D. Aminu (mohd.aminu@gmail. com/@mdaminu) wrote from Yola, Nigeria.

e all want to attend universities for different reas ons. The fundamental reason, which is not contestable, of course, is the fact that we all desire an education as a way of unlocking our full potential for vertical and upward social mobility. But beyond this essential motive, there could be other reasons why one person desires to be in a given university while another person chooses to be in the other institution. One of these reasons that influences the choice of prospective candidates is the ranking of universities which is often conducted by making comparisons between their standards. When universities are ranked, some of the performance indicators used may include teaching (e.g. the learning environment, staff to student ratio, etc.), research output (e.g. volume, reputation, income, etc.), citations (e.g. research impact, scaled-up implications, practicability, etc.), international spread (e.g. diversity in terms of staff and students,

THOMPSON AYODELE Ayodele is a Senior Research Fellow with the Initiative for Public Policy Analysis, an independent think-tank based in Lagos, Nigeria

n September 3, African leaders will convene in Beijing to attend the 2018 Summit of the Forum on China-Africa Cooperation (FOCAC). The theme of the summit is to build a stronger community with a shared future through win-win cooperation. However, the realization of the forum’s theme is dependent on China’s intention to further strengthen its relationshipwith Africa. For more than five decades, the key economic considerations that had shaped China-Africa relations include foreign direct investment (FDI), development assistance and debt cancellations and trade. According to Chinese Customs Department, the volume of trade between China and Africa increased from US$11 billion in 2000 to US$170 billion in 2017. This is encouraging but it is just about one-fifth of last

research, etc.), collaborations with the industry (e.g. grants, knowledge transfer, etc.). The rankings are often conducted by publications as “Times Higher Education World Rankings”; “The Times World Rankings”; “The Complete University Guide”; “The Guardian”; etc. Because of our obsessions with university rankings, my friend who is about to begin his doctoral studies is at liberty to attend any UK university of his choice. He wants to attend Imperial College in London, obviously for the age-old prestige and value for money that he hopes to get from the institution, although he is having second thoughts about Imperial College since his attendance will certainly involve living in or around London with his young family—a task that is too expensive for him to handle, in financial terms. He then asked me to advise him. I advised that he can attend another UK university, which is not Imperial College, and yet have a very good doctorate degree which is equivalent to that of Imperial College. It is important to note that at the doctorate level, it is critical to consider several factors aside from the university’s ranking, to make a choice of where to go to. The doctorate is a highly specialized degree; as such that high specialty that is sought after by a prospective student may not be necessarily found, all of the time, in the highly ranking universities. While chances are that the most favourably ranked universities would give effective support to students in terms of the research they will be conduct-

‘ At the doctorate level,

the choice of ‘what university amongst universities’ to attend should be carefully considered, as opposed to the case if anyone was considering studying for taught degrees such as a bachelors’ or masters’

’

ing, nevertheless, there are exceptions, which call for caution and further considerations. Some examples are helpful to buttress this point. At the time my father was about to start his doctoral study in the early to mid-1980s, he was advised by an expert in his field that the best universities in the UK for his area of research were Stirling (Scotland), Aston (Birmingham) and Wales (Cardiff ). At the time he attended Cardiff, it was arguably the best institution in which to conduct research on freshwater fisheries—his area of study. Cardiff had some of the best experts at the time, including Professor R.J.H. (Raymond John Heaphy) Beverton (1922-1995). Beverton’s book, entitled “On the Dynamics of Exploited Fish Populations”, contained much of the foundations of quantita-

tive fisheries science. Beverton was involved in several projects and papers, some of which were published after his death. He was also known for bringing about the Beverton-Holt model—a model used in population ecology. The Fisheries Society of the British Isles awards a yearly medal called the Beverton Medal “to a distinguished scientist for a lifelong contribution to all aspects of the study of fish biology and/or fisheries science, with a focus on ground-breaking research.” Beverton was/is the best in fisheries biology, and my father had the privilege to study in his department. I attended Cranfield University for my doctorate in energy (carbon capture and storage), and I concluded my study in July 2018. Cranfield is not found in popular university rankings. Since Cranfield is a post-graduate only university, making direct comparisons with other universities which normally have undergraduate programs is problematic. But, be that as it may, I am not sure that because I attended an unranked university, my doctoral thesis would have failed the award if it was taken to the highly ranked UK universities. The person who examined my thesis earned his own doctorate from Imperial College and he works with the University of Aberdeen. My research was also good enough to be published in journals where people from, say, Imperial College, patronize. In those journals where I published my work, the editors and members of the editorial boards include academics from prestigious brands

as Stanford, Massachusetts Institute of Technology, University College London, University of Cambridge, Imperial College, etc. Additionally, my work was cited from different places in the world including one from the Los Alamos National Laboratory (New Mexico, USA) of the Manhattan Project fame. More so, my friend recently earned his doctorate degree from the University of Brighton, after examination of his thesis by a professor and Head of School in the University of Manchester. In this case, it will be disingenuous to claim that because Manchester is more highly rated over Brighton, my friend’s doctorate would have failed the award if it was presented as a Manchester thesis. Therefore, at the doctorate level, the choice of ‘what university amongst universities’ to attend should be carefully considered, as opposed to the case if anyone was considering studying for taught degrees such as a bachelors’ or masters’. In contrast with taught degrees where contribution to knowledge is not expected, the doctorate is different in that it is expected to impact on the community of scholars in the discipline. Thus, where to make impact the most is more important than the ageold prestige of the institution of study, unless, of course, a good correlation exists (and rightly so, most times) between the highly ranked universities and the impact anyone person’s research will make to the discipline.

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China-Africa engagement: Beyond foreign aid year’s trade volume of US$515 billion between China and its Association of Southeast AsianNations (ASEAN) trade partners, as recorded by the Chinese Ministry of Commerce. The proximity of China to its Asian neighbours is a factor to explain this. Of more importance is the Free Trade Agreement (FTA) signed between China and its ASEAN partners in 2002. FTAs are mutually beneficial to countries that are signatories in terms of enhancing trade and foreign direct investment, and reducing tariff or non-tariff barriers amongst partners. China has signed hordes of FTAs with many countries across the world, except Africa. Typically, China does not publicly articulate its FTA strategy. How its FTA partners are selected is best known to officials in Beijing. What is clear, to some extent, is that China FTAs are tailored to its specific needs and considers the economic and strategic interests of partners. What is also evident is China has followed a

narrower model of FTA, mainly economic integration that focuses on trade in goods only approach. The central criteria of China’s FTAs include, achieving “One China” policy designed to thwart Taiwan’s influence across the world; recognition of China as a market economy apparently to put trade partners in a weaker position to commence anti-dumping action as contained in the World Trade Organization (WTO) rules; achieving access to raw materials to enhance its manufacturing base and freeup its labour from agriculture for manufacturing; and maintaining and strengthening its political and diplomatic relations. These criteria appear to have been evident in its FTAs over the years. Many African countries such as Kenya, Nigeria, Sudan, and South Africa, to mention a few, meet these criteria with which China signs FTAs. Signing FTAs has both benefits and costs. For African countries, the benefits will outweigh the costs, potentially. In addition to providing access to larger markets, increasing local capacity building and transferring of knowledge, FTAs

with China will increase foreign direct investment just as it did in Chile and Peru, following FTAs with China. However China-Africa FTAs will need to overcome significant political and economic obstacles, even though African countries meet China’s FTAs ‘criteria’. Politically, the Politburo Standing Committee (PSC) is the supreme decision-making authority in China. The PSC must approve FTAs regarding specific countries or regions of the world. Unfortunately, issues relating to Africa are rarely discussed at the PSC, except peace-keeping deployment or setting up of China military base in Africa. There is indeed evidence of growing economic links between China and Africa. China’s engagement strategies have been largely focused on the use of foreign aid, development assistance and debt cancellations but the trickle-down effects of these engagement strategies are rarely felt. In the era of Trump’s “America First”, African countries would have to create

trade networks and sign trade agreements within and outside of the continent. The recent signing of African Continental Free Trade Area is a good step but trade agreement with China would also benefit Africa. Rather than focussing on the traditional means of engagement, African countries would have to set their priorities and develop strategies to actually engage China. The era of relying on China’s foreign aid and development assistance should give way to increasing trade for which FTAs are in good stead. When African leaders eventually meet their Chinese counterparts at the FOCAC summit, they should take advantage of the existing relationships as a leverage on China to seek strategic economic partnership with China through mutually beneficial trade, just the way its Asian neighbours are, not just in terms of foreign aid or development assistance. China-Africa FTAs are steps in that direction.

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Monday 03 September 2018

National interest or tyranny?

ome weeks ago, following the failed coup at the national assembly where the residences of both the president and deputy president of the Senate were blocked by security operatives to prevent them from attending plenary where supporters of President Muhammadu Buhari were expected to summarily remove the president of the Senate, we asked whether indeed the president is a tyrant as being alleged by those who disagreed with the tactics being used by the government to silence its opponents. Of course, the allegations against the president were not without justification. The impunity with which court orders were being disobeyed were alarming and unmatched in Nigeria’s history. When the Attorney General of the federation and minister of Justice said the illegally detained former

National Security Adviser would not be allowed to enjoy the bails granted him by several courts in the land in the interest of the ‘public good’, we thought he was overreaching himself and was not speaking for the government. How wrong we were. But even the president was to repeat the same line of thought recently at the 59th annual conference of the Nigerian Bar Association in Abuja. He was quoted as saying: “Our apex court has had cause to adopt a position on this issue in this regard and it is now a matter of judicial recognition that where national security and public interest are threatened the individual rights of those allegedly responsible must take second place in favour of the greater good of society.” Aside the fact that the president and his speechwriters were wrongly interpreting the decision of the court, two questions come to mind. The first is what is ‘public good/

national interest and who determines the public good or national interest? Despite the fact that no government, as yet, has been able to define the terms and there is no body of laws called public good or national interest, governments still cite it often as reason for abridging the rights of citizens. In effect, governments usually have the sole rights to determine what national interests or public goods are and they may be no more than regime or personal interests. This has allowed governments to deny or abridge individuals’ rights while allowing them to get away with murder literally and metaphorically. Secondly, the case being relied by the president and his attorney general was that between the federal government and Asari Dokubo. In that case - a treasonable felony one - it was the court that declined to grant the defendant bail based on the nature of the crime for which he was accused and not the government. Like we said

the last time, “only under tyranny would the Presidency or the executive arm of the government act as the accuser, the law enforcer and the judge at the same time”. It is only when tyranny reigns in a country that the rule of law is ignored. Under the Buhari Presidency, increasingly, there are becoming too many situations that the rule of law is being ignored in favour of the whims and caprices of the president. But it should be noted that those who ignore the rule of law today, will need the law to protect them in future. It is therefore very dangerous to the freedom of all citizens when the rule of law is ignored in the name of ‘perceived’ public good as determined by the President and not by the courts. The President we see today, no matter how good intentioned, will not be there forever. Only the law, and quest for justice lasts forever and justice is what everyone seeks for and deserves.

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Monday 3 September 2018

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Monday 03 September 2018 In Association With

When the music stops

Lebanon’s economy has long been sluggish. Now a crisis looms But the country’s politicians are busy haggling over cabinet posts

HE main feature of Beirut’s skyline is not minarets or church steeples, but construction cranes. From the roof of a posh downtown hotel you can see 17 of them, throwing up luxury apartments that cost up to $1m each. Wealthy Lebanese sip wine on their terraces and discuss investment opportunities. They rub shoulders with Gulf tourists drawn by Beirut’s libertine nightlife. Lebanon’s economy relies on tourism, construction and finance for growth. All three seem to be thriving. That, however, is an illusion. The country is tipping into a property slump—and perhaps a banking crisis that threatens its currency. An economic crash could destabilise a country already swamped with refugees and plagued by sectarian divides. Trouble in the banking sector, which draws investors from around the region, might be felt beyond Lebanon’s borders. Ireland wrestles with Catholicism as the religion plunges in popularity Start with tourism, which was bouncing back from a period of regional unrest. Arrivals hit a fiveyear high in 2017. But they are still below their peak of 2010 and the industry is fickle. In November Saudi Arabia briefly detained the prime minister, Saad Hariri, and forced him to resign (a move he later reversed). Hotel occupancy plunged by 14 percentage points within a month. Saudi visitors, who account for the biggest share of tourist spending, are down by 19% this year. Investment is sluggish. Kafalat, a firm that guarantees loans for small and medium enterprises, handled 117 tourism projects last year, a 6% drop from 2016. Annualised figures from the first half of 2018 show a further 18% decline. More worrying is the construction industry, which accounts for nearly one in ten jobs. Despite the cranes dotting Beirut, construction is slowing. The number of permits issued in the first half of 2018 was 9% lower than in the same period last year. Property transactions dropped by 17% year on year in the first quarter.

Genocide in Myanmar

Burmese generals should stand trial for atrocities against the Rohingya The West should stop coddling Aung San Suu Kyi

HEN Rohingya Muslims began fleeing from Myanmar to Bangladesh a year ago, the cause was obvious: the army had gone on the rampage. But the Burmese government maintained that the mass exodus from Rakhine state—723,000 people, by the UN’s count—stemmed from a simple misunderstanding. The army, it insisted, was just searching for Rohingya militants who had attacked police posts. It was only because of false rumours of military abuses, officials blithely declared,

Developers fear a deeper slump is coming. For years the central bank subsidised mortgages, offering 30-year loans with interest rates as low as 3%. In March it abruptly halted the scheme. Bankers say it was abused. Instead of buying houses, some borrowers put the principal into higher-interest savings accounts to turn a profit. Many young couples cannot afford unsubsidised loans, which carry rates of 8-9% and shorter repayment periods. Some have cancelled their weddings as a result. From bad to worse Lebanon’s economy was already struggling. Annual GDP growth was 8% in 2010, before neighbouring Syria plunged into civil war. Since then it has averaged less than 2%. The slowdown in the housing market will drag it down further. In Hamra, the commercial hub of west Beirut, electronics stores are almost empty despite deep discounts. Fewer new homeowners means less demand for refrigerators. Many shops have cut salaries or fired staff to get by. “This is the worst it’s been in 40 years. Everything is coming to a halt,” says Rafi Sabounjian, a small-business owner. On paper, at least, the banking sector looks solid. Commercial

banks hold $200bn in deposits, four times as much as Jordan, which has more people. The central bank (the Banque du Liban or BdL) sits on $44bn in assets, excluding gold, enough to cover more than two years of imports. Its governor, Riad Salamé, says everything is fine. He points to the months after Mr Hariri’s detention, when the central bank spent $1bn to prop up the Lebanese pound, which is pegged at 1,500 to the dollar. Reserves recovered almost immediately. But those numbers are misleading. In 2016 the BdL pioneered something called “the swap”, a complicated scheme in which it borrows foreign-currency holdings from commercial banks. It uses the dollars to maintain the currency peg. The banks get eye-popping returns, raking in 40% for a one-year loan. With no economic growth, the swap works only if it can attract ever-larger sums. “It’s a pure pyramid scheme,” says Jean Tawile, a banker and adviser to Kataeb, a political party. The BdL does not publish its net reserves. Toufic Gaspard, its former head of research, wagers that “swapped” deposits are worth $65bn—meaning net assets are already negative. Fearing a devaluation, banks are increasingly des-

perate to attract foreign currency. Interest rates even for short-term deposits are at their highest level in nearly a decade. High rates mean small firms cannot obtain credit. A decade ago commercial lending in Lebanon grew by 15-20% annually. This year it is shrinking. The currency peg has been a pillar of the economy since 1997. Receipts are printed in dollars and pounds; shoppers use the two interchangeably. This is starting to look unsustainable. Devaluation would be painful for a country that imports so heavily. It would be good for exporters—but Lebanon hardly has any. Last year it exported $2.8bn worth of goods, about half as much as Iceland. The currentaccount deficit is more than 20% of GDP. Lebanese politicians made a fortune from the banking boom. Of its 20 biggest commercial banks, 18 are wholly or partly owned by politicians or well-connected families. Now they seem oblivious to the looming crash. Instead they float fanciful schemes for growth. Some hope Lebanon will become a hub for rebuilding post-war Syria. That plan faces many obstacles, not least that nobody knows who will foot the estimated $200bn bill for reconstruction.

that villagers had taken fright and headed for the border. On August 24th the UN’s Human Rights Council delivered its official response to this drivel. After a year’s research, including 875 individual interviews, it published a report which affirms that the army led a pogrom that claimed the lives of more than 10,000 Rohingyas (see article). Most damningly, the report finds evidence that the violence was premeditated and amounted to genocide. Senior generals, the report concludes, should be put on trial for war crimes. It is an indictment of the world that the Burmese army is, thus far, getting away with mass murder. Myanmar’s rulers, the UN’s authors lament, have responded with “denial, normalcy and impunity”. Aung San Suu Kyi, Myanmar’s de facto leader, has set up worthless committees to investigate. The only soldiers to have been punished are seven infantrymen who were implicated in a massacre by a detailed Reuters report. (The government also put the journalists in question on trial for obtaining secret documents.) China and Russia defend Myanmar; Western governments have been feeble in their response. Apologists for the Burmese govContinues on page 15

Monday 03 September 2018

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A deadly virus in an already dangerous place

Battling Ebola in a war zone in Congo Health workers are finding it hard to outrun a deadly virus

ROW of health workers in blue gowns and face masks sit at tables outside the tin-roofed bungalow that was home to Kambale Vincent, one of 75 people who have died from Ebola in the Democratic Republic of Congo this month. His widow, a hunched, 60-yearold in a black cardigan, pulls her arm out of her sleeve and winces as a needle pierces her skin. She is receiving an experimental Ebola vaccine, fresh from trials in west Africa, that is being offered to anyone who may have touched her late husband. Getting vaccines to the centre of this outbreak, the scrubby village of Mangina in the North Kivu province of Eastern Congo, is no easy task. The area is in infested with about 40 armed militias, most of which have been hiding in the forests since the end of a war in 2003 that claimed the lives of between 1m and 5m people. Just a day after the outbreak was declared on August 1st, machete-toting militiamen sprang out of the bush and abducted 16 people in a field around 30 kilometres from Mangina. In broad daylight they dragged ten men, four women and

two teenage boys—who were walking back from a day’s farming—into their forest hideout. Fourteen of the villagers’ hacked-up bodies were found in shallow scrubland graves five day later. The two boys were probably taken as recruits. The attacks have been blamed on the Allied Democratic Forces (ADF), a group of Islamist ideologues originally from Uganda. In recent years the anti-government rebels have gone from attacks on the Congolese

army and UN peacekeeping troops, to indiscriminately abducting citizens. Each time they strike, frightened families rush through the porous border into Uganda nearby—exactly the kind of hurried, untraceable movement that makes it harder to contain the Ebola virus. “We have a toxic mix of factors,” says Mike Ryan, of the World Health Organisation (WHO), which is trying to get 9,300 vaccinations to those who need them. “We are dealing with security problems, a weak health system and disease. We have to balance access with security all the time.” Health workers risk more than exposure to a virus. Médecins Sans Frontières, an international charity running the Ebola treatment centre in Mangina, had four of its staff abducted by the ADF in 2013. Though one escaped after 13 months, the rest have not been seen since. Other factors may also have contributed to the spread of the disease, including a strike by local nurses who were not paid for three months. The virus may have reached Mangina as early as May 11th when a man with Ebola-like symptoms died in the local clinic. But the first deaths were reported only in late July. Josephine

Kahambu, a nurse, alerted the officials in the capital, Kinshasa, after two men with bloodshot eyes, diarrhoea and fevers came to her clinic. Although she was on strike she decided to see to them and recognised signs of the deadly virus. This particularly deadly strain of the disease, known as “Zaire Ebola”, has killed 78% of those it has touched. It is transmitted through bodily fluids and can be passed on with as little as a sweaty handshake. Thankfully some lessons learned in the west African outbreak, which killed 11,310 people between 2014 and 2016, seem to be helping. Instead of barking at frightened villagers through a megaphone about how they should protect themselves from infection, workers from the WHO talked to the village chief. “The chief is more listenedto than we are,” says Frizzia Safari, a Congolese doctor. “We talk to him and then he talks to the people.” If nurses can prick enough arms quickly then it may be possible to halt this outbreak before it spreads much further. But they are finding it difficult to outrun the virus because of poor roads and the threat of attack from armed rebels. So new cases keep cropping up each day.

Burmese generals should stand trial... Continued from page 14

ernment insist that it is almost impossible for anyone, foreign or local, to do much about this, since the Burmese army is a law unto itself. It made way for a civilian government only two years ago, after imposing a constitution that gives it complete control over its own affairs and all matters of security. What is more, ordinary Burmese tend to view Rohingyas, most of whom are Muslim, as a threat to Buddhism, the religion of the majority. And Ms Suu Kyi, the argument runs, does not have the authority to rein in the army, and would only alienate voters and undermine her own standing by attempting to do so. By the same token, should the West take Myanmar too strongly to task for the army’s conduct, it would imperil the fragile democracy for which it and Ms Suu Kyi fought for so long. It would also, the theory goes, drive Myanmar into the arms of China. These arguments are not only an affront to justice—they are also wrong. Acquiescing to the abuses in Rakhine does not help entrench democracy. Instead, it will give the generals the impression that they can act with impunity in other parts of Myanmar where they are fighting ethnically-based insurgencies (the UN report says the army is also committing atrocities in the fight against the Shan and Kachin). And foreigners, far from strengthening Ms Suu Kyi by tiptoeing around the atrocities, simply reinforce the idea that the army is calling the shots and that her government is little more than a figleaf. There is reason to believe that the generals will respond to pressure. International ostracism and sanctions played a part in their decision to retreat from government in 2016. Ms Suu Kyi, moreover, has stood up to the army in the past, not least by insisting on leading the government despite the clause the generals inserted into the constitution barring her from the presidency. She should stand up to the generals again, or risk seeming complicit in their crimes. Concerned foreigners, too, should defend their principles. If a democracy can be preserved only by turning a blind eye to genocide, then it is not worthy of the name, much less the world’s protection.

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Monday 03 September 2018 In Association With

Passive, aggressive

Asset managers get involved in the companies they own Index-tracking funds take a more hands-on approach to corporate governance

XECUTIVES have grown used to being nagged about their company’s strategy and governance by all and sundry. Activist hedge funds targeted 524 companies worldwide between January and June, compared with 570 in the whole of 2013 and 805 in 2017, according to Activist Insight, a research firm. Last year two big index-makers, S&P Dow Jones and FTSE Russell, excluded firms with multiple share classes from their flagship indices. On August 22nd Glass Lewis, a firm of “proxy advisers” which advises shareholders on how to vote, gainsaid the management of Sports Direct by urging the British retailer’s owners to evict its founder, Mike Ashley, from the board. Now hitherto quiescent big asset managers are sticking their oars in as well. Institutional investors, which own the largest stakes in most listed firms, have conventionally deferred to proxy advisers in matters of corporate governance. A positive recommendation from Glass Lewis or Institutional Shareholder

Services (ISS), the two giants of the shareholder-advice industry, can raise the vote in favour of a motion on board appointments, executive pay and the like by up to 20 percentage points, according to a recent analysis by academics at Stanford University. But big funds do not always blindly follow proxy advisers’ suggestions. BlackRock, the world’s biggest fund manager, overseeing more than $6trn of assets, is putting more emphasis on “stewardship”: active engagement with firms it co-owns (and, in the case of index-tracking funds, from which it cannot divest). It employs only 35 people to liaise with firms’ management and decide how its passive funds should vote, but that number is likely to double in the next three years. State Street Global Advisors, another big asset manager, boasts that last year it managed to shame a number of companies without a woman on their boards to hire some. As well as their separate efforts to become more involved in the

companies they own, asset managers are also banding together. Focusing Capital on the Long Term, an organisation founded in 2016, wants to reduce short-termism in investment, for instance by abolishing quarterly guidance. Its members include asset managers and pension funds, as well as companies like Dow Chemical, an American firm, and Tata, an Indian conglomerate. In 2017 a group of 50 investors, among them BlackRock, State Street, Vanguard and

The new geography of innovation

Why startups are leaving Silicon Valley Its primacy as a technology hub is on the wane. That is cause for concern

“

IKE Florence in the Renaissance.” That is a common description of what it is like to live in Silicon Valley. America’s technology capital has an outsize influence on the world’s economy, stockmarkets and culture. This small portion of land running from San Jose to San Francisco is home to three of the world’s five most valuable companies. Giants such as Apple, Facebook, Google and Netflix all claim Silicon Valley as their birthplace and home, as do trailblazers such as Airbnb, Tesla and Uber. The Bay Area has the 19th-largest economy in the world, ranking above Switzerland and Saudi Arabia. The Valley is not just a place. It is also an idea. Ever since Bill Hewlett and David Packard set up in a garage nearly 80 years ago, it has been a byword for innovation and ingenuity. It has been at the centre of several cycles of Schumpeterian destruction and regeneration, in silicon chips, personal computers, software and internet services. Some of its inventions have been ludicrous: internetconnected teapots, or an app that sold people coins to use at laundromats. But others are world-beaters: microprocessor chips, databases and smartphones all trace their lineage to the Valley. Its combination of engineering expertise, thriving business networks, deep pools of capital, strong universities and a risk-taking culture have made the Valley impossible to

clone, despite many attempts to do so. There is no credible rival for its position as the world’s pre-eminent innovation hub. But there are signs that the Valley’s influence is peaking (see Briefing). If that were simply a symptom of much greater innovation elsewhere, it would be cause for cheer. The truth is unhappier. Silicon Plateau First, the evidence that something is changing. Last year more Americans left the county of San Francisco than arrived. According to a recent survey, 46% of respondents say they plan to leave the Bay Area in the next few years, up from 34% in 2016. So many startups are branching out into new places that the trend has a name, “Off Silicon Valleying”. Peter Thiel, perhaps the Valley’s most highprofile venture capitalist, is among those upping sticks. Those who

stay have broader horizons: in 2013 Silicon Valley investors put half their money into startups outside the Bay Area; now it is closer to two-thirds. The reasons for this shift are manifold, but chief among them is the sheer expense of the Valley. The cost of living is among the highest in the world. One founder reckons young startups pay at least four times more to operate in the Bay Area than in most other American cities. New technologies, from quantum computing to synthetic biology, offer lower margins than internet services, making it more important for startups in these emerging fields to husband their cash. All this is before taking into account the nastier features of Bay Area life: clogged traffic, discarded syringes and shocking inequality. Other cities are rising in relative importance as a result. The Kauff-

Elliott, a prominent activist fund, as well as the state pension funds of states like Illinois and California, launched a stewardship “code” for America, the last big advanced economy to lack one. Institutional investors in British-listed firms have gone a step further. In 2014 a group of them founded a body called the Investor Forum to allow them to approach specific firms while avoiding legal restrictions on shareholders acting “in concert”. Its 40 members man Foundation, a non-profit group that tracks entrepreneurship, now ranks the Miami-Fort Lauderdale area first for startup activity in America, based on the density of startups and new entrepreneurs. Mr Thiel is moving to Los Angeles, which has a vibrant tech scene. Phoenix and Pittsburgh have become hubs for autonomous vehicles; New York for media startups; London for fintech; Shenzhen for hardware. None of these places can match the Valley on its own; between them, they point to a world in which innovation is more distributed. If great ideas can bubble up in more places, that has to be welcome. There are some reasons to think the playing-field for innovation is indeed being levelled up. Capital is becoming more widely available to bright sparks everywhere: tech investors increasingly trawl the world, not just California, for hot ideas. There is less reason than ever for a single region to be the epicentre of technology. Thanks to the tools that the Valley’s own firms have produced, from smartphones to video calls to messaging apps, teams can work effectively from different offices and places. A more even distribution of wealth may be one result, greater diversity of thought another. The Valley does many things remarkably well, but it comes dangerously close to being a monoculture of white male nerds. Companies founded by women received just 2% of the funding doled out by venture capitalists last year. Shadows of the colossi The problem is that the wider playing-field for innovation is also being levelled down. One issue is the dominance of the tech giants. Startups, particularly those in the

include British fund-management firms such as Legal & General and Schroders, and foreign giants like Capital Group and GIC, a Singaporean sovereign-wealth fund. Since 2015 the Forum has looked at 34 problem cases and spoken directly with the board in 22 of them. It intervened at Rio Tinto when the miner was picking a new chairman, and at BT, a telecoms firm, about poor capital allocation. When TCI, a strident hedge fund, alleged that the chief executive of the London Stock Exchange had been ousted against his will, the Forum helped investors obtain the information they needed to decide whether to support the board’s position. The Forum does not forbid members from acting independently. Rather, explains Andy Griffiths, its head, it serves as an “escalation mechanism” when firms ignore individual investors or exhibit problems that worry many shareholders. Executives can expect to receive more such earfuls from investors, whether they are acting solo or in a chorus. consumer-internet business, increasingly struggle to attract capital in the shadow of Alphabet, Apple, Facebook et al. In 2017 the number of first financing rounds in America was down by around 22% from 2012. Alphabet and Facebook pay their employees so generously that startups can struggle to attract talent (the median salary at Facebook is $240,000). When the chances of startup success are even less certain and the payoffs not so very different from a steady job at one of the giants, dynamism suffers—and not just in the Valley. It is a similar story in China, where Alibaba, Baidu and Tencent are responsible for close to half of all domestic venture-capital investment, giving the giants a big say in the future of potential rivals.

Monday 3 September 2018

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Monday 03 September 2018

International Breweries shows mettle as competition thickens

Stories by ODINAKA ANUDU

nternational Breweries (IBPlc) is showing that it is capable of being a market leader in the Nigerian brewery industry in the near future. Last week, the brewer commissioned its $250million Gateway plant at Bara village along AbeokutaSagamu interchange. This is the fourth brewery plant owned by the firm, with existing three breweries in Onitsha, Ilesha and Port Harcourt. That is not all. The plant is seen as the largest in the West African sub-region. With this plant, the brewer is positioning itself for effective competition in an industry that also has the Nigerian Breweries and Guinness as key players. History favours IBPlc. Founded in 1971 by Lawrence Omole, it was listed on the floor of the Nigerian Stock Exchange in April, 1995. On 1 June, 2012, SABMiller took over the firm following a strategic alliance with the Castel Group. SABMiller acquired a controlling interest in Pabod Breweries Limited in Port Harcourt and built a green field brewery – Intafact Beverages Limited in Onitsha. In September 2016, AB InBev combined with SABMiller worldwide,

International Breweries’ plant at Bara village, Ogun State

thereby effectively owning controlling interests in Intafact, Pabod and the then IBPlc. In November 2017, Intafact and Pabod Breweries combined with IBPlc to form International Breweries. Today, it is still the subsidiary of AB InBev. IBPlc has two brands that have been widely accepted by Nigerian consumers. Trophy Lager and Hero Lager are currently seen as economic brands, having also become engines of IBPlc’s business.

The brewer offers consumers further choice with Castle Lite lager and Eagle Lager as well as Eagle Stout brands. Just before the World Cup, the firm unveiled Budweiser, launching it with its sponsorship of the FIFA World Cup tournament in Russia. Apart from beer, the company also produces malt drinks, with Grand Malt and Betamalt as key brands. “With the coming on stream of this brewery, 600 direct jobs and well over 2,000 indirect jobs will be

created along our value chain,” Annabelle Degroot, managing director, said during the launch. “Our combined contribution to the Nigerian economy through the already existing breweries is well above N8 billion in excise, N7billion in VAT and in N2.5billion in other taxes annually. As we grow and prosper, so will our contribution to the economy,” Degroot said. The plant will, indubitably, have multiplier effects on the economy, adding

jobs and growing other affiliate industries. “Yearly, we buy over 30,000 tons of sorghum and maize and other raw materials locally. This will be significantly increased with the coming on stream of this new brewery,” she said. Degroot said the firm had also positively impacted the growth of several other industries, pointing out that manufacturers of cans, crown corks, bottles and labels had benefitted from the brewer’s steady and increasing patronage, enabling them to generate further employment. She disclosed that over N300m had been expended on empowering young entrepreneurs in start-up businesses through the company’s Kick Start programme, with 110 youths receiving grants. “We have spent over N80million on training small retailers through ourRetailer development programme,” she added. Nnaemeka Alfred Ugochukwu Achebe, chairman of the company and traditional ruler of Onitsha in Anambra State, said the manufacturing sector of our economy was a key enabler of the creation and promotion of value chains and for employment. “We rely on policies and the support of our government and state to support

and bring about evident transformation in the manufacturing sector. I encourage our government to simplify taxation and licensing requirements, particularly at the state and local government levels, to enable manufacturing concerns to thrive,” Achebe said. Carlos Brito, CEO of AB InBev, said to brew the highest quality beers, the company needed a sustainable environment and thriving communities. “Sustainability is not just related to our business, it is our business. We are building a company to last for the next 100+ years, both globally and in Africa, with Nigeria being a big part of this growth. We are set on brewing beers that will continue to bring people together across generations and communities. Our global portfolio offers more than 500 brands and in Nigeria, we now have a beer that will suit most people’s tastes from our core brands such as Trophy and Hero to our affordable brands like Eagle Lager and Eagle Stout.” Muhammadu Buhari, Nigeria’s president, represented by Boss Mustapha, secretary to the government of the federation, said the new plant was an indication that Nigeria was ready for business. Buhari said it also portrayed that investors had confidence in the economy.

amounted to N1.1 trillion, according to data from the National Bureau of Statistics (NBS). Low oil price and Niger Delta militancy sent Nigeria into recession in 2016, with its attendant dollar shortages. Manufacturers and importers were hurt as they scrambled for the greenback to import inputs and products respectively. Nigeria’s economy is vulnerable as oil remains 75 to 90 percent provider of foreign exchange and revenue, despite contributing only 12-14 percent to the Gross Domestic Product. Inflation is dropping but has remained double-digit for at least 20 months. “The challenges of exporters have to do with

quality and exportation of primary products. The quality issues are mainly due to knowledge gap on the part of exporters, dubious practices among exporters and local suppliers, inadequate quality inspection agents, inadequate lab for testing and sometimes unprofessional and dubious inspection agents,” said Bamidele Ayemibo, chairman of Export Group of the LCCI. Ayemibo explained that paperwork in international trade is critical, given that the buyer will likely pay for the goods before receiving them. Babatunde Paul Ruwase, president of LCCI, said government must provide the right environment for value addition to thrive.

Why Nigerian exporters fail in global market ODINAKA ANUDU

number of reasons have been adduced as to why Nigerian exporters struggle in the global market. One key reason is high cost of doing business in Nigeria, which is putting a number of businesses in a position of weakness. It is a well-known fact that power cost in Nigeria occupies 40 percent of the entire expenditure in agro and manufacturing value chain. Annual self-generating capacity in the manufacturing sector is 13,223 megawatts. Expenditure on alternative energy in the sector totalled N117.38 billion in 2017 and N129.95 billion

in 2016, the Manufacturers Association of Nigeria (MAN) said. The only reliable railway in Nigeria at the moment is Abuja-Kaduna, and broadband penetration is just 30 percent. These are not good signs for struggling manufacturers. But beside this, some of the problems are selfinflicted or caused by other internal factors. For example, a Nigerian businessman exported cans of 35cl malt drink numbering into hundreds of thousands to Kenya. The products were on display in the East African country until they caught the attention of the Kenya Bureau of Standards (KEBS), which subjected them to measurement tests. The products

were subsequently found to be 32cl, rather than 35cl. The KEBS withdrew them from the Kenyan market, banning the malt drink—including its supplier—from the country for good. Also, some Nigerian exporters have been victims of fraudulent freight forwarders who inserted banned substances into their containers during product repackaging process. There have also been cases where products stayed on containers for one month because the exporter could not get certification from regulatory agencies, exporters say. The state of Apapa roads and Nigerian ports are also big hiccups. “ Ni g e r i a n e x p o r t e r s thank God whenever they

are paid at all for their products. This is because products from Nigeria are always downgraded,” Fred Uwheraka, CEO of Frijay Consult Limited, an export firm, said at the Lagos Chamber of Commerce and Industry (LCCI) symposium held in Lagos on Wednesday. Uwheraka explained that exporters need to get proper information about the needs of each market before going in. For full year 2017, total exports were N13.598 trillion, 59.47 percent higher than N8.52 trillion in 2016. Out of N4.69 trillion export done in the first half of 2018, crude oil export stood at N3.58 trillion, accounting for 76.3 per cent of the total exports. Non-oil exports

Monday 03 September 2018

C002D5556

BUSINESS DAY

REAL SECTOR WATCH FMN invests N50bn in sugar, records 25% yield in oil palm …as Group’s PAT surges CHUKS OLUIGBO & ODINAKA ANUDU

n a bid to tap into growing opportunities in the Nigerian economy, Flour Mills of Nigeria (FMN) plc has invested N50 billion in the sugar value chain, providing a concrete example of efforts to cut sugar importation into Africa’s most populous country. Speaking at the annual general meeting held last Thursday in Lagos, John G. Coumantaros, chairman, FMN, said the sugar investment had made huge savings in foreign exchange, boosted local capacity and reduced unemployment by putting thousands of Nigerians to work in the agriculture sector in line with the agricultural policy of the government. “The sugar estate at Sunti, near Mokwa, in Niger State,

is situated on 17,000 hectares of irrigable farmland, and a sugar mill that processes 4,500 metric tons of sugar cane per day,” Coumantaros said. “At full capacity, the mill

is expected to produce one million tons of sugarcane, which roughly translates into 100,000 metric tons of sugar yearly.” FMN is one of Nigeria’s largest conglomerates, with

interests in flour, palm oil, grains, starch, animal feeds, and bag production, among others. As a company, FMN’s revenue rose 4 percent to N389 billion, with profit before tax (PBT) recording a

28.9 percent surge, rising from NN10.979 billion in the year ended March 31 2017 to N14.153 billion in the corresponding period of 2018. The company experienced a drop in profit after tax (PAT), from N9.829 billion in 2017 to N9.244 billion in 2018. The Group’s PBT rose from N10.472 billion in 2017 to N16.541 billion in 2018. Similarly, the Group’s PAT surged from N8.836 billion in 2017 to N13.615 billion, representing a 54.08 percent rise. Coumantaros said one of the subsidiaries—Agri Palm Limited—located at Iguiye and Ugbogui near Benin City (with 4.500 hectares of oil palm plantation) recorded improvements in yields with a 25 percent increase in fresh fruit bunches. He said following the acquisition of additional 20,000 hectares of arable land in Edo State, FMN was on the verge of ascertaining the boundar-

ies by planting beacons for better management. As part of FMN’s plan to raise starch production, one of FMN’s subsidiary—Agroallied Syrups Limited—has succeeded in cultivating 800 hectares of cassava in Shao, Kwara State, in the last 12 months, Real Sector Watch understands. “You would recall that in my last year’s report, I highlighted our Group’s agreement with Ere-Egwa Farms Limited, a company with wide experience in the growing of cassava to support our downstream company with the supply of cassava through a contract farming arrangement. I am pleased to report that the strategic decision had started yielding the desired results, as evident in the increased supply of cassava tubers to Thai Farm International, our downstream company in the value chain,” he said.

How Theresa May’s visit will impact Nigerian companies ODINAKA ANUDU

ritish Prime Minister Theresa May visited Nigeria last week amid pomp and ceremony. She took time to assure the Nigerian business community that the United Kingdom was ready to do business with Africa’s most populous country. But beyond the fanfare, May’s visit has some implications for the Nigerian business community. This is predicated on the fact that May’s entourage included executives of some of the companies willing to do business with local firms. Some are private enterprises, while others are government institutions. This, according to those close to May, is an indication that the British government is ready to facilitate bilateral business between the two countries. One of the firms that were part of May’s delegation is Hydro Industries, a water technology firm that develops, designs and operates solutions for water purification and industrial effluent processing. The UKbased firm was launched in 2010, and according to

it, “We’re thinking big and growing global.” Clean water is a challenge in Nigeria and manufacturers spend millions annually on water treatment. Water in many parts of the country is unfit for human consumption and only two or three companies are in water treatment business in the country. Here is an opportunity for interested firms and suppliers to make money. Next is Northumbria Energy, which is bringing together individuals and organisations to provide energy access to 1.2 billion people around the world without access to electricity. Managed by Tim Cantle-Jones, an entrepreneur based in the UK who has 25 years of experience working in Africa, the company believes that no or inadequate access to power is a significant constraint to economic and social development, and works with governments throughout Africa, NGOs and the donor agencies. Part of May’s delegation was Bombadier Transportation, seen as world’s leading manufacturer of planes and trains. The company also provides train and rail

equipment as well as category-defining business jets and commercial aircraft. Obviously aware of Nigeria’s ongoing rail projects, Bombadier is making efforts to penetrate the Nigerian market. The Liverpool-based Clarke Energy was there. It is a multinational specialist in distributing power generation solutions. But the company already has a presence in Nigeria, at Ikeja, Lagos. “Our locally based team have delivered 300MW of electrical generation capacity to many large industrial facilities across Nigeria,

seeking economical, reliable captive power plants,” the company says on its website. Real Sector Watch also found that the Scotch Whisky Association was part of the delegation. This is a trade association that represents the Scotch whisky industry (spirit drink), which is a critical part of the Scottish economy, and particularly the Scottish export market. It operates as a non-profit organisation with David Frost as CEO. There is no gainsaying that infrastructure is critical to Nigeria. To this end, the Private Infrastructure Devel-

Theresa May & Muhammadu Buhari

opment Group (PIDG) was also in the country with May, targeting mobilisation of private sector investment to assist developing countries in providing infrastructure vital to boosting their economic growth and combating poverty. The London-based group is a conglomeration of key organisations such as UK Department for International Development, KfW, Australian Government Department of Foreign Affairs and Trade, Netherlands Ministry of Foreign Affairs, Finance for Development, and International Finance Corporation, among others. The UK Export Finance (UKEF) was predictably part of the delegation. The government institution is charged with the task of boosting export-focused UK firms with funding. Between April 2017 and March 2018, the UKEF provided £2.5 billion to UK firms, helping 191 companies sell to 75 markets around the world. It also lent £666 million directly to overseas buyers to help them buy from the UK – more than double the amount for 2016 to 2017. “Through just one UKEF

supplier fair we are securing at least $250 million of UK exports in support of the construction of two power plants in Iraq, led by Enka UK and General Electric,” the UKEF said. The London Stock Exchange had a representative as well as the Financial Conduct Authority of the UK. Interested Nigerians can get across to these firms through the UK High Commission, the British Council and the Nigerian-British Chamber of Commerce (NBCC). Speaking in a telephone interview with Real Sector Watch, Akin Olawore, president of NBCC, said composition of May’s delegation shows that Britain is ready for business. “The excitement here is like a lover that has abandoned you and decides to come bank with a bang,”Olawore said. “What is being done is that if the standards are low here, the UK comes in and trains our people to meet the stipulated standards.” He pointed out that Nigerians can partner with UK businesses to leverage enormous opportunities that are yet to be explored.

BUSINESS DAY

C002D5556

Monday 3 September 2018

Monday 03 September 2018

BUSINESS

COMPANIES & MARKETS

Stanbic IBTC Insurance Brokers urge Nigerians to embrace risk management

Pg. 22

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

B7JV signs $10m contract with NDIC for NLNG Train 7 feed MICHEAL ANI

7JV, a UK-based joint venture, lead by KBR, JGC and TechnipFMC have awarded a $10 million contract to NDIC, a Nigerian-based consortium led by Netco, DeltaAfrik, IESL and Crestech for the design service of the NLNG Train 7 project. The signing, which took place on Tuesday at the FMDQ OTC Securities Exchange will see it support the engineering development for the Train 7 project for NLNG. It would also provide basis for training and development of Nigerian Engineers looking forward to EPC. It is expected to provide training for 800 to 100 Nigerian engineers in preparation for the Engineering Procurement C contract bid. It would also safeguard jobs for 100 project team personnel’s from the United Kingdom. The contract builds on the consortium prior involvement in the execution of Trains 1-6 and was rated ‘green’ by rating agency RAG.

Speaking at the signing ceremony, Mustapha Yakubu, managing director/CEO of NETCO said the contract is a welcome development for the firm especially given the fact that the firm had engaged in similar projects in the past like in the 1-6 of the NLNg Train

roject, the Egina project and the Bonga project “NDIC is an acronym of a four indigenous oil and Gas consortium Company in Nigeria comprising (Netco, DeltaAfrik, IESL and Crestech), and are working for B7JV as a dual feed in executing the lo-

David Ibidapo

uinness Nigeria Plc half year report released on the NSE show a spike in its profit after tax (PAT) by 249 percent to N6.7 billion in H1 2018 from N1.9 billion in H1 2017. In the light of this, Guinness Nigeria plc experienced a surge in its earnings after cutting down significantly on its finance cost and administration cost. Finance cost of the firm declined significantly by 42 percent to N5.6 billion in H1 2018 from N9.7 billion recorded in H1 2017. This was achieved by after the company cut significantly on expense on loans and borrowings by 65 percent to N1.9 billion from N5.4 billion, interest expense on over draft by 39 percent to N634.2 million from N1.04 billion. Also loss on re-measurement of foreign currency

cal content of the NLNG Train 7 project,” he said. KBR is a global provider of differentiated professional services and technologies across the asset and program life cycle within the hydrocarbons and government services sectors.

L-R: Daniel Braie ,Ag managing director; Joshua Bernard Fumudoh , chairman; Moses Omorogbe, company secretary, and Imo Oyewole, non-executive director ,all of Linkage Assurance Plc during the 24th annual general meeting of the company in Lagos. Pic by Pius Okeosisi

Guinness earnings up 249% on cost efficiency balance declined by 5 percent to N2.9 billion in H1 2018 from N3.11 billion in H1 2017. Cash flow analysis based on financing activities of the company revealed that finance cost during the period declined significantly by 52 percent to N3.6 billion from N7.6 billion as there was no record of accrued finance cost on loans and borrowings. Meanwhile finance income during the period declined slightly by 2 percent to N2.2 billion from about N2.3 billion. Despite a decline in company’s other income and an increase in its marketing and distribution expenses, Guinness Nigeria plc was able to cut significantly also on its administrative cost by about 28 percent from N13.6 billion to N9.8 billion in H1 2018 boosting operating profit by 31.4 percent to N13.3 billion from N10.1 billion. Company’s other income which comprised of operating

lease income, sales of products and gain from disposal of property, plant and equipment declined by 21 percent. A deeper look into this aspect of their financials revealed that in H1, while other components of income grew by 47 percent and 20 percent respectively, gains from the disposal of property, plant and equipment declined by 97 percent from N364.9 million to N10 million as there was no major disposals recorded during the period under review. Total marketing and distribution expenses on the other hand grew slightly by 3 percent to N26.01 billion from N25.2 billion. This increase was initiated by an increase in company’s marketing expenses by 18 percent from N10.2 billion in H1 2017 to N12.04 billion in H1 2018. Meanwhile during the same period, distribution cost declined by 7 percent from N15.08 billion to N13.9 billion.

DAY

Travelstart, Uber announce flight partnership with ‘Uberescape’ OBINNA EMELIKE

ravelstart, Africa’s leading online travel agency, has announced the launch of ‘UberEscape,’ collaboration between Travelstart and Uber to allow customers book flights through the Uber app. In September customers will be able to book their flights by simply opening their Uber app and clicking on ’UberEscape.’ Customers will then be directed to the secure ‘UberEscape’ website where they can access exclusive flight deals to some of their favourite destinations. These flight deals are powered by Travelstart. The online travel agency is known for their cheap flights to Dubai, London, New York, Johannesburg and more. The journey to ’UberEscape’ will kick off on August 31, 2018 with an exciting competition on social media titled “Snap &Share”. During the competition, Uber riders will be asked “Where To?” Participants can pick from any flight route snap a selfie and share it with Travelstart, UBER and their social media followers to win a trip to their

dream travel destination. One lucky Uber rider will win two free economy return flights tickets! The competition will end September 7, 2018 and the winner will be announced by September 14, 2018. Speaking about the partnership, Bukky Akomolafe, commercial manager, Travelstart Nigeria, said, “We are excited to partner with Uber to make flight bookings even more accessible. With this partnership, customers will be able to book their flights as seamlessly as ordering their next ride via the Uber app.” This reinforces Travelstart’s commitment to making flight bookings even simpler for Nigerians. “We are constantly looking for new ways to excite and create value for our burgeoning customers, and we are thrilled to be collaborating with Travelstart through the launch of ‘UberEscape,’” says Margaret Banasko, country marketing lead, Sub-Saharan Africa, Uber. ‘UberEscape’ allow Uber riders to book a flight to their next destination with just a click of a button. “We are happy to be enabling even more options for their urban mobility needs”, she added.

FHF partners PWC on human capital development to drive affordable housing CHUKA UROKO

amily Home Funds (FHF) has secured the assistance of PriceWaterHouse Coopers (PWC) to launch a recruitment campaign aimed at securing top quality manpower to deliver ambitious affordable housing programme. This is a key aspect of the government’s social intervention programme targeted at providing affordable housing and job creation. FHF, a special purpose investment vehicle which has the Nigerian Sovereign Investment Authority and the Federal Ministry of Finance Incorporated as founding shareholders, is very aggressive in its push for affordable housing delivery and job creation. The Fund has an ambitious target of supporting the development of over 500,000 homes and 1.5m jobs for Nigerians on low income in the next five years (2023). It has assured people in this class that its focus is to create homes that they can afford, just as it will ensure that it provides opportunity for them to earn decent wages consistently through its investment in its numerous

projects. “We have spent the last 9months building very strong foundations for a major take off and now we should start seeing the results in form of affordable homes and jobs for local people”, officials of the Fund disclosed recently. So far, the fund has completed the construction of 400 homes with an average cost of N3.5m in Grand Luvu, Nasarawa State and this is part of over 4,000 homes under construction in 5 states namely Ogun, Nasarawa, Kano, Delta and Kaduna. A further 30,000 homes are at advanced stages of negotiation with development partners

and will commence by November 2018. As the new company builds capacity through the ongoing recruitment campaign, it will achieve a programme of 80,000 homes by December 2019. Creation of new jobs is a critical element of the Fund’s programme. Ongoing investments are already making a real difference with over 13,000 jobs created and about 360,000 to be created from current development pipeline. The Grand Luvu Project in Nasarawa State has created about 8000 jobs 26-year-old Kabiru Usman has been unemployed since graduation from Nasarawa State University.

BUSINESS DAY

C002D5556

COMPANIES & MARKETS

Monday 03 September 2018

Business Event

Stanbic IBTC Insurance Brokers urges Nigerians to embrace risk management Modestus Anaesoronye

igerians have been enjoined to protect themselves against unforeseen mishaps by taking up insurance products, Anselem Igbo, chief executive, Stanbic IBTC Insurance Brokers Limited has said. According to Igbo, insurance penetration in the country is too low and does not augur well for the wellbeing of individuals, businesses and the economy. Igbo said the insurance business is a unique one, which has been set up to help clients effectively manage their risks, including theft, accidents, robbery, injuries, manmade and natural disasters, and even death, thereby ensuring peace of mind through risk transfer and efficient insurance claims. “Insurance is an essential part of everyday life. Contrary to what currently obtains, where insurance penetration in the country is low, every adult Nigerian ought to see insurance as a necessity, one that helps them mitigate all forms of unfortu-

nate situations such as theft, accidents, robbery, manmade and natural disasters, and even death by taking on these risks so that they can have peace of mind knowing that someone is there to assume the risks for them,” Igbo said. “The insurance industry has numerous bespoke products and services to cater for the insurance needs of all strata of society, including individuals, families, groups, associations, businesses, and large organizations. I therefore urge Nigerians to protect themselves, their families and valuables by investing in insurance coverage,” Igbo urged. The insurance chief stated that one of the reasons the Stanbic IBTC Group established the Stanbic IBTC Insurance Brokers was to fill this perceived gaps in the industry and ensure Nigerians are adequately protected. Igbo said the company commenced full operations sequel to the granting of a licence by the National Insurance Commission (NAICOM) in January 2016, paving the way for the firm to offer the full spectrum of insurance

brokerage services, a development that will help in deepening insurance penetration in the country. According to the chief executive, Stanbic IBTC Insurance Brokers, building on the brand strength of the Standard Bank Group, to which Stanbic IBTC Holdings belongs, will continue to adopt global best practice in its operations, including exceptional quality of service and facilitating prompt payment of claims for clients. “Our services apply to individuals and corporate entities, existing customers and noncustomers of the Stanbic IBTC Group. As insurance professionals with a vast knowledge of the workings of the insurance market, we are able to arrange the most suitable policies for our individual and corporate clients. We proffer advice on the management of risk, secure protection against such risk and reduce exposure to the risks of business disruption, injury and death. We also deliver creative risk management solutions that enable our clients create, protect and preserve wealth,” Igbo restated.

Skystone harps on presentation skills for SME funding campaigns FRANK ELEANYA

ecuring funding from investors is a major challenge for most small and medium scale enterprises (SMEs) and one that Skystone Capital said can be addressed during a session with tech startups at the Workstation, Lagos. Skystone Capital which provides funding, funds management, financial advisory and personal finance services to retail and small businesses, has over hundred years of experience in the SME banking space. Ola Olabinjo, CEO of the company told start-ups at the Workstation in Lagos that it takes more than funding to build a successful business. Most of the times, funding may not even the subject that the entrepreneur should be addressing. This is

partly responsible for the underperformance of small businesses in Nigeria despite their potential for tackling the unemployment problem in the country. SMEs are responsible for 70 per cent of job creation in Nigeria. Most SMEs may have very good ideas; however the ability to articulate properly what the ideas are about could be a major limitation. Having a business plan could go a long way to mitigate this challenge. “Developing an idea into a business plan would enable the entrepreneur to ask questions and obtain answers on various subjects relating to the business idea,” Olabinjo said. “In the process he or she would deepen his or her knowledge of the intended field of business and fine tune the intended business in line with any new findings.” Small businesses that have been funded by Skystone Capital,

he noted, go through extensive documentation process to help their ideas become refined, precise and more likely to succeed. For founders that rely solely on their intelligence, Olabinjo says “It is not enough to be brilliant, emotional intelligence is better than IQ.” When pitching an idea, entrepreneurs must be able to emotionally assess the people they are pitching their ideas to in order to be able to get some money in the end. He also recommended having an offline strategy that recognises thousands of potential buyers that may not online. “People that have the cash to spend in Nigeria are mostly older people between the ages of 45 to 65 years. They are not very savvy with mobile gadgets and technology,” Olabinjo disclosed. Start-ups should also carry out brand health-check.

L-R : Endwell Brown, zonal head, Apapa/Alaba, First City Monument Bank (FCMB); Folashade Kolapo , managing director of Boas Pharmacy Limited and one of the winners of a shopping card at the first draws of the FCMB ‘’SME Race to China’’ promo; Bukola Smith, executive director, business development of the bank; Leka Awoyemi, senior executive, National Lottery Regulatory Commission, and Paul Adebo, head, SME Liability of FCMB, during the promo draw ceremony in Lagos.

L- R:. Oluwadamilola Emmanuel, General Manager LASWA; Adeniji Kazeem, attorney-general and commissioner for justice representing Lagos State governor, Akinwunmi Ambode; Mazen Mroue , COO MTN Nigeria, and Babajide Sanwo-Olu, managing director LSDPC, at the commissioning of the LASWA Ferry Terminal and LSDPC Multi-Level Car Park built by MTN Nigeria in Lagos.

Afolabi Oladele, Olayimika Phillips, Omowunmi Adedurotimi company secretary, Wole Abegunde Chairman, Niyi Toluwalope Interim CEO and Tony Egbuna, all members of the board of directors of eTranzact International Plc at the annual general meeting of the company in Lagos.

Nigeria spends $22bn annually on food importation

he Minister for Agriculture and Rural Development, Audu Ogbeh has assured that government is working on a mechanism that will end of farmers/herders clash by year end. The minister disclosed this while delivering a lecture on “Technology and Agricultural Revolution: A tool for economic growth, ” at the 19th edition of Catholic Brothers United (CBU) of St. Agnes Catholic Church, Maryland, Lagos.

The minister further disclosed that the mechanisms entails government providing enough feeds for cattle from agro waste, rice stocks, cassava leaves, maize, among others. “We are determined to bring the crisis to an end, ” Ogbeh assured. The mister also decried the huge funds Nigeria spends on food importation, which poses danger to the nation’s economy. “Nigeria spends a total of 22billion per annum importing food into the country.”

Tunji Owoeye, Group Managing Director, Elephant Group, commended the federal government, Central Bank of Nigeria (CBN) and the Bankers’ Committee for the reduction in the interest rate for the agriculture and manufacturing sectors. President Catholic Brothers United, Emmanuel Okoro remarked that the topic was carefully chosen in consideration of the various developmental challenges currently facing the country.

L-R: Iyke Ejimorfor , executive secretary NSACC ; Foluso Phillips, chairman, NSACC; Lynda Saint-Nwafor, chief enterprise business officer, MTN Nigeria, and Darkey Africa , consul general, NSACC, recently at the August breakfast forum of the Nigeria-South Africa Chamber of Commerce which in Lagos .

Monday 3 September 2018

C002D5556

BUSINESS DAY

Monday 03 September 2018

Access Bank Rateswatch Market Analysis and Outlook: August 31 - September 7, 2018

KEY MACROECONOMIC INDICATORS Indicators

Current Figures

Comments

GDP Growth (%)

1.50

Q2 2018 — lower by 0.45% compared to 1.95% in Q1 2018

Broad Money Supply (M2) (N’ trillion) Credit to Private Sector (N’ trillion)

24.81 22.28

Decreased by 1.41% in June 2018 from N25.17 trillion in May’ 2018 Increased by 0.34% in June 2018 from N22.21 trillion in May’ 2018

Currency in Circulation (N’ trillion) Inflation rate (%) (y-o-y) Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor) External Reserves (US$ million) Oil Price (US$/Barrel)

1.90 11.14 14 14 (+2/-5) 45.91 75.41

Decreased by 1.56% in June 2018 from N1.93 trillion in May’ 2018 Decreased to 11.14% in July’ 2018 from 11.23% in June’ 2018 Raised to 14% in July ’2016 from 12% Lending rate changed to 16% & Deposit rate 9% August 29, 2018 figure — a decrease of 2.47% from August start August 31, 2018 figure— an increase of 6.42% from the prior week

Oil Production mbpd (OPEC)

1.67

July 2018 figure — an increase of 4% from June 2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

NSE ASI Market Cap(N’tr)

Friday

31/08/18

24/08/18

34,848.45 12.72

Change(%)

35,426.21 12.93

(1.63) (1.63)

0.38

0.53

(27.07)

Value (N’bn)

9.79

4.53

116.28

MONEY MARKET NIBOR Friday Rate

Friday Rate

Change (Basis Point)

(%)

31/08/18

24/08/18

6.0000

6.7500

(75)

O/N CALL 30 Days

6.8300 12.9167 12.7192

7.9200 8.2500 12.0585

(109) 467 66

90 Days

13.1472

12.7039

Friday

1 Month

(N/$)

Rate (N/$)

31/08/18

24/08/18

31/07/18

306.15 357.45

306.10 355.22

305.90 350.24

0.00 361.00

362.00 360.00

361.55 360.00

OBB

FOREIGN EXCHANGE MARKET Market

Official (N) Inter-Bank (N) BDC (N) Parallel (N)

Friday

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.)

Tenor

7-Year 10-Year 20-Year

Friday

Change

(%)

(Basis Point)

31/08/18

24/08/18

2,620.69 8.42

2,632.36 8.46

(0.44) (0.44)

5.39 7.16 (48.22)

(0.96) (0.47) (0.50)

5.34 6.69 (48.72)

YTD Change

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

75.41 2.93

6.42 (1.01)

16.89 (4.12)

2310.00 102.70 82.55 10.66 545.25

(1.62) 0.29 0.54 3.39 1.44

19.32 (21.12) 6.52 (30.46) 25.78

1204.18 14.59 269.90

1.07 (0.55) 0.04

(8.61) (15.13) (17.66)

Friday

Change

(%)

(Basis Point)

31/08/18

24/08/18

11.25 11.72

10.32 11.50

93 22

6 Mnths 9 Mnths 12 Mnths

13.36 13.40 13.78

12.93 12.95 13.12

43 45 66

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Index

Friday

Change

(%)

(Basis Point)

31/08/18

24/08/18

0.00

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr) YTD return (%)

14.45 15.08 14.83

14.24 14.70 14.49

21 38 34

YTD return (%)(US $)

15.14

14.90

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

91 Day

24,960.59

29-Aug-2018

182 Day

44,993.79

12.3

29-Aug-2018

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.

(%)

1 Mnth 3 Mnths

AVERAGE YIELDS

3-Year 5-Year

1-week Change

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

BOND MARKET Tenor

31/08/18

(%)

Volume (bn)

Tenor

Indicators

364 Day

137,000

Rate (%)

13.0456

Date

29-Aug-2018

Global In the US, the Commerce Department revised its growth estimate for the second quarter to 4.2% from an initial estimate of a 4.1% annual rate. The second quarter marked a sharp improvement from a 2.2% gain in the JanuaryMarch period. The revised GDP report showed that consumer spending, which accounts for about 70% of economic activity, expanded at a strong annual rate of 3.8% in the second quarter, down slightly from an initial estimate of 4% growth in consumer spending. However, that downward revision was outweighed by other factors including stronger business investment, which grew at a 6.2% rate, driven by spending on such items as computer software. Other sources of strength were less growth in imports, which subtract from GDP, and faster growth in government spending at the federal, state and local levels. In a separate development, Japan’s unemployment rate notched up to 2.5% in July 2018, slightly higher than the 2.4% recorded the prior month and the highest rate recorded in the last three months. The number of unemployed people were reported at 1.72 million in July, 60 thousand higher than reported in the previous month. Labour force decreased by 80 thousand to 68.07 while those detached from the labour force went down 170 thousand to 42.8 million. Elsewhere, Brazil’s unemployment rate declined to 12.3% in the three months to July 2018, from the 12.9% recorded in February – April 2018. The number of unemployed people decreased by 545,000 to 12.28 million, while the number of people in the labour force rose by 383,000 to 104.53 million. Domestic Real GDP growth slowed to 1.50% year-onyear (y-o-y) in Q2 18, relative to the growth of 1.95% y-o-y in the preceding quarter (Q1 18). The economy’s performance was constrained by crude oil and gas sector, which contracted by -3.95% y-o-y in Q2 18, compared to growth of 14.77% in Q1 18. Average daily oil production was recorded at 1.84 million barrels per day (mbpd), lower than the production volume of 2.0 mbpd seen in the first quarter of 2018.The non-oil sector increased by 2.05% — its strongest growth since Q1 15. The momentum was driven by transportation (21.76%), construction (7.66%) and electricity (7.59%). Stronger growth in the non-oil sector was constrained by agriculture, which ticked up by only 1.30% compared to 3.00% in Q1 18. In a separate development, data from the Central bank of Nigeria (CBN) shows foreign exchange reserves have slid below $46 billion, losing $1.25 billion in the thirty days to August 30th. The country’s reserves which stood at $47.12 billion as of July the 31, fell to $45.87 billion - the lowest level in nearly five months - on August 30th. The depletion in the nation’s external purse may not be unconnected to the weekly intervention of the CBN into the foreign exchange market to ensure the stability of the Naira, and the recent drop in crude price in the global market from over $80 per barrel in May to around $72.03 per barrel as of August 10, 2018. Reserves have also come under pressure from increased demand for the greenback by Foreign Portfolio Investments (FPIs) exiting naira assets. Stock Market The Nigerian stock exchange market returned to negative territory last week as the major market indicators trended downwards. The All Share Index (ASI) declined by 577.876 points to close at 34,848.45 points from 35426.21 points the previous week, representing a 1.63% decrease. Similarly, market capitalization shed 1.63% to close at N12.72 trillion from N12.93 trillion the previous week. Banking, oil and gas, consumer goods and healthcare sectors led the downturn in the market. Market sentiment was

impacted by huge fines imposed on four deposit money banks by the apex bank over alleged illegal fund repatriation on behalf of MTN Nigeria as well as profit taking activities byinvestors as more financial scorecards were released. This week, we expect that the market might remain in negative territory as profit taking by investors continues. Money Market Last week, money market rates moderated for the third consecutive week due to inflows from Open Market Operation (OMO) maturities of about N314 billion. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates declined to 6.00% and 6.83% from 6.75% and 7.92% respectively the previous week. In contrast, longer dated placements trended upwards. The call, 30day and 90-day NIBOR closed lower at 12.92%, 12.72% and 13.15% from 8.25%, 12.06% and 12.70% the prior week. This week, expected release of the Federation Accounts Allocation Committee (FAAC) funds will likely drive rates further downwards. Foreign Exchange Market The local currency depreciated marginally across all market segments monitored last week. At the interbank window the naira lost 0.63% to close at N357.45/$ compared to N355.22/$ the previous week. The official and parallel rate also trended lower, settling at N306.15/$ and N361/$ respectively last week relative to N306.10/$ and N360/$ the week before. The weakening seen across all markets comes amidst continued intervention by the monetary regulator to provide liquidity to the FX market. This week, we envisage the naira will oscillate around current levels. Bond Market Bond yields closed on a bullish note for the week driven by positive sentiment resulting from the higher yield seen in the primary market auction conducted last week. Investors sold off bonds in order to invest in treasury bills. Yields on the five-, seven-, and ten- and twenty- year debt papers closed at 14.45%, 15.08%, 14.83% and 15.14% from 14.24%, 14.70%, 14.49% and 14.90% respectively the previous week. The Access Bank Bond index declined by 11.67 points or 0.44% to close at 2,620.69 points from 2,632.36 points the previous week. This week we expect the yields to trend upward as the investors’ sentiment persists. Commodities Oil prices rose last week on growing evidence of disruptions to crude supply from Iran and Venezuela and after a fall in US crude inventories. Nigeria’s benchmark crude oil, Bonny light, inched higher by $4.55% to close at $75.41. Price of precious metal moved in divergent directions in response to mixed cues from economic data releases and on-going trade tensions. Gold$12.71, or 1.07%, to settle at $1,204.18 an ounce, while silver closed 0.5% lower at $14.59 an ounce. This week, the upside in oil prices may likely be sustained by a combination of falling supply in countries such as Iran and Venezuela, and strong demand especially in Asia. For precious metals, we see remaining pressured by expectations the US Fed will nudge benchmark interest rate higher in September. MONTHLY MACRO ECONOMIC FORECASTS Variables

Aug’18

Sept’18

Oct’18

Exchange Rate (Official) (N/$)

358.28

360

Inflation Rate (%)

9.34

9.00

Crude Oil Price (US$/Barrel)

76.75

76.00

77.00

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

Monday 3 September 2018

C002D5556

BUSINESS DAY

C002D5556

Monday 3 September 2018

Monday 03 September 2018

C002D5556

BUSINESS DAY

This is M NEY A daily guide to your Personal Finance

• Savings • Travel • Debt & Borrowing • Utilities • Managing your Tax

How to create a need for your product... Iyore Ogbuigwe

o you need more clients but face difficulty converting your prospects to paying clients. What can you do to change the tide and become a big player in your industry? Follow these simple steps: 1. Determine what type of product/service you want to offer in terms of who your ideal client is. Then start to act like the person your ideal client can buy from. 2. Make reference to clients you have worked for by telling success stories of those who have used your product or service. When talking about organisations you have worked for, depending on your industry or product you may need to be discreet otherwise, make it clear who you’ve worked for. Use your voice tone to emphasize this politely. 3. You need to have different packages for clients: basic, intermediate and premium package depending on the budget of the prospective client. This will give the prospect options and a sense of flexibility which will encourage him to buy. For example, the basic package can have a set of value and cost 100,000 Naira, intermediate package can have the value attached to basic package plus added value and instead of 100,000 Naira, cost 130,000 Naira while premium package will have the value of the basic package and intermediate package as well as added value then cost 200,000 Naira. The key is to increase price as value increases. 4. Clarify if the person you’re speaking with is a decision maker and if not, request for a meeting with the person and the decision maker. This clarification is made through ef-

fective listening and not by asking directly. 5. Don’t mention the price during the phone discussion but continue to stress on getting the meeting with the decision makers. 6. If the client is still unable to make up his or her mind at any point in the sales process, don’t badger him or her with calls. Instead send a text messageletting them know the service or product may not be available if they don’t act fast. Phone calls are always better for follow up but salespeople seem to make the mistake of not closing the conversation loop. We encourage that before you end any conversation with a prospect, you enquire to know when next you can speak with them to follow up on the transaction e.g. can I call in 2 weeks time? This is important because 80% of sales are lost due to lack of skilful follow up. 7. Make the client see that you are the piece of the puzzle that makes their business or life complete. Do this by asking questions. 8. Build trust Great salespeople are not in a hurry to sell (because they have a robust

To find an opportunity to listen you need to create the opportunity for the prospect to talk. You can achieve this by asking open ended questions which are questions that foster discussions list of prospects), rather they are in a hurry to build relationships. They are in a hurry to connect. They are in a hurry to build trust. Building relationships, trust or connecting with prospects don’t have a time factor in accomplishing them. This is because they are dependent on the other party and not you alone. However this is how you can maximize your own end which can of course hasten the trust factor. The key is to FIND AN OPPORTUNITY TO LISTEN to them. To find an opportunity to listen you need to create the opportunity for the prospect to talk. You can achieve this by asking open ended questions which are questions that

foster discussions. Stop talking about your product hurriedly, start listening patiently. This is how trust is built (I’m sure your favorite friends are those who listen to you). The sale takes place in the listening not in the talking. There is a difference between mere hearing and listening. We were all born with the ability to hear but no one was born with the ability to listen. This is because listening itself is a skill and an art. It requires a commitment at that moment to forget about yourself and all your problems then to focus wholeheartedly on that person, realizing that the other party is a creature of inestimable value and worth. So you won’t interrupt while they speak

but you’ll focus on them NOW. Listening to others builds their self esteem and since most of the world have not learned to listen, the moment you learn to listen through practice you will be ahead of the competition. 9. Get rid of pressure associated with selling by making a mental shift by focusing on the client you want to serve. Selling is service. If you walk into a room filled with people with your product, which is easier? Thinking of who you can get money from or who you can give a solution to? You’re right, the latter obviously. In the same way, think about how your product / service makes the lives of your clients better; how does it solve problems for them? When these problems are solved who does it impact in their lives directly or indirectly? When you’ve answered these questions sincerely, you will see your job like a mission. Suddenly a mental alignment will take place and you’ll see that helping your company achieve their goals could be you achieving yours. This will bring a fresh

passion to your sales pitch and with passion will come excellence and exceptional performance. There’s no pressure on the road of service. Pressure is only found on the road of acquisition. Think service; become service conscious. 10. Once you’ve identified the need of the prospect and created a need for your product in the mind of your prospect, you can ask,“is it important this issue is resolved quickly?” If the prospect says “Yes, it is,” you may go on and ask so “why is it urgent?” If he tells you, “it’s really urgent because if I don’t do this now, xyz will happen,” you’ve created some level of urgency if he answers with strong reasons. The person is likely to pay for your product/service immediately. This is why the question, “why?” can be useful in closing a deal. Also, ask how your product or service will be used. For example, “if you get this product now, how soon will you start using it?” The response can be “I’m going to start using it immediately.” Notice I said if you get this product NOW. This will programme the prospect’s mind subconsciously to pay for your service NOW, giving him a suggestion that he should take it now. This increases your chances of getting a yes instantly.

Iyore Ogbuigwe is a highly sought after sales and persuasion expert for local, international and multinational corporations. Iyore is the CEO of Ultravantage& Founder of the IyoreOgbuigwe Sales Academy (IOSA). He holds sales seminars in Nigeria, Ghana and the USA and has written 5 books on selling. Connect with Iyore: Website: www.iyoreogbuigwe.com Email: admin@iyoreogbuigwe.com Instagram & Twitter: @ iyoreogbuigwe

BUSINESS DAY

C002D5556

BUSINESSINTELLIGENCE

Monday 03 September 2018

In association with

Who should chair the board meeting in the chairman’s absence?

ANNE AGBO

he Chairman of the Board of Directors is “Primus inter pares” first among equals in relation to other NonExecutive Directors. The procedure through which a Chairman is appointed is typically prescribed by the company’s Articles of Association or by the Board Charter. In some cases, this process is determined by the terms of a Shareholders’ Agreement or an Investment Agreement. Where the procedure is not clearly prescribed, selecting a Board chair should be a simple process as prescribed by Section 263(4) of the 2004 Companies Act - “The Directors may elect a Chairman of their meetings and determine the period for which he is to hold office….” Section 263(4). The practice in many companies is that the business owner/ Chief Executive Officer (CEO) identifies and appoints an individual with desirable characteristics to serve as the Chair. Prior to the formal inauguration of a typical Board, the person to be appointed as Chairman is usually pre-determined in advance by the majority shareholders.

Very few organisations adopt the democratic approach of leaving the choice of Chair entirely to the discretion of the Board by having Directors vote on whom amongst them will serve as Chair at the inaugural Board meeting. Regardless of how the Chair is appointed, it is important to ensure that the individual possesses a good understanding of the business, to be able to properly provide oversight to the CEO and the Board. The Chair must also be someone who will command a unifying presence on the Board and the ability to objectively guide the Board to a consensus on issues. Typically, the Chairman is available to attend meetings given that in practice, meeting dates are pre-agreed for the year subject to the convenience or availability of all Directors and in particular the Chairman. It is however possible that due to supervening events or other business/personal commitments, one or two Directors may be unavailable to attend a particular board meeting. Directors would typically inform the Chairman and the Company Secretary if they are unable to attend a meeting. Where the Board has in place a policy or practice that allows Directors to appoint alternates, the Director’s alternate may attend the meeting in his/ her stead. Where all the Directors have confirmed their availability and

the Chairman is the only one who has a conflicting engagement or for whatever reason is unable to attend a meeting, many Boards are not clear on how best to proceed. The typical reaction is to reschedule the meeting to a date convenient to the Chairman. On the other hand, some Directors have argued that where a meeting has to be rescheduled at the instance of only one Director, it implies that that Director (regardless of whether he/she is Chair or not) has a domineering influence on the Board. While this view may sometimes be a little far-fetched, it is definitely the case on some Boards. Those who favor rescheduling a meeting if the Chair is unavailable argue that where sensitive matters are on the agenda for deliberation at the meeting, the Chairman will be best able or suited to guide the Board to come to an objective decision Respective Board dynamics and cultural undertones do not support proceeding in the absence of the Chair. A company’s Board Charter may provide for the position of (Executive) Vice Chairman with the provision that should the Chairman be unavailable, the (E)VC should chair such meetings. By corporate governance best standards, where the Vice Chairman is an Executive Vice Chairman and the MD/CEO, he/she should not chair a Board meeting if the substantive chair

Cordially invites you to its

Director Development Programme

“The Eﬀective Board” Target Audience Directors, Aspiring Board Members, Executive Management, Business Owners, Managers as well as Entrepreneurs. Date: October 10th & 11th 2018 Location: Dubai, U.A.E. Registration Fee: S2,500 USD exclusive of 5% VAT (Discounts available for multiple nomination)

Modules: •

The Board’s Role, Directors Duties & Liabilities

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The Eﬀective Board: Composition & Structure

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Board Procedures

For enquiries and registration: • Anne Agbo: aagbo@dcsl.com.ng or 08090381864 | Mobile:08053208436 • Nike Taiwo: ntaiwo@dcsl.com.ng or 08090381864 |Mobile:08037699347

is unavailable. The Latin phrase “nemo iudex in causa sua” - “no one should be a judge in his own case” - aptly captures the scenario this creates. . The MD reports and is accountable to the Board and should therefore not preside at a meeting of Directors. Some Boards permit the Chairman to nominate a Director to chair a meeting on his behalf if he will not be available. The flaw with this practice is that the office of Chairman is not one which the holder of the office can delegate at his discretion. The Board should collectively decide on who should chair the meeting in the Chairman’s absence. It is possible to also adopt the practice in other jurisdictions such as the United Kingdom where companies have the option of appointing a Senior Independent Director (SID). The SID serves a dual function-: as a channel of communication between the Board and shareholders where normal channels of communication with the Chairman and MD are not as effective as they should be and also as the lead Director on matters relating to the Chairman’s performance. Led by the SID, Non-Executive Directors are encouraged to meet at least once a year without the Chairman being present, to discuss the Chairman’s performance and on other occasions as are deemed appropriate. This is however a practice that has not gained any grounds in Nige-

ria. The suspended FRC Code of Corporate Governance provided for the position of a SID. The revised exposure draft does not have a similar provision. The simple response to the question of who should preside over the meeting in the Chairman’s absence is found in the same Section of the 2004 Companies Act which spells out how the Chairman is appointed. It says “….. if no such Chairman is elected or if at any meeting, the Chairman is not present within five minutes after the time appointed for holding the same, the Directors present may choose one of their number to be Chairman of the meeting”- Section 263 (4). The Board should reserve the right to determine at each meeting where the Chairman is unavoidably absent, which NonExecutive Director is best suited or experienced to preside over its deliberations.

Anne Agbo is the Head, Company Secretarial Unit, DCSL Corporate Services Limited. Kindly send comment(s) and reaction(s) to aagbo@dcsl. com.ng For more information about our services, please visit www.dcsl.com.ng

Monday 03 September 2018

Stocks

Currencies

C002D5556

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

ECONOMY

Insurers are spending less to generate revenue BALA AUGIE

nvestors want to know whether management and board of directors are curtailing costs and maximizing profit. This is because ballooning expenses erode profitability, and consequently resulting in a propitious drop in stock price. In environment freight with rising claims, acquisition, maintenance and management expenses, maintaining an efficient underwriting capacity could be a herculean task for some managers. A cursory look at the financial statement of 20 quoted insurer on the floor of the bourse shows that firms are spending less on expenses to generate each unit of premium income, but underwriting and operating expenses for some are heading south. Of course firms spend a lot of money in the acquisition of latest technology and recruitment of a talented work force. In a nutshell, the half year result of insurers reveals their expenses are not eroding revenue because the expense ratios, but combined ratios for some of them were high. For the first six months through June 2018, the cumulative underwriting expenses of 20 insurers increased by 16.60 percent to N27.0 billion from N23.28 billion the previous year. Underwriting expenses, according to insurance companies, comprise acquisition costs and other underwriting expenses. Acquisition costs comprise all direct and indirect costs arising from the writing of insurance contracts. Experts say increasing underwriting expenses may indicate a poor performance, though; the expenses might have been committed to improving anticipated premium income. The above means firms spend more as revenue increase. The cumulative management or operating expenses of these insurers increased by 5.47 percent to N25.56 billion in June 2018 from N24.23 billion as at June 2017. Interestingly, combined average total expense ratio,

BUSINESS DAY

P.E

SHORT TAKES 57.1

The Purchasing Managers Index (PMI) of the manufacturing sector of the economy grew at 57.1 index points in August compared to 56.8 recorded in the month of July. The Central Bank of Nigeria (CBN) on Friday released the PMI reading for August, which shows a 17 consecutive month of expansion. The Purchasing Managers’ Index (PMI) is an indicator of the economic health of the manufacturing sector. The headline PMI is a number from 0 to 100. A PMI above 50 represents an expansion when compared with the previous month. A PMI reading under 50 represents a contraction, and a reading at 50 indicates no change. The further from 50 is greater the level of change.

lance, firms use income from fixed income securities, short term government securities to add impetus to earnings since rising claims eat most of the premium income, leaving them with a slim underwriting profit. # While lenders in Africa’s largest and most populous ec0nomy took advantage of the interest on shortage government securities to shore up profitability, their insurance counterparts were unable to take advantage of high yields environment to bolster the bottom line. Thirteen Nigerian banks made N879.23 billion income from treasury bills (Tbills) in 2017, this c0mpares with the N49.16 billion investment income realized by 18 largest insurance companies, data gathered by Seplat Petroleum DevelopBusinessDay shows. ment Company Plc, said on In the insurance parWednesday August 29 that lance, investment income its $350million 9.25% Senior comprise of income from Notes due 2023 were listed bonds, T-bills and real estate. and admitted to trading on For instance, firms in the Europe, Asia, and the United the International Securities States own skyscrapers and Market of the London Stock Exchange. The Notes were earn rental income. issued on March 21, 2018 The assets under manand listed on the Euro MTF agement for firms are small. The entire premium they market of the Luxembourg Stock Exchange have received in relation to GDP is not up to 1 percent. The unaudited half year (H1) financial results for Seplat That is the fund they will use to invest,” said an actuarial Petroleum Development scientist who didn’t want his Company Plc for the period name mentioned. ended June 30, 2018 as re“Their investable funds leased by The Nigerian Stock are poor compared to bank Exchange shows the comas lenders make money from pany grew revenue by 160 fixed deposit. The larger percent to N104.794billion, your resources, the higher from N40.317billion in the the returns you get. This corresponding H1 period of means if your pool of re2017. sources are not enough, you may not have enough to invest in securities,” said Experts are of the view that poor investment port- The annual report of PZ Cussons Plc for the year ended folio management is responsible for the insurance 31st of May 2018 reported a industry’s low performance double digit drop of 47.7 percompared to other sectors. cent in the after-tax profit on They however added Friday, hit by a surge in the net that an efficient investment finance cost of the company management strategy will by 434.1 percent. bolster insurer’s margins The expected uplift in trading in the short term since an did not materialise, while unpredictable and tough competitive pressure inmacroeconomic environ- creased for the company as PZ ment has undermined unGroup posted a Net finance derwriting business. cost of N651.72 million, 434.1 Agusto & Co estimated that the insurance industry’s percent from the Net finance income of N195.09 million investment portfolio grew by eight per cent to N762 billion posted in the last fiscal year in 2017. in 2017 (approximately 75% of total assets).

$350 million

(operating and underwriting expenses) as a percent of combined net premium income, fell to 63.90 percent in June 2018 from 67.88 percent as June 2017. But a breakdown of costs reveals some of them are grappling with deteriorating underwriting performance. Experts are of the view that the country’s insurance industry is becoming more competitive with the Tier Based Minimum Solvency Capital, TBMSC, which indirectly compels companies to beef up their capital base. A breakdown of the figure shows Aiico Insurance’s underwriting expense increased by 22.89 percent in to N1.91 billion in June 2018 as against N1.55 billion as June 2017. The insurer spend less to generate each unit of pre-

mium income as underwriting expense ratio fell to 13.27 percent in the period under review from 14.54 percent as at June 2017. But Aiico’s combined ratio of 110 percent in the period under review exceeds the 100 percent threshold. AXA Mansard Plc’s underwriting expenses were up 27.71 percent to N1.79 billion in June 2018 from N1.41 billion as at June 2017. Underwriting expenses ratio fell to 18.72 percent in the period under review from 21.42 percent as at June 2017. The Insurer’s combined ratio improved to 93 percent in the period under review from 104 percent the previous year. Wapic Insurance Plc increased by 41.60 percent to N1.16 billion in June 2018 as against N707.82 million the

previous year. Underwriting expenses were flat at 30 percent while combined ratio fell to 110 percent in the period under review from 134 percent as at June 2017. Linkage Assurance Plc underwriting expenses were up 20.44 percent to N1.17 billion in June 2018 from N972.57 million as at December 2017. Underwriting expense ratio rose to 66.36 percent in June 2018 from 64.21 percent as June 2017. The insurer’s combined ratio moved increased to 102 percent in the period under review from N94 percent the previous year. Experts are of the view that insurers should underpin their risk allocation strategy, as they bemoan the abysmally poor investment income. In the insurance par-

47.7%

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: DIPO OLADEHINDE, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: SAMUEL IDUH )

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

BUSINESS DAY

C002D5556

Monday 03 September 2018

Markets Intelligence ECONOMY

Investors shy away from Consumer Goods stock as GDP growth slowed …Only Unilever has gained YTD SOBECHUKWU EZE

he slow growth in the country’s GDP from the recent Q2 report that came out recently may have helped explained just how much consumer goods companies’ half year earnings growth have slowed when compared to last year. The unimpressive results combined with sell of emerging market assets following a trade war between the two world economic power- China and the U.Shave seen firm’s stock price nose dive. The Q2 report from the National Bureau of Statistics (NBS) showed that the country recorded national output of N16.58trillion, representing a growth of 1.50 percent in the second quarter (Q2) of the year. However, this marks the second consecutive quarter of a decline in the pace of economic growth in Nigeria as a decline in oil sector growth hurt the pace of economic expansion. Faith Ogedengbe, research analyst, GDL Asset Management said that “The second quarter of this year was quite tumultuous for the national economy as several economic headwinds kept economic growth at bay. The delay in the passage of the budget along with increased political tensions hurt business confidence and slowed the decision making process in companies”. Looking at the financials of 9 companies in the Nigerian Consumer Index, companies who have the same half year end on Nigerian Stock Exchange, it was seen that most of the companies’ earnings under observation declined except two. Nestle and Unilever were the only

two companies who had an improvement when compare to the same period last year. Moses Hammed a research analyst at Investment One financial limited told businessday that concerning the lower earnings that “Consumer Demand has not really picked up, which may be due to the backlog of salaries owed by states and this has affected the earnings of this

Snap shot of lenders’ H1 interest income BALA AUGIE

he sudden slump in banks’ interest income should send a predawn chill down the spine of investors as the continued drop in yields and waning foreign exchange gains could deal a great blow on future earnings. Custom street bankers have been labelled the indigenous or smart guys because they were able to take advantage of regulators monetary policy. First, the devaluation of the currency in 2014 and 2016 was a boon for operators, as it balloon dollar denominated assets, therefore, underpinning earnings. Second, the high yield on short term government security in 2017 saw lenders make money from income on treasury bills, and again, profit spiked. Little wonder shareholders were rewarded with jumbo dividend while directors drank from wine poured from a flagon into a golden goblet even amid economic downturn. The introduction of the Investors’ and Exporters’ window in April 2017 eased liquidity in the foreign exchange market, and lenders were able to access foreign currency. The cumulative interest income of 10 banks that have released half year results fell increased by 2.67 percent to N1.31 trillion, from N1.27 trillion the previous year, this compares with a 25.115 percent increase in the 2017 and 2016 financial period. Experts are of the view that banking isn’t charity business adding that lenders are in

business to make money for shareholder in so far as it is legitimate. “Why should they lend to a risk sector while they can invest in risk free securities,” said an analysts who didn’t want his mentioned. The anonymous analyst has opened another chapter: Why have banks refused to turn on the tap on lending despite government Treasury bill redemption. Despite the redemption of treasury bills by the Federal Government that resulted in enhanced liquidity, banks have refused to turn on the tap on lending to the private sector as loan books continue to shrink. This means they are unconvinced that the

company who cannot increase prices for fear of losing their customers”. Their stock price has not also fared well year to date (YTD). Only one of the stocks Unilever has had a positive return with a 24 percent YTD return. It’s not also surprising to note that of all the other stocks on the decline, Nestle appears to have lost the least with a 3.5 percent decline in share price.

risk level is not low enough for them to start lending. “I think this is not unique to Nigeria alone where authorities want banks to lend as much they want. In United States and the United Kingdom (UK), authorities find other ways to encourage them to lend more,” said Olubunmi Asaolu, Head of Equity Research at FBNQuest Capital. “No bank has decided to turn on the taps as they feel the risk level is not low enough for them to worry about lending,” said Asaolu. Between December 2017 and June 2018, Federal Government redeemed N840 billion worth of Treasury Bills, a strategy that has resulted in reducing the yields on bench mark government securities to 11 percent and 14 percent in the first half of 2018 from 18.50 percent to 22 percent in January. The cumulative total loans and advances to customers for the seven banks that have released half year results were down 7.88 percent to N7.43 trillion in June 2018 from N8.07 trillion the previous year, according to data compiled by BusinessDay. Drilling down into the numbers shows GTBank’s total loans and advances to customers reduced by 10.41 percent to N1.291 trillion in June 2018 from N1.44 trillion as at June 2017. Zenith Bank’s loans and advances to customers dipped by 10.95 percent to N1.87

Other companies observed were McNichols whose earnings increased by 21.2 percent however the share price has fallen by 40 percent YTD. Champion breweries’ earnings’ decreased by 7 percent and YTD by 13.5 percent. Nigeria Breweries earnings fell by 22.4 percent and YTD, it is down by 25.9 percent. Dangote Sugar’s H1 earnings reduced by 26 percent and its share price YTD declined by 22.6 percent. Dangote flour mills’ earnings fell by 43 percent and YTD down by 34.1 percent. Cadbury and International Breweries both had losses this year H1 which were higher than their last year losses. Their share prices fell by 35.6 and 38.1 percent. On the outlook for these companies Hammed said that “Currently, market is in the bearish run which may extend till the end of Q3 largely because of negative sentiment against emerging markets. The election is still a major concern for investors, so these two issues may outweigh the effect of better performance of the companies in consumer goods, the two issues are systemic in nature”. “The slow growth of 1.19 percent year on year in the agricultural sector at the end of Q2 2018 may be negative for food prices. This could cause inflation to spike with food sub index accounting for about 50 percent of the CPI. This could also increase the cost of the locally sourced agricultural products which are used by these companies”, Hammed added. “However, we expect consumer spending to improve on the back of higher spending by the government as N9.12 trillion may be spent in the next one year for both capital and recurrent expenditure”. He concluded.

trillion in the period under review from N2.10 trillion as at June 2017. First Bank’s loans and advances to customers reduced by 7.50 percent to N1.85 trillion in June 2018 from N2 trillion as at June 2017. Union Bank’s total loans and advances to customers reduced by 9.07 percent to N470.15 percent billion in the period under review as against N517.15 billion the previous year. There has also been consistent marginal decline in the Federal Government (FGN) Domestic Debt to N12.58 trillion in March 2017 and N12.15 trillion in June 2018 from N12.59 trillion December 2017, according to a recent report by the Debt Management Office (DMO). It will be recalled that the country raised $3 billion in a two-part international bond sale with a view to funding a fiscal deficit and reducing its local-currency debt burden. The low interest rate environment means it is end of free money for banks as income from treasury bills are expected to shrink, with possible negative repercussions on future margins. Analysts at CSL Stock Brokers said the recent issuance of commercial papers by corporates may suggest that commercial banks are still not compelled to channel credit to the private sector, while corporates are taking advantage of lower yields from commercial papers. “We envisage that the issuance of commercial papers will continue to gain traction over the course of the second half of the year, more so that the prospect of a rate cut and an attendant reduction in banks’ loan rates is becoming elusive,” said analysts at CSL Stock Brokers.

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INTERVIEW ‘I feel compelled to enlighten people on the need for decent environment’ For an emerging economy like Nigeria, environment is everything because the growth or otherwise of the economy depends, to a large extent, on how the environment enables investment, commerce, education, entrepreneurship and business. ‘GBENGA ONABANJO, Founder/CEO, Goforte Foundation, in this interview with CHUKA UROKO, Property Editor, highlights the challenges of the environment in Nigeria and how they impact on almost everything, including national growth. He also offers insights on how the environment could be planned for positive impact. As someone with strong passion for the environment, what is your perception of the Nigerian environment? asically, the environment is everything around you that affects you such as air, land, sea, water and the ecosystem. These are the things that constitute the environment. However, the way these are structured, to a large extent, determines how comfortable you are in the environment. So, coming to my perception of the Nigerian environment, I would say it used to be better than what we have now. One would expect that with advancement in technology we should be improving and that the trends in the civilized world should rub off on us. But somehow we seem to be too pre-occupied with the basics of life such as power, water and housing. These consume so much of our time that we are unable to look at things that will take us to the next level. Environment is one key area that we should pay attention to. Government has not paid attention to these areas and it is affecting every aspect of our lives. Environment is everything—education, commerce, health, economy, industry. We need to create that enabling and physical environment for us to thrive. Foreign investors are not seen in Nigeria as many as they should be because they say the country’s environment is not right. What do you think? Quite recently, The Economist Intelligence Unit published in this year’s Global Liveability Index, ranked Lagos, which is Nigeria’s commercial capital, as the third worst city to live in the world. Out of 140 world cities, Lagos was ranked 137th. The parameters considered included general living conditions, ease of doing business, security, infrastructure, health, education, transportation, economic stability and improvement of these parameters over the years etc. After considering all these, with Damascus, a war thorn city just a rank after Lagos, it was concluded that Lagos is likened to a city at wartime. So, if it is not easy to do business and life is not safe here, how would one expect anybody to come and do business? It is only when the return on investment is high enough that it is irresistible that high risk takers will come, and what they will do is just take their return on investment and get out, meaning that whatever is their attraction is not sustainable or enduring. We need an enabling environment to attract foreign direct invest-

Gbenga Onabanjo

ment and that is not even difficult to do. Once your environment is enabling, people from economies that are already saturated would like to spread their investment in the country and continue to do business there because there are still viable opportunities to invest and get good returns. Where there is no guarantee that they will come in safely and go back safely, they will rather stay away and keep their money. Not long ago, Lagos was selected as one of the 100 resilient cities in the world by the Rockefeller Foundation. From what we see around the city like the current Apapa gridlock, poor infrastructure, poor waste disposals etc, how sustainable is this resilient city status? Though I am not conversant with the parameters for selecting Lagos as a resilient city, I think that for Lagos to be a resilient city, given the way the state is constituted, in terms of population, if care is not taken, it will crash because everything seems to be disorganized. Processes are not in place. There is no visible development plan which shows the way to ameliorate the seeming chaos in the city. There is no template on ground to show that the problem has been identified and this is the way to go about providing solution. If all these were in place, there would be hope. But where things get done by discovery, not by concerted efforts, then there is a problem. The city is over-crowded and there is need for decentralization and decongestion of the city centre to the outskirts. The rural-urban migration to Lagos is so high that gov-

ernment needs to stem the tide and the way to do it is for the government to start helping the neighbouring states to set up cottage industries so that people can as well explore and settle there and seek job opportunities. If this is not done, the influx into the city will continue to put pressure on the available infrastructure, creating more problems. Looking at the way the state is today, if you were to advise the government on environmental issues, what would you tell them? We need to look at what the challenges are; analyse them and thereafter begin to think of the solutions. Every neighbourhood has its own peculiarities and solutions are not perfect. Every human being has his peculiar characteristics. Everybody has all the necessary body organs, but these organs differ in sizes. So, for every neighbourhood, there should be basic needs in place such as housing, water, good roads, school, hospital etc. Once these basic infrastructure are there, the level to which you provide the sophistication in each of the neighbourhood is what differentiates one location from another. But the important thing is that they all have the basic infrastructure in place, meaning that nobody has any reason to migrate or resettle from point A to point B. Now, tell us about your activities in the environment which seem to take all the passion you have. How did it all start? It all started about 20 years ago when I was working as a public officer in Abeokuta, Ogun State. I was actually a commissioner in charge of health in the state.

I went for a conference on pure water sachet. The conference wanted a policy that would compel producers of sachet water to dispose the used sachet in such a way that it does not destroy the environment. It was at that point that my passion for restoring the environment activities Goforte was birthed. What is of concern here is that 20 years after, I am not aware of any concrete policy to stem sachet water disposal menace; the situation has not changed; if at all, it has grown worse. If you go about the cities, you see drainage systems clogged with plastic bottles and sachets all over the place. All these take hundreds of years to degrade which does not help our ecosystem. Aside from that, I am an Architect; I love nature; I love beauty; I love orderliness; I love things being done properly and excellently too and once one does not see these around –one begins to feel some discomfort. It is actually innate in everyone but the effort to make things work makes the lasting difference. I see a compelling need to enlighten people on the virtue in having a decent environment. Over time, what has been your footprint in this effort at addressing the identified vacuum in the environment? My mantra has been to do simple things very well. Whatever you do, just do it very well, no matter how small. We started by going to the neighbourhood and estates to enlighten them. We advised people to sweep the frontage of their houses, clean their drains; wash the beds and let the water flow. If you have pothole on your street, you don’t need to wait for the government to come and do it for you. Just patch the pothole. This is one of my many initiatives and I call this one ‘A Stitch in Time.’ In the past six years, this has been the case at my estate and it is catching on. We also have programmes like ‘Clean Street, Healthy Neighbourhood’ campaign which goes on every first Saturday of every month. Everyone including landlords, tenants, sweepers, gardeners and so on gather and together we sweep and clean the streetsand the entire neighbourhood. With these activities we have been able to instill in people in the estate dignity of labour and the spirit of volunteerism. There is so much pollution in the air caused by waste particles, dusts, sand and silt which are not meant to be where they are if they are cleared at the right time. We have therefore started the campaign of sweeping and getting the sand and silt off the sidewalks in our “Stir up

the dust campaign”, by so doing, we are allowing fresh air to circulate and people can breathe and feel fresh. Again, we encourage people to go into tree planting. Our living areas need community gardens or recreation parks. For an average human being, two average-size trees can give him enough oxygen for his life time. Trees, apart from being objects of beauty, have a way of purifying the environment by producing the oxygen we breathe and take away our carbon dioxide waste. Unfortunately in Lagos, instead of having trees or shrubs planted within our housing developments, what we see mostly are choked up housing built everywhere irregularly planned and with rusty roof tops. In every field of human activity, there are factors that tend to limit growth and success. In your case, what are these factors or challenges you face carrying out your campaign? The first challenge you face doing this kind of work is trust. People tend to see you as one out to scam. They believe you are not real; you are in it just to see what you can get; or that your intentions are not genuine. This has been the case, but when people see you prove yourself by using your resources to drive what you preach, they latch in to the idea and help you run with it, and they welcome you. The second challenge is the thinking that government has to provide everything which is not a good idea. Until we begin to understand that the private citizen has a part to play in developing a nation, we will not get it right. What is expected of us is simply service. Everybody has to work. People should always be ready to give to the government and not to take from it. People should always be ready to make sacrifice because that is the only evidence of love and patriotism. Like human beings, organizations too are aspirational. What could be the aspiration of Goforte in the next three to four years? Goforte, in the next four years, would like to be impactful in the physical space, starting from its Jerusalem to Judea and then to the outer space. We have started with our immediate neighbourhood, now extending it to other estates in Lagos, encouraging through our programmes and thereafter collaborating with multi-sectoral ministries within Lagos state for now. By the next three years, with our initiatives being applied here and there, we will begin to see the impact in measurable terms. To a large extent, people have started buying into these initiatives and we intend to extend these initiatives on a national scale.

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Monday 03 September 2018

BD Special Report on

Leading Mutual Fund Managers

‘AT FBNQuest, we navigate complex markets and enable investors achieve financial objectives’ FBNQuest Asset Management is one of the leading investment management firms in Nigeria with a proven track record of delivering value-adding advice to clients. IKE ONYIA, MD/CEO of the Company in this interview bare his mind on the vision of the company, developments in the market and growth opportunities in the Nigerian market. Excerpt: investing, and the Fund is the first of its kind in Nigeria. The Portfolio Managers draw constituents from the largest 40 stocks (by market capitalization) and screen these stocks based on proprietary parameters identified from our research as drivers of the market performance. In order to manage liquidity, the Fund may invest in short-term money market instruments and fixed deposits. We also provide clients who have expenses in foreign currency an opportunity to earn an income in foreign currency. We provide this through the FBN Nigeria Eurobond (USD) Fund which invests in foreign currency bonds issued by the Nigerian government and Nigerian corporates.

ive us a brief background of yourself and FBNQuest Asset Management? My experience as a financial services professional spans over 20 years’ and I am currently tasked with the responsibility of managing and providing leadership to the investment management business of FBNQuest. FBNQuest is the associative brand name for all the businesses that operate within the merchant banking and asset management group of FBN Holdings Plc., which is one of the largest financial services groups in Africa. FBNQuest Asset Management is a subsidiary of FBNQuest Merchant Bank, and is one of the leading investment management firms in Nigeria with a proven track record of delivering value-adding advice to clients. It is a full-service investment management firm committed to providing a broad range of investment solutions to various client segments. These clients have over time, come to rely on our vast experience in financial markets as well as our insights and perspectives to achieve their financial goals. Our investment solutions are based on our strong fundamental and quantitative research capabilities, regarding money markets, fixed income markets, public equity markets and alternatives. What led to the setting up of FBNQuest Asset Management? The financial landscape in Nigeria has evolved over the last couple of decades with advances witnessed in the regulatory framework and the adoption of new technology. As a result, the instruments available to government, corporates and entrepreneurs to raise capital, through the money market, the bond market as well as both public and private equity markets broadened. Also, during this period, some individual and institutional investors were faced with the challenge of understanding the relative sophistication of these markets as well as having to institute and manage their fit-for-purpose portfolio management plans. It was within this context that FBNQuest Asset Management was established, essentially, to bridge this gap and provide investors with financial planning and investment advisory services that made it easier to navigate complex markets and enabled investors to achieve their financial objectives. Our offering serves as an efficient mechanism for the al-

Ike Onyia

location of resources between investment capital and investment opportunities, and a wide variety of investor segments have benefited from partnering with FBNQuest Asset Management. It is gratifying to see that in a short space of time, we have evolved into a leading investment manager in Nigeria, based on the size of assets under our management. It also attests to the trust that our clients have in our capabilities. FBNQuest Asset Management offers a diverse range of mutual funds ranging from the FBN Money Market Fund, FBN Fixed Income Fund and FBN Heritage Fund to the innovative FBN Nigeria SmartBeta Equity Fund and FBN Nigeria Eurobond (USD) Fund. Tell us about these products and what investors stand to gain by buying in to your mutual funds? Yes, we do, but allow me to give bit of a preface - FBNQuest Asset Management is a full service investment management firm and not a mutual fund house only! So, while our mutual funds constitute our more public face, we do offer made-to-fit portfolio advisory and management services. At FBNQuest Asset Management, we think of our products as “solutions” offered to the investing public. By investing in our mutual funds, investors stand to gain competitive returns driven by superior and best-in-class investment management from our diverse range of experienced professionals. We make it our aim to go above and beyond in delivering to our clients by carrying out extensive market research and deploying our vast

resources in making investment decisions. Different solutions tackle different investor categories and needs.For the purpose of this interview and the product specifications, we shall categorise our investors into three broad categories based on the level of risk they are willing and/or able to take; low risk investors, medium risk investors and high risk investors. For low risk investors who need to have cash requirements and need a steady income, the FBN Money Market Fund and the FBN Fixed Income Fund best suit their needs. The FBN Money Market Fund as the name suggests, invests in money market (lowrisk and highly liquid) securities such as treasury bills. The FBN Fixed Income Fund also invests in money market securities as well as government and corporate bonds (debt issued by these entities). Both products provide steady income to investors. The FBN Heritage Fund is a balanced fund which invests in all asset classes namely, money market, government and corporate bonds, Nigerian equities and alternatives (e.g. real estate). It is categorised as a medium-risk solutionsince the money market component of the portfolio provides significant cushion from volatile equity returns. The FBN Nigeria Smart Beta Equity Fund is our equity-based fund which invests a minimum of 75% of the total portfolio in quality stocks of Nigerian companies. The Fund uses a simple systematic rules-based investment strategy that is designed to capitalize on equity market inefficiencies specific to the Nigerian market, as established by extensive inhouse research. The strategy is commonly known as smart-beta

FBNQuest Asset management had the highest return when BusinessDay did analysis on the listed funds on SEC ranging from December 29 2017 to June 2018, what do you consider in choosing instruments into your portfolio? First of all, we would like to restate that at FBNQuest Asset Management, we put our clients’ needs first. With this in mind, we seek to generate competitive returns on investments. We do this by making sure we are disciplined across the investment management value chain, that is, from extensive in-house research to portfolio management. Factors we consider when choosing instruments into portfolios include, but are not limited to; Market dynamics and realities: We have a team of research analysts who focus on the prevailing and future market conditions and how these will impact certain parameters such as interest rates, inflation, capital importation etc. which in turn have direct impact on the investment decisions we make. Regulations: We put regulation at the fore-front of all our investment decisions and service to clients. Matters such as approved weightings of asset classes in portfolios, statutory filings, timelines for providing reports to clients are strictly adhered to in our day-day operations. Risks and Returns: With the approved bands/weightings of asset classes in mind, we seek to invest our Funds giving full consideration to risks and returns associated with the instruments. What are the benefits of investing in Mutual Funds that Nigerians need to know? Mutual funds have relatively low volatility and a fairly simple, once understood by the investor. However, the following are more benefits from investing in

mutual funds that Nigerians need to know; Diversification: By investing in a mutual fund, investors are provided with the opportunity to invest in different asset classes without the need to create individual portfolios. For example, the FBN Heritage Fund which invests in money market instruments, government and corporate bonds, equities and alternatives, provide investors the opportunity to invest in all four different asset classes without having to create individual portfolios. Liquidity: Mutual funds are typically set up to be able to meet liquidity needs i.e. a sudden need for cash. Investors can subscribe into and redeem from mutual funds with relative ease. Professional Investment Management : When investors buy into a mutual fund, they must vet the investment management firm to ensure they are buying into one which providesskilled investment management. Our investment managerscarry out extensive research and analysis with a view of including high quality assets into the portfolio. This is particularly beneficial for investors who may not have the required time or skill to manage investments. Safety: The Securities and Exchange Commission (SEC) registers and regulates all Fund Managers which regulatory cover and ensures the safety of investors’ funds under management. Additionally, all mutual funds are required to have an independent Custodian, whose core role is to hold the assets of the Fund separate from the Fund Manager. This provides another layer of security for investors. How has FBNQuest Asset Managers being able to handle the challenges it encounters in the course of its operations? As previously mentioned, Nigeria is characterised by a growing need for investment management services for the population. This has led to more players offering investment management services to the public. Therefore as a professional service provider, we focus on building innovative and best in class solutions as well as offering seamless client service to stay ahead of the competition. We also work to ensure the performance of our Funds remain competitive. We are focused on increasing the market’s awareness about investment management as an industry, as well as about FBNQuest Asset Management and our solutions. This will ensure we remain relevant as a firm.

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Monday 03 September 2018

BD Special Report on

Leading Mutual Fund Managers

‘At United Capital Asset Management, we provide innovative bespoke investment services to a diverse client base’ United Capital Asset Management in providing its services carry out portfolio and fund management expertise with well experienced board and management, offering robust and effective risk management system that ensures right investment decisions. SUNNY ANENE its MD/CEO in this interview with ENDURANCE OKAFOR and CHIJIOKE ONYEOGUBALU shares his thought on the plan of the company, opportunities in Mutual funds and a lot more. Excerpt:

an you give us a brief background about yourself? I am Sunny Anene, the MD/CEO of United Capital Asset Management Limited. I am a chartered accountant; I got qualified in May 1991, and became a chartered stockbroker in 2003. I have a Masters degree in Finance from the University of Lagos. I am a Fellow of the Chartered Institute of Stockbrokers (CIS), the Institute of Chartered Accountants of Nigeria (ICAN), the Chartered Institute of Taxation of Nigeria (CITN); and an Associate of the Certified Pension Institute of Nigeria. I am also a Member of the Institute of Directors of Nigeria. I have a total of 26 years’ experience in commercial and investment banking in Nigeria. I have 6 years core banking experience, starting from Chartered Bank Limited after which I switched to Investment Banking in First City Group in 1997. In First City Group, I was Head of Operations for 5 companies in the Group, and at some point, the Lead Trader for CSL Stockbrokers, the Securities Trading arm of the Group. I worked at FCMB for a total of 7 years before moving to pension management in Zenith Pension Custodian Limited, a subsidiary of Zenith Bank Plc. At Zenith, I worked for about 3 years as the head of Risk Management, Compliance and Internal Control. I returned to the Capital Market in 2008 when I joined Chapel Hill Denham as the Director of Finance and Operations for the Group and at a time, the MD/ CEO for the stockbroking business. I was at Chapel Hill for 6 years. Here at United Capital Plc, I was the Group CFO, with additional responsibilities for 6 other functional areas in the Group for about 3 years after which I was appointed the MD/CEO of the Asset Management business in July last year.

Sunny Anene

that includes Corporates; Governments; High Net Worth Individuals; and Retail Investors. We have been in existence since 1964 and we have a well experienced board with very robust internal control and risk management system that ensure we make the right investment decisions.

What led to the formation of the Asset Management Division? This company was hived-off UBA in 2012, when the CBN mandated banks to focus on core banking services and divest from nonbank related businesses. So with the CBN directive, the company was floated with a new license from SEC to carry out Asset Management services. After the spinoff, shareholders in the bank were granted proportionate shares in UBA Capital, which later changed its name to United Can you tell me briefly about Capital Plc as part of strategies United Capital Asset Manage- to consolidate its independence and reflect its separate identity ment? United Capital Asset Manage- from UBA Plc. ment is licensed by the Securities and Exchange Commission What are the benefits of in(SEC), to carry out portfolio and vesting in Mutual Funds? funds management. We provide Firstly, mutual funds are maninnovative bespoke investment aged by experts with a wealth services to a diverse client base of experience and strong back-

ground. They are designed for retail clients who have neither the expertise nor the financial capabilities to carry out huge transactions. So, the retail investors contribute the small money they have and we employ our expertise to cherry-pick the best investments. When we look at investments, we consider both the returns as well as the risk because we have a risk management framework that guides our investment decision making. And with a pool of funds, investors can get better deals. Also, the asset management business is regulated, so our actions are guided by the Securities and Exchange Commission (SEC). Lastly, the returns on mutual funds are taxfree in Nigeria, in a bid to encourage financial inclusion. United Capital Asset Management offers very diverse funds, what would be the benefits for an investor that wants to invest in any of them? We have six mutual funds and each of them has its individual uniqueness in terms of risk and return. The mutual funds are designed for different investors with

different risk appetites. For example, the Money Market Fund is invested in instruments that have a maximum of one-year tenor and pay interests that are specified in advance. Though market rates change from time to time, the invested capital is usually guaranteed, so investors who are risk averse can take advantage of the Money Market Fund. We have the United Capital Equity Fund which invests in quoted entities on the Nigerian bourse. Equities have higher risk than money market instruments, but you can get a lot more return if you have a long-term horizon. It has been proven that over a long period of time, equities outperform bonds and other fixed income instruments. We are also very careful in our stock selection. We invest in only fundamentally strong companies using the recommendation of our highly experienced research team. We also have a Bond Fund, where we invest in FGN bonds and some corporate bonds issued by blue chip companies; a Balanced Fund, which is a mix of equities and money market instruments, the fund is tailored to investors who want greater return

and are ready to take on some level of risk; a Wealth for Women Fund, which is also a mixed fund but is targeted at women. Lastly, we have the Eurobond Fund, where we invest in dollardenominated products only, as well as the Eurobonds issued by the federal government or large corporates in Nigeria. The return on this fund is significant and much higher than what you would get in your domiciliary account. How do you work exchange rate around the Eurobond fund? There is no exchange rate risk at all. The exchange rate risk will only apply if you invest foreign currency in Naira-denominated assets. We invest in dollar denominated assets. In fact, the Eurobond Fund is a good hedge against exchange rate depreciation. How well has your recently launched funds performed? The Funds have performed well and indeed our business generally. We have a ground benchmark that we set for ourselves besides Continues on page 35

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â&#x20AC;&#x2DC;At United Capital Asset Management.... the traditional benchmarks for different products. For equity funds, ideally, the benchmark is All Share Index (ASI) return, but in our own case, we say All Share Index plus more. The same applies to other funds where we stretch the traditional benchmarks. Our Eurobond Fund was recently ranked number 1 in the industry in terms of returns by Nairametrics. In the first 8 months of the Fund, we did over 7% return and paid $3 distribution per unit (i.e. $3 on every $100 invested). How have you been able to cope with the challenges of picking the best equities with the prevailing market conditions most especially the sell-offs? Here, we have a very strong risk management framework that we work with, and a highly effective research team, so most of our investment is based on well-researched recommendations. We apply all resources at our disposal alongside the research findings and that helps us stay afloat and beat the market. What do you consider in choosing a particular portfolio? In the mutual funds, we are guided by the Trust Deeds, which

are the instruments based on which the regulators approved the mutual funds. That is the first thing you have to consider because you cannot afford to breach the Trust Deed. We also adhere to investment mandates

and policy statements prepared for our private clients and ensure we meet their expectations. Why should investors choose United Capital Asset Management Ltd over others? United Capital is a well-respected institution that has a rich history and strong track record in the Nigerian Capital market. We have stood the test of time and our clients continue to trust us to manage their funds efficiently. We like to delight our clients with good returns but we also place a premium on safety of their funds. My predecessor is now a Commissioner for Education in Ogun state, which suffice to say that we churn out quality professionals here. We have a good framework and a robust internal control system which makes it almost impossible to perpetuate fraud. Last year, we won the Pearl Award for the best company in corporate governance and in four other categories. It was the first time in the 22-year history of the Awards that a single company would win in all the 5 categories. The Pearl Awards was designed to encourage excellence amongst listed companies on the Nigerian Stock Exchange. Conclusively, we have a good board and management and a great framework which makes us stand out amongst our peers.

Looking at the H2, do you see your Asset Management having one of the highest returns in H2? We can only improve, one of the things I do is to improve continuously. I have been here for 14 months and every month, we do better than the preceding month, and we keep striving to do better. In the next six months, we will do better than we did in H1 irrespective of the challenges. One key risk that every investor is concerned about relates to political uncertainties as we approach the next elections. But for us, we believe every situation presents both challenges and opportunities and we will strive to make the best use of the times we are in. We will always try to beat the market like I said because we have a strong research team and a framework that enables perform effectively in spite of the difficult economic terrain. Are there any plans of launching a new fund in the market? Yes, depending on what we see in the market, we are going to deepen what we currently have, and strive to be among the top 3 in the next 3 to 4 years. The mutual funds are largely for the retail investors so one has to go beyond direct marketing. We will

employ technology solutions and different marketing strategies to improve our visibility. With technology taking shape in different forms lately, are there any plans to bring up innovations with technology in the nearest future? We currently have a business software which is working perfectly, and we have our online platform called Invest Now which is linked to the software and enables investors carry out trades at their own convenience with their internet-enabled devices. In fact, for most of our products, investors can set up recurring payments that fund their investment accounts on a regular basis which helps them to be disciplined in investing. Can we have a general fiveyear forecast on the performance of the funds under your management? We are working hard and we will get to the top in terms of the funds under management. A company like ours ensures the safety of investment and long term returns on investments. We have a lot of retired customers who do not look at their returns, but they focus primarily on the safety of their investments as they want to sleep well at night knowing that their funds are safe.

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Monday 03 September 2018

Heightened fintech funding raises inclusion hopes ABDULLATEEF ENIOLA-GIWA

n recent weeks a total of over N6 billion inflow to Nigerian Fintech startups has ignited hope and the belief that the 80 percent financial inclusion goal of the Central Bank of Nigeria is not far fetched. The recent funding of credit startup Mines.io to tune of about N3.96 billion, Paystack of over N2.4 billion and RecyclePoints impressive performance in a competition to spur financial inclusion innovation in Nairobi has been a step in the right direction with a positive ripple effect on financial inclusion in the country. On the condition of anonymity, a venture capital expert explains that “the funding rounds and good performance will boost investors apathy in the Nigerian fintech market and this will lead to the emergence of more startups who will look to tackle the problems of financial inclusion in the rural areas as there is an abundance of opportunity in that area.” “If more credible fintech companies present enviable solutions to financial inclusion problems, they will attract funding and this race of the CBN to meet its 80 percent target will be a lot easier and realisable” She added. Skepticism of attaining 80 percent financial inclusion has surfaced from time to time but the Federal Government through its apex bank has shown resilience and the political will to avoid falling short of including upward of 40 million unbanked Nigerians into

the financial net by 2020. In a recent tweet the Government of Nigeria reiterated the functions and benefits of the Shared Agent Network Expansion Facility (SANEF) and the unrelenting energy from CBN to meet its target. “These SANEF agents will broaden financial inclusion in Nigeria, introducing 40 million low income and undeserved Nigerians to digital financial products like savings accounts, micro loans and insurance pensions.” the tweet stated on Thursday. Emerging markets credit startup Mines.io closed a $13 million Series A round led by The Rise Fund and 10 other private equity players, including Velocity Capital which further broadens the outlook of financial inclusion in the country. Mines provides business to consumer (B2C) “credit-as-a-service”

products and with the use of USSD, credit starting from N5,000 will be available to consumers with no documentation and directly from a mobile device. A close source involved in the funding process revealed the measures to ascertain the credit worthiness in order to limit the risk of giving credit. “There are applications that run checks on the consumer recharge history and other vital details provided you have a BVN. This is to ensure credit worthiness and hedge the company from risk of non payment.” Paystack, the Nigerian payments company also raised N2.4 billion series A funding round from local and international investors which follows after the news that fintech start-up has recently built a payment gateway integration for Shopify. Led by co-founders Shola

Akinlade and Ezra Olubi, the Paystack team will use the investment to build out its engineering team in Lagos, as well grow its sales and marketing operations, to accelerate product development and customer onboarding. RecyclePoints won N9 million at the 2018 Zambezi Prize for innovation in financial inclusion while South Africa’s Wala was named the winner of the grand prize taking home N30 million. The announcement came during the Open Mic Africa Summit in Nairobi on August 29th, 2018. The Summit, featuring cohortbuilding, panel discussions, and MIT hackathon exercises, culminated in the announcement of Wala as the N30 million grand prize winner. Tulaa (Kenya) and RecyclePoints (Nigeria) each won N9 million as runners-up. The potential fee structure of fintechs when they branch out to banking the unbanked will be tolerable to t as the commercial bank and the proposed ease of access to credit which has been said to be a major value added service to ensure the government meet financial inclusion targets will be a step in the right direction for the country. Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs which includes; transactions, payments, savings, credit and insurance which will be delivered in a responsible and sustainable way, also access to a transaction account is cited as a

first step toward broader financial inclusion since it allows people to store, send and receive money. Globally, about 1.7 billion adults remain unbanked, yet two-thirds of them own a mobile phone that could help them access financial services, according to the Global Findex Data. It concludes that digital technology could take advantage of existing cash transactions to bring people into the financial system. Global Findex database report admitted that there are other opportunities to increase account ownership and use through digital payments as more than 200 million unbanked adults who work in the private sector are paid in cash only, as are more than 200 million who receive agricultural payments. In 2011, just 30 percent of Nigerians who are 15 years and above had an account with a financial institution; however there was an improvement with 44 percent in 2014, while in 2017 it falls to 40 percent. According to the data, 51 percent of male adults in Africa’s largest economy had bank accounts in 2017 compared to the 27 percent recorded for female. This signified that the Nigerian male adult were 24 percent more financially included than the female. Meanwhile, the 24 percent reported in 2017 was 4 percentage points wider than the 20 percent recorded in 2014 when the total male with account was at 54 percent while female was at 34 percent. New insights and approaches are therefore needed to close this gender gap.

Diamond Bank disburses N1bn under cash flow-based SME lending scheme ODINAKA ANUDU

iamond Bank Plc announced the disbursement of over N1 billion to the micro, small and medium enterprises (MSMEs) under the cash flow-based lending scheme. Launched in January 2017 in partnership with the Women’s World Banking (WWB), the scheme features the Cash Flow-based MSME Lending Methodology, which has a strategic focus on cashflow, net asset capacity, character and business proficiency of MSMEs as a means of determining their

eligibility to access credit. Commenting on the remarkable achievement, Uzoma Dozie, CEO, Diamond Bank Plc said, “This milestone is a demonstration of our resolve to develop innovative ways of advancing financial inclusion in Nigeria and a signal to many more successes to come as we push through our technology-driven retail-focused strategy, designed to position Diamond Bank as the most profitable and fastest growing retail bank franchise in Nigeria by the year 2020.” Under the lending scheme, the bank was able to disburse N267 million during the pilot phase,

while it disbursed N750 million between June and August 2018. Remarkably, all the loans disbursed under the scheme to the 550 small businesses are performing despite the recipients of the facilities being first-time borrowers. “We are confident that the future of retail banking belongs to banks with disruptive business models and solutions that deliver superior customer experience through strategic alliances, as well as create life-style-focused products, processes and channels. We pride our financial inclusion strategy as the most robust and customer-centric in the Nigerian

banking industry and will achieve more milestones through databased initiatives that are simply, Beyond Banking,” Dozie said. Diamond Bank Plc is Nigeria’s lead driver of financial inclusion, providing enhanced customer experience through innovation and technology. Regarded as supporter of MSMEs in terms of lending, capacity building, business seminars and workshops, the bank’s mobile banking app—Diamond Mobile— currently has over three million active subscribers on its platform. Diamond Bank has over the years leveraged its underlying resilience to grow its

asset base and to retain its key business relationships. It has also played a leading role in partnering with domestic and international bodies such as The Gates Foundation, MTN, Medical Credit Fund (MCF), and Entrepreneur Development Centre (EDC), among others, to create easy access to financial services for the unbanked, a statement by the bank said. The bank has cultivated banking relationships with well-known international banks, allowing it to provide a range of banking services to suit the business needs of our clients, the statement added.

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How Ekemeriere makes money from quality made-in-Nigeria brands with N10, 000, which was spent on creating the online platform. The young entrepreneur says his business has grown tremendously since starting as Madinna.com has been able to partner with top brands in the industry and also built trust with their customers. “We have grown tremendously since starting in 2016. We have been able to partner with top brands and also built trust in locally made products with potential customers,” Ewomazino says. He tells Start-Up-Digest that the country’s huge infrastructural gaps remain the major challenge confronting the business. He adds that it has increased the business cost of operations as delivery hours have continued to be longer owing to bad road infrastructures. Similarly, he says that high preference for foreign goods and lack of trust in Nigeria products are also key challenges facing his business. He notes that despite that things are fast changing in

BUNMI BAILEY

womazino Ekemeriere is a young vibrant Nigerian entrepreneur. He is the brain b e h i n d Ma d i n n a . com, a start-up online retail store that sells made-in-Nigeria products. Ewomazino co-founded the online retail store with Ebuka Onah and Tosin Fashipe. He and other cofounders w e re i n s p i re d t o e s t a b l i s h Madinna.com in 2016 to promote made-in-Nigeria products and tap into opportunities in that segment, creating easy access to these products globally. “We focus on top quality made-in-Nigeria products with the aim of promoting their use by providing easy access to these products via the internet as well as reducing dependence on imported goods,” he says. The undergraduate of the National Open University says that the business was established

Ewomazino Ekemeriere

Union Bank partners TEDxLagos to unveil ‘next100 fund idea’ for start-ups ANTHONIA OBOKOH

nion Bank has partnered with TEDxLagos to unveil next100 fund idea. The bank has also reiterated its continued commitment to innovation, creativity and support for Nigeria’s start-ups. According to a press statement made available to BusinessDay, the ‘next100 Fund idea’ is an initiative to galvanise the private sector and Nigerian citizens at large towards the achievement of the Sustainable Development Goals (SDGs) that would place the country on an accelerated path to growth and prosperity. “Union Bank is pleased to be a principal partner of this year’s TEDxLagos event, widely recognised as an initiative synonymous with sharing and inspiring great ideas,” Emeka Emuwa, chief executive officer (CEO) of Union Bank, said.

“We identified the TEDxLagos initiative as one that will amplify our efforts to encourage private sector participation for the achievement of Nigeria’s economic and social advancement. “We are excited by the innovative ideas and potential partnerships that emerged as a result of today’s sessions,” Emuwa said. Emuwa further said that the bank continues to focus on maintaining its leading position as a socially driven and responsible corporate organisation. The bank recently released the second edition of its Citizenship, Sustainability and Innovation (CSI) report, a compendium which outlines the impact Union Bank has made within its host communities and its commitment to its customers and other stakeholders. It also emphasises the bank’s vision to inspire a future where private sector participants are committed drivers of the nation’s sustainable development.

terms of quality and standards in made-in-Nigeria products, people still believe that anything produced in the country are of low quality. He calls on the government to provide grants for start-up businesses. The undergraduate states that the business has be en changing the perception of Nigeria through the quality products on its online store. He stresses that Nigerians are gradually embracing ecommerce, stating that many citizens now carry out transactions using cash transfer options on delivery. According to him, the business will continue to increase the number of made-in-Nigeria brands on its platform and planning to establish pick-up hubs across the country for effective service delivery. When asked the advice he will give other younger entrepreneurs, he says, “Be patient, work smart, be consistent and always believe in yourself.”

25 entrepreneurs get grants from Life Beer …Train moves to Anambra

total of 25 entrepreneurs received cheques worth N300, 000 each to grow their respective businesses during the Life Progress Booster event which held in Enugu on Sunday evening. The programme, which is an initiative of Life Lager Beer, a product of Nigerian Breweries, is part of the brand’s commitment to supporting small and medium scale entrepreneurs in South-East Nigeria. The beneficiaries—11 women and 14 men—were drawn from applicants interviewed and selected from Ebonyi and Enugu states respectively after they were able to convince the panel of judges on how they intended to expand their businesses with the money. Emmanuel Agu, portfolio manager, Mainstream Lager and Stout Brands, Nigerian Breweries Plc, in his address at the event stated that Life Continental Beer is committed to the progress of the consumers of the brand in the South Eastern part of Nigeria where it holds sway as market leader. “This initiative was established with the aim of encouraging the entrepreneurial spirit of the Igbo people in South Eastern Nigeria. Enugu and Ebonyi are producing the first 25 beneficiaries and the first set of entrepreneurs we are supporting this year. The Life Progress Booster is open to both male and female small and medium

scale business owners,” Agu said. Beneficiaries at the event expressed gratitude and joy. Okoro Damien Chukwu thanked Nigerian Breweries profusely for the initiative. “I am so happy for this gesture and honestly wasn’t expecting such support from a beer company. I wouldn’t have believed a company could give out money without telling you to participate in a ‘buy and win’ promotion. This is a pleasant surprise. No collateral, no interest, and no refund… I am so happy. Thank you.” In her own remarks another beneficiary, Okwari Anne E, said, “I am so happy today. A friend whose uncle participated in the 2017 edition encouraged me to apply for the grant. I applied, got invited and defended my business idea. And here I am today with a cheque of N300, 000 and with no strings attached. Thank you Life Beer.” Residents of Anambra should expect the train to berth on the commercial state on Sunday, 9th of September 2018 as Life Progress Booster continues to empower small-scale businesses in the community. To be part of the initiative, interested participants only need to drop their business proposals at designated outlets or visit lifenigeria.com to send in their entries. Shortlisted candidates will then proceed to pitch their existing businesses to a team of business experts

and judges including chief technologist, Enugu State University, Ferdinand Ozoani; a member of Customary Court Enugu, Michael Ndubuisi, and CEO, Four Seasons Bar and Restaurants, Onitsha, Martins Ezigbo. Successful candidates across the catchment zones get to receive grants to support their businesses. Life Progress Booster, which has supported over 600 beneficiaries, is now in its Fourth Season and since 2014, the brand has consistently executed these programmes in a bid to bond with its consumers, improve the people’s economic fortunes, boost local businesses and the general economic wellbeing of the communities in South East Nigeria.

Start-Up Digest Team ODINAKA ANUDU Editor

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Remilekun Lawal: Revolutionalising Nigeria’s beauty industry JOSEPHINE OKOJIE

urrently, in the world of beauty, there is a huge interest in products that celebrate the essence of natural resources and ingredients. Remilekun Lawal, founder of Brown Skin Girl (BSG), is gradually changing the face of Nigeria’s beauty industry through the creation of fabulous natural, proudly Nigerian skin products. Remilekun went into the business because she wanted to have a safe skin care alternative for people who had skin damage resulting from chemical products they used. With just N10,000, she started the business in 2016, mixing shea butter and coconut oil with her body cream. After mixing them together, a friend would always pick it up from her, a situation that went on and on. After a while, she saw a business potential in it and subsequently went for an online training to learn how to combine essential oils together with herbs for lotion. Remilekun has had four people work for her and conducts trainings. “I import some raw materials. Most of the essential oils I use are not grown in Nigeria, like olive, rose flower oil, sweet almond oil, eucalyptus oil and the likes. For fruits extracts, I get some here and still have to import some because they have to be grown organically. I also get my milk locally from a dairy farm. I shop online for some of my products. I equally source things that can be gotten locally like shea butter and coconut oil,”

Remilekun Lawal

she states. She says the dollar crunch in Nigeria in 2016 impacted her firm negatively. In terms of challenges, she explains that packaging is a big challenge in the cosmetics industry at the moment. “I hardly find good packaging materials that are up to standards

for my products. In developed countries there are specifications for beauty care packaging materials, but you do not find this in Nigeria. The manufacturers don’t follow specification for cosmetics packaging but produce same packaging for all products,” she says. “Another major problem is

How start-ups bridge yawning gap in education sector ODINAKA ANUDU

tart-ups are bridging the yawning gap in the Nigerian education system, making money from it. Godwin Benson, a first-class graduate of Systems Engineering from the University of Lagos, founded Tuteria to help Nigerian students find teachers near them. Tuteria manually assesses teachers and also interviews them to ensure they are suitable for the subjects or courses they claim to teach. Tuteria does not just connect teachers to students for traditional courses or subjects, but also for areas such as beauty and lifestyle, cooking, music and instruments, among others. Prepclass provides home tutors to Lagos residents, offering test-taking strategies and targeted examination practice for students. In a city of over 20 million people, where most parents are busy from morning till evening, Prepclass is filling up the gap of

providing tutors to pupils and students at their convenient time. “At Prepclass, we have access to more than 1000 tutors in different specialities and locations across Lagos alone. This makes it possible for us to match your ward with the very best of the best tutors without any stress to you. We try to work with your budget and make the entire process as stress free and flexible as possible,” the firm says on its website. T h e re i s a l s o Tu t o r. N G, launched in 2014, with a view to providing tools for engaging and tutoring learners in Nigeria. Through the platform, teachers and trainers can sell their courses at a fee, to whoever is interested. The platform tutors students on English and French languages, public speaking, as well as on entrepreneurship courses such as bead making, cooking and mobile app development, among others. At the launch of the platform in 2014, Peter Ogedengbe, cofounder of Tutor.NG, said the platform would solve the problem

of learning beyond the classrooms and create employment for smart and versatile graduates. More so, EduRecords is one of the platforms changing the way the business of education is done. It was founded to track the performance of students and teachers. EduRecords keeps records of students and teachers against loss, damage or alteration; monitors children or school affairs from any part of the world, and provides performance analysis on children. The platform checks continuous decline in students’ performances as well as decline in enrolment rates, thus enabling the parents to learn the performances of their children. Launched in September 2016, the platform has Ajayi Lawrence as its chairman and Olatunde Ogunlade as the managing director. The managing director Ogunlade believes that with a population of about 200 million people in Nigeria, EduRecords is sure of transforming the lives of the people within the age bracket the firm covers.

the huge desire for bleaching products among Nigerians. Everybody wants a product that will just bleach them quickly without considering the adverse effect of it. So it is quite difficult to convince people about organic and natural skin care products because it takes time before you see the effects on your skin, but people always want

it very fast,” she adds. She says poor power supply is also a major challenge, which has contributed to surging production cost, adding that lack of access to funds is also a major hiccup. She recognises the role of the social media, disclosing that it has had a positive impact on her business. “I started out by creating a BBM channel where I posted all my products and skin care routines on the channel and people started requesting my products through the channel. Despite that it was expensive then because of the FX volatility, people were still buying my products. My business has grown in the recession and it is still growing,” she discloses. “Now I take some of my products to exhibitions and people still buy. I have customers that have been with me since starting till now,” she says. Like other entrepreneurs, Remilekun says government must create an enabling environment for start-ups to survive. “We need key infrastructures such as power to survive. Finance is also very key. Start-ups need a lot of incentives and finance at single-digit interest rate. The government should adjust some of its importation policy to allow importers bring in products that cannot be produced in the country. “The government must also ensure that standard products are imported into the country and not substandard. The government also has to look at some of the oils that are used by cosmetics industry to be grown in the country,” she says, while calling for tax holidays for start-ups .”

Solar Power: Saraki to train, equip 700 youths SIKIRAT SHEHU, Ilorin

bubakar Bukola Saraki, president of the Senate, has offered to bankroll the training of 700 youths in Kwara State on solar power installation and maintenance. The beneficiaries would be trained under ABS MACO Solar Training Programme as part of measures to make them selfreliant and reduce unemployment amongst the youths. Saraki disclosed this while addressing the youths undergoing the training programme at his ABS Mandate Constituency Office in Ilorin. Speaking through Musa Abdullahi, director general, ABS Mandate Constituency Office, the Senate president disclosed that the beneficiaries would be provided with tools kit after the training. He said his major priority as a leader was to build the capacity of youths across the state to ensure that they were positioned for future challenges. Saraki expressed worry over the rate of unemployment prevalent

among the youth in the society and assured that efforts would be geared towards creating job opportunities for them. He recalled that his office had facilitated employment opportunities for many Kwarans in the bid to curb restiveness. The senate president, who emphasised the importance of youths in the society, urged them to be focused and shun all vices that could jeopardise their future. Also speaking, Olayinka Ibrahim Otukoko, director, Project and Empowerment at ABS constituency office, said the office had facilitated the installation of 4,000 solar power in Kwara Central Senatorial District. He stated that the training of the youths, which the office undertook, was to build the capacity of the youths in the area of renewable energy. “The meeting we have just concluded here is a meeting between the beneficiaries of empowerment and youth capacity building programme that is centred around solar energy system as a renewable energy system that has high value in the market now.

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When companies want to innovate, but investors won’t let them JULIAN BIRKINSHAW

usinesses understand the power of digital innovations to reshape industries and markets. Yet time and again they have struggled to innovate with new and disruptive technologies. Some argue that an incumbent’s failure has little to do with the newness or complexity of the technology. Rather, it is often their acute focus on the needs of the most important customers that places stringent limits on what they can and cannot pursue. Our research implicates another important stakeholder, the firm’s investors, who may keep businesses tethered to existing technologies. INVESTORS AFFECT INNOVATION INVESTMENTS When investors value firms for their growth potential rather than current profits

— as is the case with startups and tech giants — they are not only more likely to invest in digital innovation, but also obtain higher market valuations. In contrast, when investors expect current-period profits — such as from industry incum-

bents — they are not only less likely to invest in digital innovations, but obtain significantly lower market valuations when they try to become digital leaders. We started by modeling companies’ trajectory, based on their performance from

1984 to 1996, and breaking down those estimates based on how much of the company’s valuation was based on current profits vs. their potential for future growth. We found that firms that were valued for future growth had the greatest propensity

for digital innovation while the high-profit firms had the lowest. We measured digital innovation based on the number of digital patents the firm had secured from 1998 to 2010. Finally, we examined the consequences of digital innovation for firms that derived their market valuations largely based on current profitability. Whereas the digital leaders in the high-growth group were rewarded for their digital investment by the stock market with higher valuations, the digital leaders among the high-profit group were punished with much lower ones. In effect, the financial markets were heavily discounting the digital ventures of these firms. SUCCEEDING DESPITE INVESTOR CONSTRAINTS Notwithstanding the allocative efficiency of capital markets, the implications for firms that are valued for

growth is that managers of these firms must recognize the opportunity of digital innovation and create capabilities to exploit this opportunity. Conversely, there are risks to digital innovation for firms that are valued more for their current period fundamentals rather than for future growth prospects.

(Anandhi Bharadwaj is a professor at Emory University. Deepa Mani is an associate professor and the executive director of the Srini Raju Center for Technology and the Networked Economy at the Indian School of Business, Hyderabad. Anand Nandkumar is an associate professor and academic director for the Centre for Innovation and Entrepreneurship at the Indian School of Business.)

How to hand off an innovation project JOE BROWN

ou can have the right portfolio of investments, the right metrics and governance, the right stage-gate development process and the right talent on the right teams — but if you don’t design the right handoffs between your teams, all of that planning falls apart. How do you prevent a drop off? By tailoring each handoff to the teams involved. In many companies, innovation teams tend to fall into three buckets: Explorers, Scalers and Optimizers. Optimizers are skilled at enhancing and perfecting the existing business. Explorers are skilled at uncovering

new opportunities in the face of ambiguity. Scalers iteratively experiment and tweak new ideas until they find a product-market fit. There are four basic models for the handoff, and dozens of hybrids. THE OWNER’S MANUAL. This is both the most common handoff and the most difficult to pull off. After months — sometimes years — of work, an innovation team extensively documents their work in hundreds of pages of slides, spreadsheets and other files, and then hands all of that over to a new team to execute. When was the last time you read an Owner’s Manual? Exactly. THE ARCHITECT. The best

way to avoid a drop off is to eliminate the handoff. In this model, the future owner of the work embeds in the Explorer and Scaler teams. That person then acts as a connector,

knowing all of the avenues already explored and all of the learning gained. THE AMBASSADORS. Similar to the previous model, in this model, members of the Explorer, Scaler and

Optimizer teams remain embedded in each phase of the project to ensure that no learning is lost and that each phase of work is designed to feed smoothly into the next.

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THE HIVE. In this model, multidisciplinary teams tackle challenges across the initiative’s life cycle. Hive teams also have representatives from functions that might normally act as corporate antibodies, like legal, finance, HR, or compliance. Outside of the Owner’s Manual, each of the other handoff models brings implementation teams along throughout the innovation process in order to seamlessly transfer knowledge. Doing this makes the handoff less like drinking from a fire hose and more like a series of steady sips.

(Joe Brown is a portfolio director at IDEO.)

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Lagos to engage 10 bakeries in mass production of coconut bread JOSHUA BASSEY

agos State Governor Akinwunmi Ambode on Sunday said the state would engage 10 major bakeries to ensure the mass production of coconut bread. The governor made the disclosure during the World Coconut Day and seventh Lagos Heritage Festival, tagged “AGUNKFEST 2018 in Badagry, Lagos. The News Agency of Nigeria reports that the theme of the festival is “Harnessing Coconut Production for Economic Empowerment and Tourism Development in Lagos State”. Ambode, represented by Babatunde Hunpe, his special adviser on Environment, said that this was to ensure more market avenue for coconut utilisation. According to him, Coconut tree has been identified as the most useful single tree in the world in terms of versatility, product utilisation and longevity. “Therefore, taking coconut to another level with this type of programme is long overdue. Nigeria is ranked 18 in the world as a coconut producing country and Lagos State is contributing 70 percent of the total

production. “Our government places high premium on sustainable food production which is the impetus driving the various activities in the agricultural sector with a renewed commitment. “A major step taken towards achieving this goal is the establishment of the Lagos State Coconut Development Authority (LASCODA) to uphold the state’s comparative advantage in coconut production,” he said. The governor said that the state had distributed coconut processing equipment in 12 local governments and local council development areas. “We have also embarked on the rehabilitation of the coconut belt, massive production of improved coconut seedlings, capacity building and empowerment of coconut value chain actors. “We have channelled a lot of resources into creating an enduring infrastructural architecture that would ensure that the state’s tourism potential are fully harness for all round economic growth and development. “We will continue to create the enabling envi-

ronment for investment in coconut production, commercialisation and utilisation,” he said. Commissioner for agriculture, Lagos State, Toyin Suarau, said the state knew the importance of coconut to it’s economy, adding that it was called miracle crop. Suarau said that the crop had generated job opportunity for the youths, saying the occasion had presented a unique opportunity to create awareness on the array of invaluable economic, health and environmental benefits that coconut offers as well as draw global attention to Badagry division. The commissioner was represented at the event by the Pernament Secretary of the ministry, Olayiwola Onasanya. Also, Tojinu Seton, the Coordinator, AGUNKFEST 2018, said the festival started in 2009, adding that it was the first of its kind in Nigeria. Seton said that the festival was geared towards creating awareness among the governments and people of Nigeria, especially Lagos State toward the invaluable economic import, health and environmental benefits that coconut offers.

Monday 03 September 2018

Stop picketing MPNU locations, FG urges STEPHEN ONYEKWELU

n consultation with representatives of the Security Personnel and Leadership of Petroleum and Natural Gas Association of Nigeria (PENGASSAN), represented by Mobil Producing Nigeria Unlimited (MPNU), over picketing MPNU locations by former security personnel, the Federal Ministry of Labour and Employment has resolved thus: That all acts of picketing, harassment, blockade of company facilities, playing of loud music, defacing of company facilities or intimation of personnel and all acts connected to the above be discontinued immediately. The PENGASSAN and the leadership of the security personal should confirm within 48 hours of this meeting (by Wednesday, August 29, 2018) that this directive has been fully complied with, before further implementation of other

terms of this agreement. That the separation of the security personnel be upheld and full, final settlement of the dispute between MPN and the separated security personnel and for the purpose of industrial harmony, the separation benefits communicated under MPN’s 13 July, 2018 letter to the 508 security personnel active as of the date of the letter shall be enhanced as follows: Payment of the equivalent of one month’s salary (before any adjustments), for the period of separation and negotiations up to the end of Augsust 2018 to be paid alongside the separation benefits. That monthly salaries of the separated security in the July 13, 2018 letter be increased by 10 percent for the purpose of calculating and paying their individual separating benefits under this settlement, without retroactive application. In addition, the Pension Transfer Payments

for the Separated security personnel be calculated using the MPN’s policy on Pension transfer factors, will ensure the delivery 50 percent cash payment of accrued pensions as part of the separation benefits, while the balance should be transferred to their respective individual Retirement Savings Account. In an earlier communication the company, the company had agreed to pay all other elements according to the Company End Service benefits guidelines, which are: Gratuity per Company policy for employees, setting in allowance – 1.75MBS to all separated personnel, notice pay1MBS to all separated personnel, notice pay- 1 MBS to all separated personnel and ex-gratia payment – 1 MBS to all separated personnel. In conclusion, all statutory and authorised deductions by the former Security Personnel can be effected by MPNU.

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Ebonyi earmarks N52m for Sporting activities

bonyi State Executive Council has approved N52 million to execute sporting activities in the state for the year 2018. In a joint press conference after the Executive Council, Commissioner for Sports and Youth Development, Charles Akpuenika, made this known while briefing journalists on the activities of his ministry. Akpuenika noted that three sports competitions had been earmarked to take place in the state before the end of the year, including the David Umahi Tertiary Institutions Games (DUMTIGA) 2018 for the ten tertiary institutions in the state. He revealed that N500,000 had been disbursed to each of the participating institutions to enable them prepare and take part in the games. The commissioner named

other competitions to hold within the year to include the School Sports Competitions, which will hold in October and the Divine Mandate Football Competition for all the 171 wards in the state. He emphasised that the state Government was intensifying efforts to birth a new Football Club for the state to gainfully utilise the talents that would be discovered through these series of sporting activities lined up in the state. In the same vein, the commissioner for power, Emmanuel Uguru, also informed journalists of the Executive Council’s review of the Contract sum for the installation of Solar Power Plants at some strategic location across the State from the initial N160m to N207 million, which contracts have also been approved to be awarded at the meeting.

FG approves new police college, academy in Anambra EMMANUEL NDUKUBA, Awka

nambra State-born billionaire and medical director, Pain Institute Las Vegas, USA, Godwin Maduka, has got an approval from the Federal Government for the establishment of Police College and Police Academy in his community, Umuchukwu, Orumba South Local Government Area of the state. Johnson Imah, Police Service Commission consultant, made this disclosure while inspecting the 50 hectares of land, site for the institutions, saying the projects were first of its kind to be undertaken by an individual in Africa. Imah said it was only in South Africa and Jos, Plateau State, that such edifice exist, adding that the Umuchukwu Police College and Academy would be second

to none when completed. According to Imah, Maduka, who is a professor of surgery and pain management, had taken a bold step that will expose youths to opportunities abound in the Police Force, thereby reducing unemployment in the country. Speaking also, a Federal House of Representative aspirant for Nnewi North, Nnewi South and Ekwusigo Federal Constituency, Humphrey Nsofor, applauded Maduka for making the state a fast growing economy in the country. Nsofor also commended the Federal Government for approving the project and Governor Willie Obiano for providing security network and other enablement, which according to him, attracted people like Maduka to invest at home.

L-R: Bolanle Meshida, company secretary to the fund manager of FSDH Asset Management Limited; Tokunbo Ajayi, chairman of the occasion/MD, UBA Trustees Limited; Mayowa Ogunwemimo, MD, FSDH Asset Management Limited/fund manager of UPDC Real Estate Investment Trust, and Fola Aiyesimoju, CEO, UACN Property Development Company plc, at the UPDC REIT 4th annual general meeting in Lagos. Pic by Pius Okeosisi

Foreign airlines increase market share, as domestic passenger traffic drop IFEOMA OKEKE

arket share of foreign airlines operating in Nigeria has continued to increase over absence of code-share agreements and the government’s approval on multiple destinations, BusinessDay’s findings show. This is as passenger traffic on domestic routes in the country dropped by over 30 percent in the first half of 2018, compared with same period last year. Records on passenger movement made available by the Federal Airports Authority of Nigeria (FAAN) and the Nigerian Civil Aviation Authority (NCAA) also confirmed the low passenger traffic in 2018, compared with the previous year. For example, in the first

Missing child at Christ Embassy: Edo evacuates children from God’s Own Orphanage

do State government has evacuated 15 children from God’s Own Orphanage in Benin City, pending conclusion of ongoing investigation of the case of a child that was allegedly stolen at Christ Embassy, Oregun, Lagos, and found at the orphanage in Benin City. The four-year-old, identified as Elo Ogidi, was said to have been stolen during a church service at Christ Embassy in Oregun, in July and was found last Friday in God’s Own Orphanage when policemen raided the facility after a tip-off. Speaking after sealing off the centre, located at 25 Davies Street, off 2nd Dr. Garrick Layout, off Siluko Road, Benin City, Magdalene Ohenhen, commissioner for

women affairs and social development, noted that management of the centre did not follow due process in admitting Elo into the home. During the operation, the commissioner and her team also discovered that the orphanage had three other children who were not documented with the ministry as required by law. Ohenhen said, “There are rules and regulations guiding the operations of orphanages, but the management of God’s Own Orphanage did not abide by these rules, which is why we have shut it. “The procedure is that before you accept a child into an orphanage in the state, the operator of the home must inform the state government through the state’s Ministry of Women Affairs and Social

Development.” According to Ohenhen, God’s Own Orphanage “has three other children who were admitted into the home without the knowledge of the state government.” Noting that the owner of God’s Own Orphanage didn’t inform government before admitting Elo, she said, “the home did not inform us about the child who was reported missing in a church in Lagos, before accommodating the child in the home.” She noted that the children in the orphanage numbering about 15 are being moved to a safer centre, where they will be under the custody of the Edo State Government, pending when investigation on the activities of the home is concluded.

six months of 2017, the Murtala Muhammed International Airport (MMIA), the busiest airport in the country, recorded 2,644,034 passengers on domestic flights. But in the same period in 2018, the airport recorded 1,803,317 passengers. Also, at the Nnamdi Azikiwe International Airport, Abuja, FAAN recorded 1,907,682 in the first six months of 2017, higher that the 1,702,020 the agency reported in same period in 2018. Code share is an agreement between two or more airlines in which airlines that have no aircraft or seats available at a scheduled place and time, pass their waiting scheduled passengers to partner airlines with aircraft and seats available. Under the ‘code share’ agreement, which is com-

mon in the international aviation sector, the originating airline and the supporting airline agree on a formula for sharing the ticket cost. In a recent data released by African Aviation Services Limited, foreign airlines operate over 300 frequencies weekly into and out of Nigeria. This is showing an increase of about 22 percent from about 220 weekly frequencies foreign airlines operated two years ago. “It is unfortunate for us to open our doors to everyone. Air France, Lufthansa, British Airways, Emirates and Ethiopian Airline fly from Lagos, Abuja and Port Harcourt. Ethiopian Airline operates in five airports. They are in Enugu, Abuja, Kano, Kaduna and Lagos,” Muneer Bankole, CEO, Medview Airline Limited, told BusinessDay. Bankole explained that although the development

might benefit the passengers, but stressed that the rampage of Nigeria’s airports by foreign airlines was killing the domestic carriers. Ethiopian Airline has the highest entry points into Nigeria, which is five. Ethiopian and ASKY together operate 54 frequencies weekly into Nigeria. British Airways and Virgin Atlantic operate 21 frequencies weekly into Nigeria. The breakdown further shows that African World Airways (AWA) has 49 frequencies per week; Cronos Airlines (proposed); EgypAir with 16; Air France 15; Saudi Arabian Airways 13; Emirates 11; Lufthansa 11; Air Cote d’Ivoire 10; Qatar Air 9, and South African Airways 7. Others are Delta, Royal Air Maroc, RwandAir, Sudan Airways, and Turkish Airways, which enjoy seven frequencies without reciprocity from Nigerian airlines.

Edo oil producing communities hail Obaseki for new focus of EDSOGPADEC

ommunities in the oil-producing local government areas of Edo State, comprising Orhionmwon, IkpobaOkha and Ovia North-East have praised Governor Godwin Obaseki for providing a new direction for the Edo State Oil and Gas Producing Areas Development Commission (EDSOGPADEC), which resulted in the approval of funds for industrialisation and education projects in their communities. The projects include the Edo Modular Refinery in Ikpoba-Okha and the rollout of the Edo Basic Education Transformation Programme (Edo-BEST) in the three local councils. A cross-section of youths in the communities said the rollout of the Edo-BEST programme and the construc-

tion of the modular refinery would set the state and the local governments, in particular, on the path of progress, as it would not only develop human capital but also create an enabling environment for sustainable development. Efosa Osaigbovo, an indigene of Ikpoba-Okha, said the refinery project would breathe a new life on the local government and build the capacity of the people to be able to benefit from their God-given resources. “I am most excited with the governor’s approval because it will bring development to this local government. It will also afford youths the opportunity to develop skills for sustenance,” he said. Ese Oviasuyi, from Ovia North-East, said the investment in the children would go a long way in en-

suring that they were well equipped to face the realities of the 21st Century, as they would be able to compete with their mates from any part of the world. “The use of technology in our classrooms will change the lives of the children forever. This is why I applaud the decision of the governor in approving the full rollout. I am certain that everyone from the three local councils that will benefit from this will one day in the future look back and thank Governor Godwin Obaseki for this move.” With the Edo-BEST programme, the state government intends to revolutionise the basic education sub-sector and make it the envy of all, with high premium on continuous capacity building for improved productivity in the classroom.

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Lagos needs laws, education, environment to become liveable city - experts CHUKA UROKO

o upturn or, at least, improve on the recent ranking of Lagos as the third worst city in the world to live in, Akinwunmi Ambode, the state governor, needs to enact new laws, enforce existing relevant ones, come up with child education policy, and create the right environment, experts advise. Quite recently, The Economist Intelligence Unit in this year’s Global Liveability Index, ranked Lagos, which is Nigeria’s commercial capital, as the third worst city to live in the world. Out of 140 world cities, Lagos was ranked 137th. Though this is an improvement, by two steps, on its 139th position in 2017, it is neither here nor there. The parameters considered included general

living conditions, ease of doing business, security, infrastructure, health, education, transportation, economic stability and improvement of these parameters over the years, etc. In 2016, the National Bureau of Statistics (NBS) estimated Lagos population at 12.5 million. It is projected that by 2050, its population will double, which will make it the third largest city in the world, but with less infrastructure than other large cities of the world. Based on the indictors used, cities like Vienna, Austria, which ranked first scored 99.1; Melbourne, Australia, was ranked second scored 98.4; Osaka, Japan, ranked third scored 97.7; Calgary, Canada, ranked fourth scored 97.5, and Sydney, Australia, ranked fifth scoring 97.4. These are the best five liveable cities.

The least liveable cities were Port Moresby, which scored 41.0, Karachi, Pakistan, scored 40.9, Lagos, Nigeria, scored 38.5, Dhaka, Bangladesh, scored 38.0, and Damascus, Syria, scored 30.7. Over the past five years, Lagos has ranked poorly. In 2014, it ranked 138th, in 2015, it netted 137th, in 2016 it had 138th, and in 2017, it was graded 139th. The experts note that based on the indicators that were used, it is yet to be seen any major improvement as rural urban migration has increased significantly which has put more pressure on the available resources such as infrastructure, health, education and social amenities. “The state government has been utterly weak on social law enforcement, and goes out of its way to embark on wrong-headed steps to worsen liveability,” said an

expert who did not want to be named. “Lagos must enforce the law on free and compulsory primary school education in the state. This will rid Lagos State of school age children begging on streets of Lagos. Same for Child Rights Law, which will provide a platform to prosecute and jail any adult exploiting babies whom they carry in order to attract sympathy,” advised the expert in response to an emailed question. To truly make Lagos a liveable city, the present government also needs to enforce laws against street trading, enforce ban on commercial motorcycles and where they are tolerated, riders must wear helmets and must not carry more than one passenger, and according to the expert, the state government should revive and re-energise Fashola’s residency registration.

L-R: Lola Cardoso, chief digital and innovation officer, Union Bank; Toun Tunde-Anjous, director of people, Co-Creation Hub, with Tomisin Kolawole and Eri Morenikeji, the first prize winners at the finals of the Campus Innovation Challenge that held recently in Lagos. Friday.

Monday 03 September 2018

IATA records solid traffic growth, load factor in July IFEOMA OKEKE

nternational Air Transport Association (IATA) has announced healthy global passenger demand for July, with all regions reporting growth. Total revenue passenger kilometres (RPKs) rose 6.2 percent, compared with the same month last year. While this was down from 8.1 percent year-over-year growth in June, it nevertheless marked a solid start to the peak passenger demand season. Monthly capacity (available seat kilometres or ASKs) increased by 5.5 percent and load factor rose 0.6 percentage point to a record high for July of 85.2 percent. “The industry posted another month of solid traffic growth. And the record load factor shows that airlines are becoming even more efficient in terms of deploying capacity to meet demand. However, rising costs - particularly fuel - will likely limit the stimulus we would expect from lower airfares. Therefore, we do expect to see a continued slowing of growth compared to 2017,” Alexandre de Juniac, IATA’s director-general/CEO, said. July international passenger demand rose 5.3 percent compared with July 2017, which was a deceleration compared with the 8.2 percent growth recorded in June. Total capacity climbed 4.7 percent, and load factor edged up half a percentage point to 85 percent. All regions reported growth, led by Asia-Pacific for the first time in three months. African airlines’ July traffic rose 6.8 percent, second highest among the regions. Although this represented a decline from 11 percent growth recorded in June, the seasonally adjusted

trend remains strong. Capacity rose 3.9 percent, and load factor jumped 2.1 percentage points to 76 percent. Higher oil and commodity prices are supporting economies in a number of countries. European carriers posted a 4.4 percent rise in traffic for July compared with a year ago, down from 7.1 percent annual growth in June. On a seasonally adjusted basis, passenger volumes have been tracking sideways for the past three months, reflecting mixed developments on the economic front and possible traffic impacts related to air traffic control strikes across the region. Capacity rose 3.9 percent, and load factor climbed 0.5 percentage point to 89.1 percent, highest among the regions. Middle East carriers had a 4.8 percent increase in demand for July, well down on the 11.2 percent growth recorded for June, although this mainly is attributable to volatility in the data a year ago, rather than any major new developments. The region has been negatively impacted by a number of policy measures over the past 18 months, including the ban on portable electronic devices and travel restrictions. July capacity climbed 6.5 percent compared with a year ago and load factor dropped 1.3 percentage points to 80.3 percent. Domestic travel demand grew by 7.8% year-on-year in July, broadly in line with 8.0 percent growth recorded in June. All markets saw annual increases, with China, India and Russia posting double-digit growth rates. Domestic capacity climbed 6.9 percent, and load factor rose 0.8 percentage point to 85.6 percent.

Former petroleum minister calls for urgent Training export professionals impacted on Q2 growth in non-oil sector diversification of Nigeria’s oil industry IGNATIUS CHUKWU & DAVID EJIOHUO

he need for the Federal Government to diversify Nigeria’s oil industry so as to profit from all aspects of crude oil has been stressed. This is as a one-time minister of petroleum, Odien Ajumogobia, said Nigeria’s crude was sought after around the world because of its low sulphur content. He stressed this need in the week when he spoke with the newsmen at Port Harcourt International Airport Omagwa. This however seems far-fetched in the wake of the decline of assent by President Muhammadu Buhari to the law expected to free the oil industry and attract investments. According to Ajumogobia, it was high time the nation took the diversification project

of the oil and gas industry serious to create more wealth and employment from the crude oil we produce and export. The former minister explained that Nigeria was just an oil producing and exporting nation but not in the oil industry business. “Nigeria as at today is just involved in the oil production and exporting business but not in the oil and gas industry because it has refused to get involved in the processing of the crude oil it produces.” According to Ajumogobia, the crude oil in itself is not useful to anybody until it is processed and the valuables are got from it. “Nigeria today, still export our crude oil with over one hundred derogative or valuables in them and import just the petrol, diesel, kerosene

and aviation fuel and forfeit or dash out the remaining derogative to the nation we export our oil for nothing.” One of the things in our crude oil he disclosed is sulphur; the Nigerian crude oil has low sulphur in it and in high demand all over the world, but we dash them out because we do not process our crude. Diversification, he noted, takes a long time and could be expensive but very profitable in terms of revenue generation and provision of the much needed employment opportunities in the nation. “No matter what it takes, it is the high time Nigeria gets involved in the diversification of her economy and the oil industry in particular. I have always advocated for this and it is my stand always even now,” he said.

HARRISON EDEH, Abuja

he Nigerian Export Promotion Council (NEPC) on Thursday said efforts to train export professionals in various export businesses had impacted on the recorded 2.05% non-oil sector growth in the second quarter, according to 2018 figure released by the National Bureau of Statistics (NBS). Olusegun Awolowo, executive director of NEPC, at the graduation ceremony of the council’s ‘Zero to export training programme’ of export professionals on Thursday in Abuja, said training exporters to have requisite skills for their businesses was key in driving growth in non-oil export business. He said, “It is important to

look at export as a business, and for those people going into exports. This is why the ‘zero to export programme’ is arranged for exporters at NEPC to bring up their capacity and for them to know the nitty-gritty of export when they compete globally.” Represented by Sidi Aliu, the director of policy and strategy in the Council, Awolowo said the council would work more closely with the graduands to drive its zero oil plan initiative, which is chaired by the Jigawa State Governor Badaru Abubakar. Awolowo said the programme was part of strategy to grow non-oil exports from $1.204 billion in 2016, to $8 billion in 2019 and eventually $25 billion in 2025. He remarked, “The zero oil plan initiative of the council is

a step to practically and realistically diversify the Nigerian economy. You must ensure you key into our plan by updating your skills and working closely with our council.” Also, speaking the consultant to the project, Kola Awe, said the aim of training the exporters was to ensure the hurdles in the non-oil export business was properly addressed, and to ensure the export professionals compete fairly in global exports markets. ”The NEPC working with us and had made about $400 million in export record receipts. The NEPC has been putting this training together, the various meetings of the cooperatives of export professionals and they track all transactions in non-oil exports through its data bank.

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BUSINESS DAY

Counting the gains of Britain, Germany leaders’ visit TONY AILEMEN, Abuja

he recent visit of both the British Prime Minister Theresa May and German Chancellor Angela Merkel, may have opened several new investment opportunities for Nigerian local businessmen, especially in the micro, small and medium scale segment. Among the several benefits promised by the British government, in what has been described as a week of harvest for Nigeria, is the promise of partnership with Nigeria businessmen in a new investment portfolio worth £70 million, aimed at creating over 100,000 jobs in Nigeria, towards enhancing poverty alleviation. Theresa May used the opportunity of the visit to announce a new paradigm shift in spending relationships with Africa, beginning with Nigeria - obvi-

ously the biggest economy in Africa, as Britain pursue Brexit next year. The new policy will see to more long-term spending in the areas of economy and security to help the country tackle the intractable security challenges. To seal the promises, Nigeria and Britain signed two memoranda of understanding in the areas of economy and security. The agreement signing, which was part of the major highlights of the visit of the British Prime Minister, covers “Defence and Security Partnership and Economic Development Forum,” according to Nigeria’s foreign affairs minister, Geoffrey Onyeama, and the minister of state, trade and investment, Aisha Abubakar. According to Onyema, the security agreement, which is a comprehensive arrangement, covers training, polic-

ing and human rights aspect of security. The Economic Development Forum on the other hand aims at enhancing economic prosperity of the two countries. He noted that the implementation would involve both private sector and government partnership. Britain is also using the agreements to further consolidate as the country prepares for Brexit to enable it build economic relationships with her traditional partners. The agreement is also expected to further boost the current administration’s Ease of Doing Business policy, while the Human Rights aspect will ensure that security forces are further trained to carry out their operations in line with internationally acceptable practice, he said. He however stated that “no major policy shift” was envisaged, but assured that “there will be greater cooperation” as the British

would no longer be constrained in dealing with her traditional partners. Speaking on other benefits, the foreign affairs minister said the “agreement will require that ministers of both countries meet on regular basis to fine tune economic policies that will help to reduce poverty and create wealth.” Human rights abuses remain a major concern among Nigeria’s political analysts, especially in the wake of recent pronouncements by President Muhammadu Buhari that subjects “ Rule of Law” to what he described as “ National security and economy.” BusinessDay however gathers that part of the security agreement will include training the Nigerian military and security agencies on observance of Human Rights in all their operations in line with internationally acceptable standards.

Participants at the recent Sahel Scholars’ Programme themed ‘Opportunities in the Agribusiness Landscape’ for students in ABU, OAU and UNN.

Concerns mount over Nigeria’s oil, productive sectors as election nears HARRISON EDEH, Abuja

erious concerns are being raised on the consecutive slowdown in the Nigerian economy, particularly the production sectors as politics takes the centre stage preparatory to general elections next year. Experts are further worried that the less than impressive performance of the agriculture, manufacturing and oil sectors, all of which hold great potential for the economy could worsen, especially as most investors usually slow commitments in key sectors with fear of election uncertainties. With a 1.5 percent reported 2018, second quarter GDP, Nigeria recorded a second consecutive slowdown in its economy this year, even though non-oil figure rose, majorly on the back of construction and services sec-

tors. For the first time since the exit from recession, growth was driven by the non-oil sector, which grew by 2.05 percent representing the strongest growth in non-oil GDP since Q4 2015, according to the National Bureau of statistics (NBS). The non-oil sector performance was however constrained by agriculture, which grew by 1.3 percent compared with 3 percent in Q1 2018 and 3.01 percent in Q2 2017. Services GDP however, recorded its best performance in 9 quarters, growing by 2.12 percent in Q2 2018 compared to -0.47 percent in Q1 2018 and -0.85 percent in Q2 2017. Manufacturing sector in real terms grew by 0.68 percent (year-on-year), lower than the preceding quarter, but marginally higher than the same quarter of 2017

by –2.71 percent points and 0.04 percent points, respectively. Growth rate of the sector on a quarter-on-quarter basis stood at –3.51 percent, the statistics office said. Industry watchers say the development does not go down well with Africa’s largest economy as election draws closer, as possible political risks threaten to expose the economy to more downturn. Speaking with BusinessDay, Tony Ejinkonye, vice chairman, National Association of Chambers of Industry, Mines and Agriculture, noted that the contraction would have negative impact on Nigeria’s economy, as election year inches closer. “We are entering into an election year and you know most people instead of investing are withdrawing their investments because of political risks and uncertainties.

Also, the 2018 budget was just recently passed, and the implementation has not really gone far, which is also taking its toll on the overall economy,” Ejinkonye said. Ejinkonye urged government to remove politics in the implementation of our economic policies. “Insurgency between the farmers and herders has also created the downward trend we witnessed in the agriculture sector. The government needs to offer strong protection to farmers as most of them had run away from farms with possible clash at harvesting season.” He was also of the view that the Economic Recovery and Growth Plan of the Federal Government is not achieving the desired result due to poor implementation. “Look at the problem in Apapa Wharf, government must look at the Southern Ports,” he suggested.

Angela Aneke

Erelu Adebayo

Abdulquadir Jeli Bello

Kayode Fashola

UBA appoints four new board members

oard of Directors of the United Bank for Africa is pleased to announce the appointment of four new members to its board, subject to the approval of the Central Bank of Nigeria (CBN). The new board members are Erelu Angela Adebayo, Angela Aneke, Abdulqadir Jeli Bello, and Isaac Olukayode Fasola. These appointments follow the retirement of Rose Okwechime, Adekunle Olumide, Ja’afaru Paki, and Yahaya Zekeri, with effect from August 30, 2018. “I am pleased to welcome Erelu Adebayo, Angela Aneke, Abdulqadir Bello and Kayode Fasola to the Group Board,” said Tony Elumelu, the group chairman of the bank. “These men and women bring a wealth of experi-

ence in their fields and will be tremendous assets, as we deliver on our mission to become the leading PanAfrican financial institution in all our countries of operation. “I am particularly pleased that two of the newly appointed Non-Executive Directors are women, bringing the total number of women to four, a further demonstration of our commitment to ensuring equality for both men and women,” he said further. Elumelu thanked the retiring directors for their contribution, hard work and commitment to UBA, “I would like to express my appreciation to our retiring Directors for their leadership and dedication to UBA and for their contribution to an already impressive 2018. I wish them the very best in their future endeavours.”

Investment: Okowa advocates synergy between govt, security agencies FRANCIS SADHERE, Warri

elta State Governor Ifeanyi Okowa on Friday advocated synergy between government and security agencies to boost investment opportunities in the Niger Delta region. Governor Okowa, who spoke when he received on a courtesy visit the new general officer commanding 6th Division, Nigeria Army, Port Harcourt, Major General Jamiu Sarham in Asaba, said his administration’s partnership with security agencies had ensured an investor friendly and peaceful environment in the state. Okowa said the partnership between the state government and security

agencies had made the state to be ranked among the most peaceful in the country. He said, “The Niger Delta region has become more peaceful because of the cooperation of the security agencies and the various outfits put in place to build peace in the region. “Team work is responsible for this peace and we appreciate the partnership with the security agencies. We will continue to secure our national asset so that production of oil will be at a level it is economically viable for our nation and state.” He commended Sarham on his new appointment and enjoined him to use his wealth of experience to achieve success and ensure an upscale of peace in his area of command.

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Stanbic IBTC gives point by point rebuttal in... Continued from page 1

as alleged,” Shogunle said in the letter. “On the contrary, all remittances were done with knowledge and approval of the Central Bank of Nigeria, an in accordance with the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 and other extant Regulations,” Shogunle said. Shogunle then went into a point by point rebuttal of the allegations made by the central bank. OnCBN’sclaimthat“theshareholders of MTN Nigeria Communications Limited invested the sum of USD402, 590,261.03inthecompanyfrom2001to 2006” Stanbic-IBTC responded “these CCIs were transferred to our Bank to facilitate the reparation of the proceeds of MTNN’s Private Placement, which took place in February 2008.” Similarly, the CBN alleged that Stanbic-IBTC Plc “repatriated the sum of USD 929, 051, 331.83 as proceeds of divestment from the CCIs valued at USD42, 704, 408, .61.” But Stanbic-IBTC said “the factual positions of CCIs transferred by Standard Chartered Bank Limited were duly transferred to StanbicIBTC Plc for the repatriation of the

MTN Private Placement proceeds.” On account of the illegal conversion of shareholders loan preference shares (interest free loan) of USD399, 594, 146.00 the sum of USD8, 134, 312, 397.63 was illegally repatriated by your bank the CBN had alleged. “The truth is that Stanbic-IBTC Plc was not involved in the conversion of the shareholder loans, nor did it carry out any amendments to the CCIs issued in respect of such loans to accommodate these conversions,” Stanbic-IBTC Plc stated. The CBN had alleged that Stanbic IBTC falsely reported thirty-five CCIs valued at USD 313, 683, 925.84 inappropriately as “other purchases” in its MTR 203 returns for February 2008 instead of “capital importation.” “On the contrary, the thirty-five (35) CCIs referred to were on the same day that the conversion of USD 313, 683, 925.84 to Naira occurred. At this relevant time (in 2008), banks were required to render DTR203 to the Central Bank of Nigeria (CBN), which was a daily return,” Stanbic-IBTC stated. The CBN had alleged that Stanbic IBTC issued 8 CCIs of USD 58.35 million in respect of FX sourced locally

as shareholder loan in contravention of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 and Memorandum 20 (1.3) (III) of the Foreign Exchange Manual, which stipulate that CCIs should be issued on capital imported. Stanbic IBTC in its reply to the specific allegation said it was not aware at the relevant time, that the affected investors in the MTN Private Placement had obtained FX loans from local banks for the purpose of their investments. “Like all issuing Houses selling shares, our responsibility was to determine that we were dealing with bonafide citizens who were applying for shares of a monetary value that was not out of line with their known income and wealth profile. There is no mandatory requirement for issuing Houses to investigate whether an investor borrowed funds or not.” Shogunle concluded with a plea in which he said, “it is our humble submission that the CBN re-evaluates the facts and come to conclusion that there was no basis for the huge fines imposed on StanbicIBTCBankPlc,aswellasrescind the directive to refund sums of money duly repatriated to foreign direct investors over a period exceeding 13 years.”

Monday 03 September 2018

Nigeria’s pensions potential attracts foreign... Continued from page 1

the country’s pension system,

can - based on the country’s life expectancy rate - expect to enjoy three years of leisure, according to the World Bank. Yet the country’s nascent pension fund schemes are being seen as a bright spot in Africa’s biggest economy, with their development lauded by policymakers and investors. Growth during the past 10 years has been impressive, although the schemes’ total assets of $22.5bn put them on a par with a small fund in North America or Europe. Nigeria launched a national contributory pension scheme after its 2004 Pension Reform Act. Companies with three employees or more are required to participate, with worker and employer both putting in 7.5 percent of the employee’s salary. In 2014, the total contribution was raised to 18 percent, of which employers contribute 10 percent. A clutch of providers came into being after 2004, including Stanbic IBTC Pension Managers, a subsidiary of South African financial group Standard Bank; and ARMPensionManagers,asubsidiaryof ARM, a $2.7bn Nigerian asset manager. Although dwarfed by their international peers, these groups have started to interest international investors, which are keen to tap the economic potential of a country whose population of 195m places it among the biggest in the world, the only African nation in the top 10.

Three years ago, Actis, a British private equity firm that specialises in emerging markets, paid $62m for a majority stake in Sigma Pensions, whose scheme has 675,000 members and $1bn in assets. “It’s an underpenetrated market,” says Natalie Kolbe, Actis’s global head of private equity. More recently, LeapFrog Investments, a private equity group specialising in emerging markets, put an undisclosed sum into ARM. Karima Ola, a partner at LeapFrog, stresses Nigeria’s potential. “Most consumers are underserved when it comes to key services, especially financial services,” she says. The National Pension Commission (PenCom),thecountry’spensionregulator, is held in high regard, although it did not respond to a request for a comment. “It’s a well-regulated sector. When you’re investing in financial services the regulator is an important consideration,” says Kolbe, adding that PenCom wants Nigeria’s pension system to be world-class. Both Kolbe and Ola are reassured by the regulator’s efforts to protect the sectorfromcorruptionandbolstertrust in financial services. Nigeria ranked a lowly 148th out of 180 countries in the annual Transparency International corruption perceptions index, but PenComisintroducingbiometricauthenticationwhiletheCentralBankofNigeria is rolling out digital identification.

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Nigeria’s poor struggle to meet healthcare... Continued from page 1

L-R: Olumide Ojo, director, information technology and mobile (IM); Jingak Chung, managing director; Awomodu Olugbenga, marketing manager, all of Samsung Electronics West Africa, and Bankole Wellington, Samsung ambassador/host, during the launch of Samsung Galaxy Note9 into the Nigerian market at Samsung Experience Store, Ikeja, Lagos. Pic by Pius Okeosisi

CBN cleared MTN, 4 banks to transact on now... Continued from page 1

“We write to inform you that after a review of your submission, the suspension earlier imposed on your company in respect of remittances/ transactions on equity related Certificates of Capital Importation is hereby lifted,” W.D Gotring, a director in the trade and exchange department of the CBN said in the letter. The Managing Directors of CitiBank Nigeria Limited, Standard Chartered Bank, Diamond Bank and Stanbic IBTC Bank were also copied in the letter. Sources tell BusinessDay that it is worrying and strange that the CBN cleared MTN and the four banks to continue repatriating dividends with the CCIs last year, only for the regulator to now turn around and impose huge fines for transactions they approved. “If ever there is a definition of a Banana republic this is it. It tells you that the central bank is being tele guided from elsewhere with little regard by those pulling the strings for financial system stability, economic growth or employment creation,” the CEO of a major investment Bank told BusinessDay last night. BusinessDay reported last week that Nigeria’s Attorney General Abubakar Malami instigated the new investigation into the matter, when it commissioned an audit from Lagos based

law firm (Tope Adebayo LLP) last year. The decision by Central Bank of Nigeria (CBN) to fine MTN and four other banks is also heightening uncertainty in the financial services sector as investors in bank stocks lost N144 billion in two days, following news of the sanctions. BusinessDay analysis shows, a total of 11 listed banks have lost N144 billion inmarketcapitalisationsinceThursday. “We should expect more sell offs in bank stocks driving prices down and equally putting pressure on the broader All Share Index,” Dolapo Ashiru, a Lagos based stockbroker on the Nigeria Stock Exchange (NSE) said. The banks include Zenith Bank, GTB Bank, First Bank of Nigeria, Stanbic IBTC, Diamond Bank, FCMB, UBA, Fidelity Bank, ECOBANK, Skye Bank, and Sterling Bank “The actions of CBN on these banks will scare foreign investors. It shows the lack of consistency on the part of the CBN as the apex bank can just wake up suddenly to place fines on anybody,” Ashiru told BusinessDay from the nation’s commercial capital. Stocks fell again by 0.68 percent on Friday for the 3rd consecutive day, as the broad NSE all share index returns for the year fell to negative 8.8 percent. Stocks are approaching a correction. From the Biggest to smallest losers BusinessDay analysis revealed that of all banks listed on the Nige-

ria stock exchange market (NSE), Guaranty Trust Bank GTB, the largest listed bank lost a total of N89.76 billion in market capitalisation after prices declined by approximately 3 percent from the previous close on Wednesday of N39.05 to N36 per share on Friday with outstanding shares of 29.43 billion. This was arrived at by multiplying the difference between the closing prices of the bank as at Wednesday (29th Sept.) and Friday (31st) by its outstanding shares. Second on the chart is Zenith bank with a loss of N31.4 billion in market cap in just 2 days of the CBN and MTN saga. Zenith bank shares declined by 4 percent to N21 on Friday from N22 on Wednesday with 31.4 billion outstanding shares. First bank Nigeria plc was also not spared as investors sold the stock, driving prices down slightly by 2 percent from N9 as at close of market on Wednesday to N8.80 on Friday, leading to a loss of N7.18 billion in market cap. Amongst affected banks that were caught up in the CBN’s penalty were DiamondbankandStanbicIBTCboth listed on the Nigerian stock exchange. As at close of trading on Friday, Diamond bank lost N3.7 billion in market cap compared to a fine of N250 million as the price of stock fell by 11 percent from N1.39 on Wednesday to N1.23 on Friday.

•Continues online at www.businessdayonline.com

slowed in the 2nd quarter (Q2) of 2018 to 1.5 per cent from the 1.95 growth recorded in the previous quarter (Q1). In the same vein, a report by a US-based non-profit organisation Brookings institute showed that every minute, six Nigerians enter into the poverty line, making Africa’s largest economy overtake India as country with the highest number of extremely poor people in the world. Experts in the health sector who spoke to BusinessDay said there are an increasing number of patients visiting hospitals due to a surge in diseases, poor nutrition and stress against the backdrop of decaying infrastructure and poverty. “What this means is that millions of Nigeria’s are being pushed into ex-

treme poverty because they must pay for health care out of their own pockets,” a health expert told BusinessDay. “This worrisome position has resulted in a situation where out of pocket expenditure as a share of current health expenditure in Nigeria rose to 72 percent,” say experts. In 2016, the Nigerian economy was hit by a lengthy recession. Since then, the economy has been slow to recover, withgrowthrateslessthanhalfthelevels prior to the recession and consumer income eroded by higher inflation. “When the economy suffers, peoples health get worse because there is almost no aliment that stress and thinking does not contribute to,” Adesimbo Ukiri, chief executive officer, Avon HMO said.

•Continues online at www.businessdayonline.com

Politics & Policy Monday 03 September 2018

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Uzor Kalu flags off 5km NDDC road in Ututu amid fanfare

hieftain of the All Progressives Congress (APC) and former governor of Abia State, Orji Uzor Kalu, flagged off the construction of a 5km Ututu Abuma – Ubila road construction work in Ututu, Arochukwu LGA, Abia State. When completed, the road will ameliorate the sufferings of the community with a long history of inaccessible roads and lack of rural infrastructural development. The road, a part of the ongoing Niger Delta Development Commission’s (NDDC) rural development project, when completed will run from St Paul’s junction, Abuma Ututu to Ubila Ututu in the first phase. The event also provided a platform for a reception by the community in honour of their former governor who also used the opportunity to flag off of the ‘Team Progressives 2019 Campaign Organisation” in the community. The event, which heralded a departure from the lack of development that plagued the community over time, attracted large number of people including sons and daughters of the community home and abroad, youths, women groups, age grades and various leaders in their various capacities who thronged out in their numbers to show solidarity to the August Visitor bearing a tale

of consolation. He however decried the lack of representation at the upper legislative house as embodied in the under development of the community and others within the Abia North Senatorial District, insisting that it would not be business as usual come 2019, even as

APC to clamp down on opponents of direct primaries JAMES KWEN, Abuja

he ruling All Progressives Congress, ( APC) has threatened to severely deal with members opposing the adoption of direct primaries in nominating candidates for the 2019 general election. APC National Executive Committee (NEC) had at its last Thursday meeting in Abuja resolved that both direct and indirect primaries as well as consensus nominations be utilised. But barely 24 hours after NEC resolution on the mode of nomination, the National Working Committee (NWC) of APC rescinded the decision and ordered for the adoption of direct primaries for nomination of candidates for all offices. Yekini Nabena, APC National Publicity Secretary in a statement on Sunday said: “The attention of NWC has been drawn to an illegal meeting to hold on Sunday at Transcorp Hilton Hotel in Abuja by some members of our party organs, with a view to fault the decisions made by the NWC followed by the National Executive Committee (NEC) as regards the mode of the party’s primary elections”. According to Nabena, APC “wants to state clearly that the meeting which has been fixed for 2pm is

German Chancellor: APC condemns PDP over Buhari statement on illegal migration JAMES KWEN, Abuja

Orji Uzor Kalu

illegal and an attempt to puncture the sincere efforts being made by the Comrade Adams Oshiomholeled NWC to reposition our party ahead the 2019 general election and to ensure unity, equity and justice in the party”. He further said: “The outcome of such meeting which is already known will be a nullity and we admonish our members to disregard such meetings in the interest of the party. It is illegal to call such a meeting outside the purview of the constituted authority. “The identities of those plotting such meetings have been identified and unless they desist from such they will be dealt with in line with the party’s constitution at the appropriate time. “The NWC will resist any attempt to disrupt the current peace and harmony prevailing in our great party after the exit of some members of our party. “We urge any member who is not satisfied with the decisions of the party to utillise channels provided by the party’s constitution to air their view.” “We remain focused in delivering good governance to Nigerians and above all ensuring the victory for our Party come 2019 and we will not be intimidated by the antics of a few in ensuring success for our Party”,

he charged the community to vote wisely for more and meaningful development for the community. The community in appreciation of the exemplary effort of Kalu pledged their support and loyalty for his quest for the Senate in 2019, and expressed much confidence in his ability to attract the required

development lacking in the senatorial district. Kalu was later conferred with the title of “Omereoha Ututu” by the chairman of Traditional Rulers Council, Ututu, Ezema Ututu, Eze Solomon Okereke, during courtesy visit to the Eze by the ex-governor.

Guber aspirant calls for stronger tie among members to win 2019 general election SIKIRAT SHEHU, Ilorin

embers of the All Progressives Congress (APC) in the country have been charged to build a stronger tie among themselves for the ruling party to gain victory in 2019 general election. Saliu Mustapha, a gubernatorial aspirant in Kwara State, said this at the weekend while speaking with journalists on the chances of the APC to be victorious and retain power come 2019. The governorship aspirant affirmed that politics is all about partnership and not just an individual project. “If we all put hands on deck and we are able to cooperate to build a viable political party, there is nothing stopping APC from making it,” he added. On his mission and vision of joining the race for governorship in the state, Mustapha said he would partner with Kwarans because the project is for the people of the state, adding that all hands must be on deck. According to him, “I intend to partner with all well-meaning Kwarans on how we can move the

state forward. “In this regard, I intend to partner with others to run for governorship election in the state under the platform of All Progressives Congress (APC). “For me, I think first and foremost, we must try to reposition and fix Kwara State and we must start from educational sector. “For people to be well informed and enlightened on negative things affecting us as a state and positive things that should be embraced to move the state forward.” He said genuine and massive investment in education would fix a number of problems bedeviling the country ranging from economy, transportation, unemployment, youth restiveness, health, infrastructural decay. The governorship aspirant added that fixing the education sector would also put an end to political thuggery and hooliganism. Mustapha, a philanthropist and founder of Saliu Mustapha Foundation, recently donated the sum of two million to Ilorin Emirate Youth Development Association in support of its educational programme as part of measures to improve standard of the sector in the state.

h e r u l i n g A l l P ro gressives Congress, APC has strongly condemned the unfortunate attempt by the Peoples Democratic Party, PDP to politicise President Muhammadu Buhari’s statement on the illegal migration and trafficking of Nigerians during the visit of the German Chancellor, Angela Merkel. APC argued that PDP in its typical insensitive and unguarded stance on matters affecting the country is exploiting an issue that bother on the lives of Nigerians (mostly youth). The ruling party stressed that, it is a known fact that many Nigerian families have suffered grief as a result of deaths and other inhuman treatment that have befell relatives attempting migration to Europe and other parts of the world. Yekini Nabena, APC Acting National Publicity Secretary in statement on Sunday noted that, “through support of international agreements/efforts towards curbing illegal migration, repatriation of stranded Nigerian migrants and addressing root causes encouraging illegal migration of Nigerians, the President Buhari administration has demonstrated the political will to check the scourge”. Nab e na s a i d : “ Th e p a i n s and suffering most Nigerians go through with the hope of reaching Europe has been well repor ted. Through relevant agencies, the President Buhari administration has continued to mitigate the migration crisis, particularly in Libya and Mediterranean Sea. “Nigerians will recall the presidential directive for Nigerians to be evacuated from Libya and other locations and be returned home safely. Already in place are several interventionist programmes of the federal government to enable them start new and productive lives. “With unemployment and poverty identified as one of the root causes of illegal migration, the President Buhari administration is using initiatives like N-Power, Bank of Industry Youth Entrepreneurship Support, Central Bank of Nigeria support schemes, Agriculture, Small and Medium Scale Enterprises (SMEs) to reduce the rate of unemployment in the country”, APC Spokesman said.

Monday 3 September 2018

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Monday 3 September 2018

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A4 BUSINESS DAY NEWS

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Monday 03 September 2018

Nigeria’s slow growth could widen poverty conditions – LCCI BUNMI BAILEY

agos Chamber of Commerce and Industry (LCCI) says the recently released Q2 GDP 2018 report by the National Bureau of Statistics (NBS) could worsen the poverty conditions of Nigerians.

Muda Yusuf, directorgeneral, LCCI, said, “We appreciate the fact that GDP is still in positive territory, although there was decline in the growth compared to the first quarter of 2018, from 1.95 percent to 1.50 percent. But with a population growth rate of 3 percent and GDP growth of 1.50 percent, there is

a reason to worry about the wider implications for poverty conditions in the country.” Recently, a report by the World Poverty Clock, a non-governmental organisation in Vienna that shows real-time poverty estimates of different countries, shows that Nigeria has overtaken India

as the country with the most extreme poor people in the world. The 86.9 million people living in extreme poverty is higher than the 71.5 million people in India. With the current 1.5 growth rate, the number of extremely poor people could increase. However, the LCCI also noted and appreciated the performance and prospects of the service sector to the Nigerian economy. “The sector currently contributes 54.6 percent of GDP and 44.7 percent of total employment and these should shape economic policy conceptualisation and implementation. The sector is also largely driven by indigenous players and has valuable inclusive attributes. The service sector deserves more policy and institutional support to unlock its full potentials,” Yusuf said. Also from the GDP report, the chamber is concerned about the decline in the performance of the real sector in Q2 2018 in which the agricultural sector performance dropped to 1.2 percent in

Q2 from 3 percent growth in Q1, and the manufacturing sector declined to 0.7 percent in Q2 from 3.4 percent in Q1. “These declines were in spite of the interventions given to support the real sector, by both monetary and fiscal authorities. The real sector is still grappling with enormous productivity challenges arising from the constraint of infrastructure, particularly power and logistics. There should therefore be greater investment and policy focus on improving logistics and strengthening the power sector,” the chamber stated. The Q2 2018 GDP data indicate an average daily oil production of 1.84mbpd, a decline from 2.0mbpd in Q1 2018. The major reason for the decline in production was as a result of incidence of pipeline vandalism, which affected production during the quarter. Weak purchasing power driven by inflation, high cost of goods and services, low disposable income, delays in payment of salaries in the public sector,

naira exchange rate effect and high import duties on many consumer items are the reason why the trade sector is still in negative territory, even though there was a slight improvement as there was reduced contraction. The chamber has recommended various polices that would help reverse the declining trend in GDP growth. “There is need to sustain the momentum of ease of doing business programme of the government in order to bring down the cost of operations of investors in the economy, governments at all levels should therefore redouble their efforts to improve infrastructure as this will also reduce risk of investment in these key sectors, ensure an investment friendly tax policy, regulatory environment for business should be aligned to the ease of doing business agenda of the government and the Apapa gridlock should be addressed as a matter of urgency,” the chamber recommended.

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FINANCIAL TIMES Coca-Cola to buy Costa Coffee chain from Whitbread for £3.9bn

Africa seeks China deals that will bring jobs and skills Page A6

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World Business Newspaper

David Davis promises to vote against Theresa May’s Brexit proposal Former Brexit secretary’s statement raises prospect of parliamentary defeat for PM HENRY MANCE

ormer Brexit secretary David Davis has promised to vote against Theresa May’s Brexit plan, raising the prospect that the prime minister could be defeated in parliament later this year. Mr Davis said on Sunday that Mrs May’s so-called Chequers proposal, which prompted him to resign in July, was “worse than the [UK’s] existing deal” inside the EU. As parliament returns from its summer recess this week, Mrs May is fighting a revolt by Eurosceptic Conservative MPs and party members who want Britain to break more decisively with EU regulations after Brexit. She has promised to put Britain’s withdrawal deal with the EU to a vote in parliament, and could be defeated if about 10 Tory MPs rebel, because the party lost its Commons majority in the 2017 general election. That risk is amplified by Eurosceptic Conservatives’ opposition to Mrs May’s Chequers plan, which sets out her proposals for a post-Brexit relationship between the UK and the EU, including a free trade area in goods where Britain observes the bloc’s rules. In a sign of the pressure on Mrs May, the European Research Group, a caucus of hardline Eurosceptic Tory MPs, has started working with Crosby Textor, the political strategy firm set up by the Australian Lynton Crosby, to try to stop the Chequers plan. The ERG is co-ordinated by arch Brexiter Jacob Rees-Mogg, and Crosby Textor said its “senior staff are often consulted because of their campaign expertise and knowledge”. Sir Lynton, the strategist behind former prime minister David Cameron’s 2015 election victory, fell out with Downing Street over

his role in the 2017 poll campaign led by Mrs May. But Crosby Textor denied any plot to oust Mrs May and replace her with former foreign secretary Boris Johnson, who resigned over the Chequers plan. In a message directed at Eurosceptic Conservatives, Mrs May wrote in the Sunday Telegraph that she would not “be pushed into accepting compromises on the Chequers proposals that are not in our national interest”. However, Mr Davis said Mrs May’s caveat about the national interest was “an incredible ‘open sesame’,” that would encourage the EU to demand further concessions. Tory officials have predicted that Mr Johnson, who has called for a “chuck Chequers” push, is preparing to challenge Mrs May for the party leadership. But Liam Fox, the international trade secretary, said: “Changing the leader doesn’t change the parliamentary arithmetic . . . You would end up with the same arithmetic but possibly more resentment.” The unrest in Conservative party ranks has led some MPs to search for compromise proposals. Nick Boles, a Europhile Tory MP and close ally of environment secretary Michael Gove, unveiled proposals to keep Britain in the European Economic Area “for an interim period”. Mr Gove himself has previously floated the idea. Separately, Simon Robertson, the investment banker and former chair of Rolls-Royce, announced his support for a second referendum on Brexit. “I think it is complete balderdash to say the people have spoken, therefore you can’t go back,” Sir Simon told the Observer. Sir Simon donated £767,500 to the Conservative party between 2002 and 2016.

Bain urged to repay fees after South Africa inquiry Call follows testimony that firm’s work gave cover to purge of revenue service ANNA NICOLAOU

ain has come under pressure to repay fees in South Africa after an inquiry heard that an ally of former president Jacob Zuma used the global consultant’s advice to undermine the country’s critical tax collection authority. Veterans of the South African

revenue service (Sars) said Bain should hand back R164m ($11m) following testimony last week that the firm’s work gave cover to a political purge of the institution. Bain said it is investigating. Vittorio Massone, Bain’s managing partner in South Africa, told the inquiry that in hindsight “we might have been used” by Tom Continues on page A6

German business leaders raise alarm over Brexit progress UK urged to soften position ahead of talks with EU TOBIAS BUCK

erman business leaders have raised the alarm over the state of Brexit negotiations and are urging the UK government to soften its position ahead of makeor-break talks with Brussels in the coming weeks. “We have reached a critical phase. The time that remains is incredibly short,” Joachim Lang, the director-general of Germany’s BDI industry federation, told the Financial Times. The warning from Berlin echoes concerns expressed last month by the chairman of Keidanren, the influential Japanese business lobby, and highlights growing anxiety among corporate leaders that Britain could topple out of the EU without an accord to smooth the process. “If there is no agreement by mid-November, German companies will start implementing their emergency plans for a no-deal Brexit,” Mr Lang said. “In a no-deal scenario, and without a transition

phase, we would end up with a border and customs regime that no one is prepared for. There would be considerable uncertainty, there would be interruptions to supply chains and the UK industrial base would take a hit.” Mr Lang also voiced criticism of the UK position as set out in London’s recent Brexit white paper, in particular with regard to its proposal on trade. Among other points, the paper calls for a post-Brexit scenario in which the UK remains part of a single market for goods with the EU, while excluding the free movement of services, capital and people. “The UK says it wants to keep the free movement for goods but become independent with regard to the other freedoms. We believe that cannot work,” said Mr Lang. Separating goods from services and the flow of people and finance, he added, was simply not possible in the modern economy. “When we sell a piece of machinery today, we don’t just sell the product. We also sell services, data

and maintenance,” he said. “You cannot pick one freedom but leave the other three on the sidelines. That simply does not work with modern industrial goods. We are not selling a piece of chocolate.” His stance was supported by Bernhard Mattes, the president of Germany’s VDA car industry federation, which represents groups such as Volkswagen, Daimler and Bosch. Mr Mattes told the FT: “When you sell an industrial good you don’t just sell iron, steel and plastic — there is always a service that comes with the product.” In a further sign that pressure is piling up on London, chief Brexit negotiator Michel Barnier said on Sunday that he was “strictly against the British proposal” on post-Brexit trade. “We have a coherent market for goods, services, capital and people - a whole ecosystem that has grown over decades. You cannot play with this by picking out parts,” he told the Frankfurter Allgemeine Zeitung in an interview.

Bond market faces Italian debt supply test KATE ALLEN

taly has less than three months to raise the bulk of its remaining annual financing needs — amounting to about €63bn in fresh debt — as its bond sales programme lags behind those of other big eurozone sovereigns. The nation, which has been hit by a series of sharp bond market sell-offs since late May, has secured less than three-quarters of its total planned 2018 debt sales to meet bond redemptions and its net increase in borrowing, according to a Financial Times analysis. Sovereign borrowers tend to heavily weight their debt sales towards the start of the year and little business is done in the final calendar weeks after the US celebrates Thanksgiving in late

November. As a result bankers, public servants and politicians have returned from their summer break with a narrow window of just a few weeks to complete the bulk of European nations’ annual funding programmes. Marco Baldini, head of European bond syndicate at Barclays, said that Italy’s debt sales pace was ahead of its performance last year, but added that the country had held fewer discretionary — syndicated — debt sales so far this year than in the same period last year and was “slightly behind [where it could have been] in supply terms”. Political turbulence has pushed up Italy’s bond yields since two populist Eurosceptic parties formed a coalition government in late May, increasing its cost of

raising new debt. Investors’ attention is now focused on the coalition’s budget talks later this month, which could see the government seek to defy Brussels by raising public spending. A series of credit rating agency updates are also expected which could fuel any market jitters. One senior sovereign deals banker who did not want to be named said Italy was in a “relatively precarious position”; the spread between Italian and German debt was “extraordinarily high” and that had “implications for the sustainability of its cost of funding”, he said. “Italy does not have the luxury of sitting on the sidelines and waiting for calmer conditions, it just has to get on [with the debt sales],” he said.

BUSINESS DAY

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FT Bain urged to repay fees after South Africa...

Why currency markets are so worried about Argentina

Continued from page A5 Moyane, Mr Zuma’s appointee as the head of Sars, to advance an ulterior agenda. After Bain submitted a restructuring plan for Sars in 2015, Mr Moyane was accused by civil society groups of destroying key parts of the service such as its enforcement unit and triggering an exodus of skilled staff. The turmoil has been blamed for a shortfall in tax revenue of about R50bn, which has badly strained South Africa’s government budget. Cyril Ramaphosa, Mr Zuma’s successor as president, fired Mr Moyane earlier this year and instituted the inquiry to examine the shortfall. Adrian Lackay, one of a number of Sars officials who were ostracised during Mr Moyane’s tenure, said Bain had a “moral obligation to properly apologise to South African taxpayers and pay back the fees.” “Knowing what I know now, not only would we have investigated, we probably wouldn’t have done the work,” Mr Massone said at the inquiry. He added that Mr Moyane had also asked for his views on Sars a year before Mr Zuma appointed him from relative obscurity in 2014. The inquiry also heard evidence that Bain’s contract may have been irregular. The collapse of Sars has been one of the deepest blows to public finances from a massive scandal in South Africa over the alleged “capture” under Mr Zuma of independent institutions that were a bar on serious corruption. The “state capture” scandal also implicated Bain rivals McKinsey and KPMG. Both firms have apologised and arranged to repay fees for work linked to the alleged looting of state contracts by the Guptas, a business family close to Mr Zuma. “Bain joins a growing list of multinational companies who did highly questionable work that allowed for institutions to be weakened and ultimately, captured,” Mr Lackay said. Dennis Davis, a judge who led a panel on reforms to Sars that were sidelined by Mr Moyane, said that the fees earned by Bain were “staggering” for work that was “palpably not good enough,” and should be repaid. At least McKinsey and the others had the decency to acknowledge they shouldn’t be milking the taxpayer Dennis Davis, judge who led a panel on reforms to Sars At least McKinsey and the others had the decency to acknowledge they shouldn’t be milking the taxpayer,” Mr Davis said. Mr Moyane, Mr Zuma and the Guptas deny wrongdoing or involvement in corruption. In a statement, Bain said that it had launched “our own internal investigation to ensure we have a complete understanding of our work at Sars in response to new questions raised in our testimony”. The firm added that “we cannot speak extensively at this time” as the inquiry continues.

Monday 03 September 2018

Peso’s crash fuels fears about government finances, recession and runaway inflation ROBIN WIGGLESWORTH, COLBY SMITH AND BENEDICT MANDER

T China’s President Xi Jinping (right) shows the way to Sierra Leone President Julius Maada Bio (left) during the welcome ceremony at the Great Hall of the People in Beijing, launching the Forum on China-Africa Cooperation © AFP

Africa seeks China deals that will bring jobs and skills Continent’s leaders want Beijing to commit to strategic relationship at summit LUCY HORNBY AND DAVID PILLING

frican leaders will step up their quest for more manufacturing investment from China next week as they converge on Beijing for a summit at which both sides will seek to extricate their relationship from charges of debt and dependency. The triennial Forum on China Africa Cooperation has in the past been a catalyst for deepening ties, which a decade ago hinged on Beijing’s efforts to secure commodities such as oil and copper in return for infrastructure investment in African nations. But African governments, partly under pressure from their own citizens, are planning to use this year’s meeting to push for deals that create domestic jobs and transfer skills and technology. “We want a strategic relationship. Not just ‘you build us a bridge and we’ll give you money’,” said Kamissa Camara, a foreign policy adviser to Ibrahim Boubacar Keita, Mali’s recently re-elected president. Ahead of the summit, African diplomats have mounted a co-ordinated push for Chinese commitments for fresh loans and, crucially, for manu-

facturing investment that could help employ a rising generation of urban youth. Africa’s population, set to double by 2050, is the youngest and fastestgrowing in the world. At the last FOCAC meeting in 2015, Chinese President Xi Jinping pledged $60bn in grants and loans. Attracting low-end manufacturing jobs being priced out of China could redress Africa’s trade deficits with Beijing, which has been a source of friction. Recovering oil and commodity prices have taken some of the sting out of the dispute, but African businesses blame Chinese imports for wiping out swaths of domestic manufacturing. China’s African push lends it clout in a continent that has a love-hate relationship with former colonial powers. Dealing with China can improve an African nation’s bargaining position with Europe, the US and even other developing countries such as India or Turkey. “A relationship with China rebalances our unbalanced relationship,” said Ms Camara. “We hope that when others see China getting involved in Mali, they too will be interested in

investing.” About 13 per cent of Chinese investment into Africa goes to manufacturing, according to the China Africa Research Initiative at Johns Hopkins School of Advanced International Studies. Africa has become a testing ground for China’s external initiatives from peacekeeping and debt negotiations to building consumer brands. Beijing has also wooed countries without commodities, especially Ethiopia, a fast-growing nation with a similar centrally controlled economy that is positioning itself as a manufacturing hub. While Chinese investment in Africa has grown, reaching $2.4bn in 2016, it is dwarfed by a trade relationship worth $170bn last year. China became Africa’s largest trading partner in 2009, as Chinese companies imported more African commodities. Meanwhile, Chinese manufactured goods make up more than 80 per cent of China’s exports to Africa. But as demand for commodities slowed, Africa’s trade deficit with China widened. In 2016, it was equivalent to Africa’s trade deficit with the rest of the world.

Risk taking in US commercial property market runs hot Investors accept smaller premium for taking on risk in bonds backed by commercial mortgages JOE RENNISON

nvestors are stomaching the lowest premium in more than a decade for taking on more risk in the US commercial property market, as a humming American economy encourages money managers to reach for higher returns. The difference between the return on the safest slices of commercial mortgage-backed securities — a pool of mortgages bundled into a bond — and the riskier slices has dropped to its lowest level since the build-up to the financial crisis, according to data from Trepp, a data analytics company. A combination of an expanding US economy and the ongoing hunt for yield is driving investors’ willingness to assume more exposure to potential losses without greater compensation. For some it is another sign that a nearly decade-old credit cycle maybe approaching a turning point. “As you get toward the latter innings of the credit cycle, people have money they need to put to work and they take on more risk

for less return,” said Alan Todd, a CMBS analyst at Bank of America Merrill Lynch. CMBS bundle pools of mortgages on commercial buildings such as offices and malls into a single bond, with the interest paid by the mortgage repayments of borrowers. The debt is sliced into tranches, with higher returns offered to those prepared to absorb potential losses on the underlying mortgages first. Demand has waned for senior, or “triple-A”, tranches of new CMBS deals, while it has remained for riskier, or “triple-B minus”, slices, narrowing the gap between the two to the lowest level since May 2007, according to Trepp. line chart showing investors are receiving the lowest premium to invest in riskier CMBS tranches in over a decade As the Federal Reserve has tightened monetary policy, higher quality fixed-rate investments such as the triple-A tranches of CMBS have fallen in price, prompting investors to seek out floating-rate assets like company loans, or take more credit risk to boost returns. “You are probably not getting paid for the risk you are taking and

that definitely concerns us,” said Dushyant Mehra, co-chief investment officer at Hildene. “We are cautious about this environment.” There has also been a deluge of supply in the CMBS market, with $49bn of new issuance between January and July, topping the $45bn sold in the same period in 2017. It has contributed to the credit premium between triple-A rated tranches and triple-B minus tranches — which sit one rating above junk — shrinking to 2.1 per cent in August from 2.2 per cent in July and below its previous postcrisis low of 2.3 per cent touched in July 2014, according to the Trepp data. While it marks the lowest premium for investing in the lower tranches of CMBS securities since May 2007, it is still far from precrisis lows of 67 basis points hit at the beginning of that year. “It is something everyone frets over,” Gunter Seeger, a portfolio manager at fund manager PineBridge, said of the evaporating premium investors are demanding. “You are always concerned that the pendulum swings too far but the reach for yield is still there.”

he Argentine peso crashed to a new record low on Thursday despite the central bank in Buenos Aires ramping up interest rates to a world-topping 60 per cent. The crisis has thrown Argentina’s reforming government into turmoil, unnerved investors and cast doubts over the International Monetary Fund’s record-breaking $50bn bailout. What are investors most worried about? The biggest worry is if Argentina can meet its financing needs in the coming years, while navigating a looming recession and runaway inflation ahead of a presidential election next year. Oxford Economics estimates the overall funding needs for the rest of 2018 and 2019 at $77bn — a challenging number even with a more favourable backdrop. Because almost 80 per cent of Argentina’s total sovereign debt is dollar-denominated, when the peso weakens it makes dollar-debt repayment far more difficult. The peso’s double-digit plunge on Thursday, which built off Wednesday’s 7 per cent drop, significantly increased the size of Argentina’s debt burden. At current levels, government debt could reach 90 per cent of gross domestic product this year. As a result the cost of insuring against an Argentine debt default shot up sharply, and now indicates that investors consider the country the second-riskiest sovereign borrower in the world after Venezuela — which has already defaulted. Will interest rates at 60 per cent be enough to stop the peso from sliding further? The peso still tumbled on Thursday despite the central bank rate increase, but tighter monetary policy will certainly help support the Argentine currency. Keeping rates this high until December at the earliest, as the central bank said it would do, indicates its commitment to shoring up the peso. Investors worry that while the central bank has done its part, halting the peso’s slide depends on the government explaining in more detail how it will reduce the fiscal deficit and meet the IMF’s target of 1.3 per cent of GDP by 2019. So far, the government has indicated it will slash energy subsidies and reduce wages for public sector workers among other measures, but it is uncertain how drastically Buenos Aires will cut spending and navigate the political pushback that such moves are all but guaranteed to spark. What do Argentines feel about this? Ever since the peso rout began in late May, Argentines have been increasingly on edge — and now more than ever. As a country that traditionally saves in dollars, thanks to a long history of economic instability, the value of the US currency is perhaps the single most important economic variable for most Argentines. Indeed, it is a useful proxy for the level of confidence in Argentina’s government and the economy in general.

Monday 03 September 2018

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FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Coca-Cola to buy Costa Coffee chain from Whitbread for £3.9bn Shares rise 18% after UK group decides to refocus on Premier Inn hotel business MURAD AHMED AND CAT RUTTER POOLEY

oca-Cola is to buy the Costa Coffee chain from UK leisure group Whitbread, in a £3.9bn deal that sets up the world’s biggest beverage maker to take on Starbucks, Nestlé and JAB Holdings in the global battle for coffee sales. FTSE 100 group Whitbread had previously announced it would spin off Costa, the second largest coffee shop globally, under pressure from activist investors. Shares in Whitbread jumped 18 per cent after it announced the deal on Friday. For Coca-Cola, the transaction represents a leap into the global coffee market, where it has little presence. James Quincey, president and chief executive of Coca-Cola, said Costa would give the company “new capabilities and expertise in coffee, and our system can create opportunities to grow the Costa brand worldwide”. “Hot beverages is one of the few remaining segments of the total beverage landscape where Coca-Cola does not have a global brand. Costa gives us access to this market through a strong coffee platform.” Coffee has been one of the frothiest markets for mergers and acquisitions activity over the past year, as competition between Swiss group Nestlé and JAB Holdings — the private investment group that manages the wealth of Germany’s billionaire Reimann family — has heated up. Nestlé’s deals include taking a majority stake in hipster roastery Blue Bottle and acquiring rights to sell Starbucks products, while JAB earlier this year struck a deal to combine its Keurig Green Mountain coffee business with soft drinks producer Dr Pepper Snapple. The deal values Costa at £3.9bn including debt. A “significant majority” of the net cash proceeds of about £3.8bn will be returned to shareholders, with about £100m set aside for estimated transaction and separation costs. The

sale will allow it to focus on its fastergrowing Premier Inn hotel business. The move marks the end of Whitbread’s 23-year ownership of Costa, which the group bought for £19m when it had just 39 shops. It now has more than 2,400 shops in the UK and 1,400 in more than 30 international markets, as well as operating a self-serve business. Costa Coffee has sought international expansion in recent years, particularly in China, as it looked to offset declining sales on British high streets. Under pressure from hedge funds Elliott Advisors and Sachem Head to take radical steps to counteract stalling growth, Whitbread announced its decision to spin off Costa in April, but publicly resisted the activist shareholders’ calls to begin a sale process. Alison Brittain, chief executive of Whitbread, said the calculation changed after Coca-Cola made its first approach in June. “We were not interested in a sale other than to someone who had a strategic rationale and so would increase the value [of the company],” she said. She said Coca-Cola, which had $35.4bn in revenues in 2017 and has market capitalisation of more than $191bn, has a global scale and supply chains that would enable Costa to grow and compete against international rivals in a way that would not have been possible as a standalone company. Before Thursday’s announcement, Whitbread had a market capitalisation of £7.3bn, with the company estimating that Costa represented £2.3bn of that value. This suggests that Coca-Cola’s offer represents a premium of about 20 per cent on the coffee chain’s estimated value. As well as returning proceeds to shareholders, the company said it intends to reduce debt and make a contribution to its pension fund — though did not provide precise details — in moves that it believes will allow it to continue its expansion of Premier Inn. The deal is expected to close in the first half of 2019, subject to shareholder and regulatory approval.

Lira rallies after Turkey’s latest move to shore up currency Turkish president says that currency woes will be temporary, blaming US “operation” ADAM SAMSON AND LAURA PITEL

urkey’s beleaguered lira rebounded on Friday after authorities announced the latest measure aimed at stemming this year’s tumble in a currency poised to close August with its worst fall since an economic crisis 17 years ago. Recep Tayyip Erdogan insisted on Friday that the currency’s decline would be temporary, repeating his claim that his country was the victim of an “operation” by the United States. “This too shall pass,” he said. Early in the European trading day, the lira climbed roughly 3 per cent to 6.45 for every dollar — although trade was choppy and the currency then cut its gain to only 1.2 per cent. It had fallen 2.9 per cent on Thursday during a tumultuous day for emerging market currencies. Friday’s move higher came af-

ter the Turkish government said it would waive a tax on lira deposits held for more than a year — a decision designed to spur savings in local currency. Chris Turner, head of currencies strategy at ING, said the tax measure “is not enough to credibly stem the currency weakness and should be only shortlived in nature (in terms of its positive effect on the lira)”. Investors also appeared to shrug off comments from US President Donald Trump to Bloomberg that he had been “let down” by his Turkish counterpart, who has refused to free a detained American pastor. “It is not possible to explain the imposition of economic sanctions on Turkey under the pretext of a court case that is continuing under a legal framework,” Mr Erdogan said on Friday. “The instability in our currency is an operation against our country.”

Unilever shareholders await details of shift to Netherlands Loss of a major component of Britain’s top index is a blow to the City NEIL COLLINS

ny day now, barring a last-minute rush of common sense to their heads, the directors of Unilever will publish the details of their plans to take the company’s domicile to the Netherlands, eliminating the listed UK arm of this long-established Anglo-Dutch business. The directors would like us to view this move as a mere technical tidying-up operation, but to win approval requires a 75 per cent majority of the plc shareholders who vote, which rather gives the game away. Shares in the UK plc are to be swapped for new shares in the Dutch top company, which will have its primary listing in Rotterdam (Rotterdam!). As a result, Unilever will no longer qualify for inclusion in the FTSE 100 index. It will be no more a British company than are the UK businesses of Nestlé or Ford. Viewed that way, this proposal is uncomfortably like Kraft’s takeover of Cadbury, or for those

with longer memories, Nestle’s of Rowntree. Rather than a mere tidying-up operation, it is a power grab from a Dutch-dominated board, which can see the chance of eliminating the Anglo from the structure which has served shareholders well for so long. At first sight, the decision to simplify the share structure looks inherently reasonable. A single class of capital allows new shares to be issued more easily for purchases, although the existing structure does not seem to have been a barrier to an aggressive share buyback policy this year. There would also be a tiny gain in bureaucratic efficiency. Doubtless the Unilever board can point to years of discussions on reform of the share structure, but to many this plan looks like a nervous response to last year’s unwanted takeover approach. For a company that considered itself too large and well-run to be the subject of a bid, this was a nasty surprise. Were Unilever to be entirely Dutch the local rules, which make a contested takeover very dif-

ficult, would provide protection against future intruders. The loss of a major component of Britain’s top index is a blow to the City. It will lead to forced selling from index funds and those with a UK mandate, while the lack of a long-term guarantee that UK holders of the Dutch shares will not be taxed more heavily on their dividends is a real cost to plc shareholders for which there is no compensation. Although the politics may make it too sensitive to mention in the documentation, it would be naive to suppose that the Bword has not helped to push the board along. Given the indifference of trackers and the pusillanimity of most fund managers, it is likely that the 75 per cent threshold would be reached at the vote next month. However, a substantial minority cast against would tarnish Paul Polman’s reputation as a successful CEO, although he may feel that hardly matters if on his retirement next year he can boast that he has brought the company home with him.

Stocks hit by threat of trade war escalation Potential new US tariffs on China imports worth $200bn leaves emerging markets exposed MICHAEL HUNTER AND ALICE WOODHOUSE

lobal trade worries returned to the fore on Friday, leaving emerging market currencies exposed and sending stocks lower. US President Donald Trump’s threat to leave the World Trade Organization and apply further tariffs on imports from China worth $200bn knocked equities in Europe and Asia and left Wall Street’s record-breaking run looking tired. India’s rupee is 0.3 per cent weaker at Rs70.9225 per dollar, just off a record low point of Rs70.9950 hit earlier. Indonesia’s rupiah was 0.3 per cent weaker at Rp14,725 per dollar, its weakest in three years and nearing its lowest since the 1998 Asian financial crisis. The Argentine peso remains mired around its lows, which defied the country’s central bank ratcheting up interest rates to 60 per cent during the previous session. It costs 37.9620 pesos to buy dollar, within reach of its weak point of 38.53 pesos to the dollar.

But the Turkish lira found support, regaining 1.4 per cent to TL6.5220 per dollar after weakening by 3 per cent over the previous session. Among stocks, Frankfurt’s Xetra Dax 30, home to a roster of major exporters, fell 0.6 per cent in opening trade, a steeper decline than the 0.3 per cent drop on the Europe-wide Stoxx 600. “If they don’t shape up, I would withdraw from the WTO,” Mr Trump warned in an interview with Bloomberg. Global trade has set the tone across markets this week after the US and Mexico agreed on new trade terms and media reports said Mr Trump intended to roll out $200bn in new tariffs on China as soon as a comment period ends next week. Kerry Craig, global market strategist at JPMorgan Asset Management, said it was not the first time Mr Trump had threatened to leave the WTO and that the next tranche of tariffs had been foreshadowed. “This doesn’t make it any easier for

the market to digest and I’d expect this to dampen sentiment,” he said. Equities London’s FTSE 100 is down 0.4 per cent, with the Paris CAC 40 down 0.3 per cent. Hong Kong’s Hang Seng fell 0.9 per cent as index heavyweight Tencent tumbled more than 4.5 per cent after China announced plans to limit online game releases. On China’s mainland, the CSI 300 of Shanghai and Shenzhen stocks down 0.2 per cent. In Japan, the Topix was down 0.1 per cent as the financials sector shed 0.5 per cent and the basic materials sector fell 0.6 per cent. Australia’s S&P/ASX 200 was 0.3 per cent lower as basic materials slipped 0.9 per cent as miners fell. US stocks retreated overnight with the China reports leaving investors reluctant to perpetuate Wall Street’s recording breaking run. The S&P 500 ending the day 0.4 per cent lower and the Nasdaq down 0.1 per cent.

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Monday 03 September 2018

PhotoSplash

FMDQ honours Frank Aigbogun, publisher/CEO, BusinessDay Media Limited for his contribution to Nigeria’s Financial Market Pictures by Olawale Amoo

FMDQ staff welcoming Frank Aigbogun, publisher/CEO, BusinessDay Media Limited, at his arrival to the venue.

Bola Onadele. Koko, MD/CEO, FMDQ OTC Securities Exchange (2nd r); Tumi Sekoni, associate executive director, capital market (2nd l); Kaodi Ugoji, associate executive director, corporate development, welcoming Aigbogun.

Ayo Gbeleyi, managing director, GA Capital Limited (m), welcoming Aigbogun (l), and Abiodun Akinjayeju, MD/CEO, FundQuest Financial Services Limited.

Bola Onadele. Koko, MD/CEO, FMDQ OTC Securities Exchange (l), presenting a plaque to Aigbogun for his contribution to the financial market development in Nigeria.

Bola Onadele. Koko, MD/CEO, FMDQ OTC Securities Exchange, giving his address.

Frank Aigbogun, publisher/CEO, BusinessDay Media Limited, giving his remark.

Kaodi Ugoji, associate executive director, corporate development, FMDQ OTC Securities Exchange (l), and Boason Omofaye, head, business news, Channels Television.

Wura Abiola, managing director, Management Transformation Limited, giving her goodwill message.

Ayo Gbeleyi, managing director, GA Capital Limited, giving his goodwill message.

L-R: Wura Abiola, managing director, Management Transformation Limited; Ayo Gbeleyi, managing director, GA Capital Limited, and Tumi Sekoni, associate executive director, capital market, FMDQ OTC Securities Exchange.

L-R: Emeka Ucheaga, analyst, BusinessDay; Anthony OsaeBrown, editor, BusinessDay; Bola Onadele. Koko, MD/CEO, FMDQ OTC Securities Exchange; Tumi Sekoni, associate executive director, capital market; Frank Aigbogun, publisher/ CEO, BusinessDay Media Limited; Kaodi Ugoji, associate executive director, and Iheanyi Nwachukwu, head, capital market, BusinessDay.

L-R: Ayo Gbeleyi, managing director, GA Capital Limited; Wura Abiola, managing director, Management Transformation Limited; Bola Onadele. Koko, MD/CEO, FMDQ OTC Securities Exchange; Tumi Sekoni, associate executive director, capital market, FMDQ OTC Securities Exchange; Frank Aigbogun, publisher/CEO, BusinessDay Media Limited; Kaodi Ugoji, associate executive director, corporate development, FMDQ OTC Securities Exchange, and Boason Omofaye, head, business news, Channels Television.

Group photograph of Frank Aigbogun, publisher/CEO, BusinessDay Media Limited (4th r); Bola Onadele. Koko, MD/CEO, FMDQ OTC Securities Exchange (4th l), with staff of FMDQ OTC Securities Exchange.

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Apapa gridlock: Ajegunle residents count ordeal Aviation unions, MMA2 disagree over sacked members as tanker drivers take over community roads IFEOMA OKEKE

JEREMIAH MBATA

esidents of Ajegunle in AjeromiIfelodun Local Government Area of Lagos State, a community that links Apapa with Lagos Mainland and Island, are counting their sufferings as tanker drivers have taken over all major roads into the community, converting streets and drainage to public toilet. The truck drivers have over the last two months converged on Ajegunle in response to the Apapa gridlock. Due to the traffic situation in and around Apapa, and in a bid to gain access to the ports in Apapa, the truck drivers had resorted to parking on the streets of Ajegunle neglecting signposts and residents’ outcry on the menace. The plight of residents of the communities that made up the area has been raised over unlawful parking of

tankers and trucks in Ajegunle, which has reduced the passage pace thereby hindering the free flow of traffic and movement of commercial and private vehicles to and from Apapa. The indiscriminate parking of trucks on the highway has resulted in hike in fares by commercial bus operators, who now charge double the initial price of commuting within Ajegunle. However, the truck drivers on the other hand are also seeking the support of the government to find a lasting solution to the unending Apapa gridlock. The truck drivers who were displaced from parking on the bridges are seeking remedy to the Apapa gridlock. Ismail Aliu, a truck driver, whose truck has been parked along the road leading into Ajegunle, in narrating his ordeal and that of other truck drivers, said, “I have been here for the past three days. It has not been easy. The gov-

ernment should do something about the road leading to the seaport to enable free movement of tankers.” A police officer in the community, simply identified as Johnson, took the gridlock rather sarcastically, saying, “the reason trucks and tankers are parked this way is because there is money in Nigeria. If there is no money in Nigeria, you will not see these trucks and tanker here.” However, despite the menace caused by truck drivers making it difficult for commuters in Ajegunle, some residents of the area said it was not the fault of the truck drivers, rather putting it on the doorstep of the government. “The government is the cause of this problem, because all the reserved areas meant for parking of trucks have been sold out by the government, so it is left for the truck drivers to hang along the road.

NCCA records $16.98m as ticket sales charge from foreign airlines in 8 months IFEOMA OKEKE

igeria Civil Aviation Authority (NCAA) has recorded over $16.98 million as Ticket Sales Charge (TSC) from international airlines and over N9.16 billion from local airlines between January and August this year through its automation system. It is expected that the amount to be collected by the NCAA will more than double before the end of the year, as passenger traffic increases. Muktar Usman, directorgeneral, NCAA, in an interview with newsmen in Lagos, said air travel demand as projected by the International Air Transport Association (IATA) will continue to grow with more connectivity, adding that the second position

of Africa in the region in the July 2018 passenger traffic of 6.8 percent increase could be surpassed with direct link in the continent. Usman said, “There has always been that projection that aviation in Africa is growing and the rate of growth is one of the highest in the world. We lack that internal connectivity within the Africa region and once those sectors are developed, you would see much more increase in the movements. “For example, if you want to go to Niger as of today, you hardly have any direct link even though airlines have been designated, one of the ways of going there, is to go to Lome and then go to Niamey when from Abuja it should not be more than one hour, but you spend a whole day. “Once we start having

this connectivity direct, the cost would also be expected to reduce and then more people would be able to afford to fly, so it is expected that the increase would continue.” Statistics released by the regulatory Agency reveals that passenger traffic in the last eight months has hit 2.4 million with 27.1k flight count. International passenger traffic from January-August shows that 10 of the airlines are carrying the traffic with Ethiopian Airline taking the lead with over 134.104, followed by Emirates with 107.217, British Airways, 86.249 and Turkish Airlines, 70.392 passengers. Air France, 70.144, KLM Royal Dutch, 63.990, Virgin Atlantic 63.448, Delta Airline, 39.196, Qatar, 38.706 and South African Airways, 36.868 passengers.

Sahel expands scholars programme across Nigeria

he Sahel Scholars’ Programme (SASP) is an annual programme that introduced by Sahel Consulting Agriculture and Nutrition Limited (SCANL) and Sahel Capital Agribusiness Managers Limited (SCAML) in 2017, to empower outstanding Nigerian students through mentorship, hands-on experience and scholarships. SASP started with the University of Nigeria Nsukka (UNN) and has extended to Ahmadu Bello University (ABU), Zaria and Obafemi Awolowo University (OAU), Ife in 2018. Under the framework of SASP, Sahel held a day conference themed ‘Oppor-

tunities in the Agribusiness Landscape’ for students in ABU, OAU and UNN. Professors in the Faculties of Agriculture from the three schools and key players in the agribusiness landscape participated in the conferences. The guest speakers were Sunday Ezeobiora, executive director of Sunchi Integrated Farms Limited, Onyedi Ayalogu, co-founder of Phinomar Nigeria Limited, Olabode Adetoyi, managing director of Hi-Nutrients International Limited, and MD Abubakar, managing director of L&Z Integrated Farms Limited. A total of 618 students, 38 professors and four guest speakers participated in the SASP confer-

ences in ABU, OAU and UNN. The Sahel team made presentations on agricultural value chains and facilitated panel discussions on the career opportunities and success factors in agribusiness. The invited agribusiness industry players shared deep insights on their experiences in agriculture and highlighted the opportunities that exist for students in the agriculture sector. The students were also engaged in group competitions that tasked them to think through, discuss and present the challenges in key agriculture value chains (cassava, yam, palm oil, diary & poultry) and potential solutions to the challenges.

he Air Transport Services Senior Staff Association of Nigeria (ATSSSAN) has accused the management of Bi-Courtney Aviation Services Limited (BASL), operator of Murtala Muhammed Airport (MMA), Lagos, of walking out of a meeting called by the Nigerian Civil Aviation Authority (NCAA) to address its impasse with the unions. This is as the National Association of Aircraft Pilots and Engineers (NAAPE) has joined the ranks of unions planning to picket the terminal operator in the next one week, after the expiration of the 15-day ultimatum issued it by ATSSSAN. The unions had accused the management of Bi-Courtney of “unjustifiably” sacking 26 workers who expressed intent to join any of the industry unions of their choice. Ahmadu Ilitrus, presi-

dent of ATSSSAN, in an interview with BusinessDay in Lagos, alleged that the management of BASL also demanded for handing over of the controversial General Aviation Terminal (GAT) at the Murtala Muhammed Airport (MMA), Lagos to it before it could recall the 26 staff disengaged for unionism. Apart from this, Ilitrus explained that the management also requested that the union should impress it on the government to allow for commencement of regional flight operations from its terminal as purportedly spelt out in its contractual agreement with the government. He added that in the cause of the meeting, the management further accused NCAA of bias, declaring that there was no going back on its planned picketing of the terminal operator once the ultimatum expired unless the management rescinded its decision. According to Ilitrus, apart from the unions, which were represented, security agen-

cies in the industry were also involved in the meeting, stressing that the unions had tried all the available options to ensured that the disengaged workers were recalled all to no avail. He said: “The ultimatum to Bi-Courtney became necessary after the management walked out of the meeting called by NCAA in conjunction with all the security agencies at the Murtala Muhammed Airport, Lagos. “Bi-Courtney representatives told the meeting that it will not return the terminated staff until the unions and the Federal Airports Authority of Nigeria’s (FAAN) management surrenders GAT to it and allows it to commence international flights operations at MMA2. “When they were cautioned about the security implication of their stand on the issue, they accused the meeting of bias and staged a walk out. It is equally important to state that the second meetings that held before the walkout were the at the instance of NCAA.”

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Death toll from Boko Haram attacks rises ...Army denies claim

eath toll from the weekend attacks on a military position by Boko Haram in Borno State may have risen to 41 soldiers, according to latest report. As of Saturday night, the insurgents reportedly killed 30 soldiers, however, additional bodies of the Nigerian soldiers killed in the attacks were recovered Sunday evening. The Nigerian Army is yet to verify the number of those killed in the Mobbar Local Government Area of Borno State. According to reports, the soldiers were attacked at their base in Zari Village, Maiduguri north, near the border with Niger Republic. If confirmed, it would be one of the biggest military loss of lives this year. There is suspicion that the attack was carried out by members of Islamic State in West Africa (ISWA), a faction of Boko Haram led by Musab al Barnawi. In 2016, ISWA split from Boko Haram, the jihadist group that has killed more than 30,000 people in the region since 2009, when it launched an insurgency to create an Islamic caliphate. The Zari attack highlights the challenge to secure the northeast, months ahead of a February election in which security looks set to be a cam-

paign issue. “The battle lasted for about two hours and our colleagues fought them but things became bad before the fighter jets arrived. We lost about 30 of our soldiers and about 10 were wounded,” a military source who did not want to be named told Reuters. Another, who also did not want to be named, said 20 to 30 troops had been killed in a surprise attack. Details only emerged days later because it occurred in a remote area near the border with Niger. The attack, in the Mobbar Local Government Area of Borno, is the latest blow to Nigeria’s efforts to defeat insurgencies by Boko Haram and ISWA. Earlier this week, Reuters reported that Nigerian government officials had ordered thousands of displaced people to return to Guzamala, an area considered by aid agencies to be unsafe, as pressure mounts to show progress in the war against the insurgents ahead of the presidential election. President Muhammadu Buhari, a former general, won the 2015 election after vowing to crush Islamist militants. He plans to seek a second term in February. In July the fourth commander in 14 months was

named to lead the fight against the militants after a number of embarrassing defeats, despite the government having said since late 2015 that the Islamists in the region had been defeated. And 20 Nigerian soldiers went missing in mid-July following a clash with militants in the Bama area of Borno. Military sources say the troops are feared dead. Meanwhile, the Nigerian Army on Sunday denied alleged killing of 30 soldiers by Boko Haram at Zari village in Guzamala Local Government Area of Borno on Friday. The News Agency of Nigeria reports that an international wire service had reported that troops deployed in Zari in Guzamala Local Government Area were killed when Boko Haram lunched a deadly attack on the village on Thursday evening. According to the report, scores of jihadists in trucks stormed the base at Zari village, in northern Borno State late Thursday and briefly seized it after a fierce battle in which 30 soldiers were killed. But Brig.-Gen. Texas Chukwu, director, Army Public Relations, who denied the report in a phone interview on Sunday. He said that the alleged killing was the “figment of the imagination of the news agency.”

Monday 03 September 2018

Marketing expert proffers solution to resolving challenges facing Made-in-Nigeria products FRANK UZUEGBUNAM

hief Executive Officer of Caritas Group, Adedayo Ojo, says the challenges of product quality, communication, reputation, perception and packaging affecting Made-in-Nigeria brands can be resolved with proper policy formulation, strategic direction and effective communication. Ojo said this while moderating a panel session at the fifth edition of Lagos Public Relations Stakeholders’ Conference organised by Lagos

chapter of the Nigerian Institute of Public Relations (NIPR), themed “Addressing Communication and Reputation Challenges of Madein-Nigeria” in Lagos. Ojo encouraged Nigerians to patronise and consume made-in-Nigeria brands, saying, “I am going to be the change. I will patronise made-in-Nigeria brands. All of us have a role to play as citizens. Let us defend everything that is Nigerian made.” Earlier in her presentation, Toyin Sanni, CEO, Emerging Africa Capital Group, emphasised the need

to market Nigeria first before marketing made-in-Nigeria brands. She said positive perception and reputation of made-in-Nigeria brands must be effectively communicated. “We need to market Nigeria first before marketing our brands. Communication is everything - it is a differentiator that shapes reality and power. Communication shapes reputation better. A better business is the one that can communicate what they do, truly project their clients and engage in strategic direction,” she said.

Afriland CEO, Uzo Oshogwe, wins 2018 most enterprising woman in Real Estate Award

anaging director/CEO, Afriland Properties plc, Uzo Oshogwe, has won the Most Enterprising Woman in Real Estate Award at the 2018 edition of Africa Real Estate Conference and Awards, AFRECA’18. The award was given in recognition of her exceptional leadership and untiring efforts in providing adequate service delivery in the growth of the Nigerian real estate sector. The event, organised by

Propertypro.ng, took place at Landmark Event Centre, is designed to proffer solutions to real estate challenges and celebrate excellence amongst African Real Estate stakeholders, for their national and global achievements. While speaking during one of the sessions themed; Sustainable and Equitable Housing: The Role of The Government and Private Sector, Uzo Oshogwe recommended collaboration between the private and public sector as the solution to the housing shortfall Nigeria had

experienced for decades. She also stated that ‘‘Property developers need single interest loans to be able play their role in providing affordable houses and should explore other sustainable materials in order to crash the cost of construction.” Other attendees include the commissioner of housing, Lagos State, Gbolahan Lawal, Erejuwa Gbadebo, chief executive, Cluttons Nigeria and Rogba Orimalade, principal partner, Rogba Orimalade & Co.

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NEWS YOU CAN TRUST I MONDAY 03 SEPTEMBER 2018

fivethings

Insight Osinbajo: The acceptable face of a lame government GLOBAL PERSPECTIVES

OLU FASAN 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

ormer President Olusegun Obasanjo once described the vice president as a “spare tyre”.The Americans call theirs a “heartbeat from the presidency”. These descriptions imply that the vice president is only there to step in when the president is dead, incapacitated or impeached. Where none of these happens, however, the vice president functions almost entirely at the behest of the president, deriving his powers from delegations from his boss. The Nigerian constitution puts it unequivocally. The “executive powers of the Federation”, it says in s.5, are “vested in the President”, and they “may be exercised by him either directly or through the Vice President and Ministers …” Section 148 reiterates the position, saying that the President “may, in his discretion”, assign any state responsibility to the vice president or any minister. So, the vice president can only be as effective as the responsibilities that the president, “in his discretion”, assigns to him! That said, the Americans give their vice president the constitutional role of President of the Senate, and, in Nigeria, ours has the constitutional role of Chairman of the National Economic Council. But neither the Senate Presidency in the US nor the chairmanship of the National Economic Council in Nigeria confers any significant powers. For instance, as Senate President, the US vice president presides over the deliberations of the Senate but can only vote to break a tie. In Nigeria, the National Economic Council, which consists of the state governors and the governor of the central bank, is only there to “advise the President”. The real economic influence lies with the President’s Economic Team. But under President Obasanjo, the Presidential Economic Team did not include the then Vice President, Atiku Abubakar. Obasanjo asked the then Finance Minister, Dr Ngozi OkonjoIweala, to lead the team but insisted that he would “preside over it as chair”,as Okonjo-Iweala wrote in her book, Reforming the Unreformable. President Goodluck Jonathan went further. He made the Finance Minister, who again was Dr Okonjo-Iweala, the “Coordinating Minister for the Economy”, effectively rendering the vice president, despite being the chairman of the National Economic Council, a hapless bystander in the country’s economic policy-making. However, all that changed under the Buhari administra-

tion. From the start, the vice president, Professor Yemi Osinbajo, a constitutional lawyer, interpreted his constitutional role as chairman of the National Economic Council to mean that he, and not the finance minister, should coordinate the economy, and President Buhari agreed. Thus, Vice President Osinbajo became chairman of the government’s Economic Management Team and was also put in charge of the administration’s social welfare intervention programme. But, despite being the head of the economic management team, Osinbajo doesn’t command the instruments of concentrated executive authority. According to the authors of the book The Political Economy of Policy Reform, edited by the famous economist John Williamson, an economic team must have executive authority and enjoy the full support of the president. But Osinbajo had little power to influence, on critical issues, the direction of the government’s economic policy or the president’s thinking. As we all know, the first two years of the Buhari administration were characterised by policy paralysis, coupled with actions that hugely damaged the economy. Take the central bank’s misguided decision to ban importers of 41 intermediate and consumer goods from accessing foreign exchange through the official window, a policy that seriously hurt industries. Even worse, for over two years, the government stubbornly defended a fixed exchange rate that led to a crippling dollar shortage and created a massive disincen-

tive to foreign investment inflow. “When you are in a hole, stop digging”, the saying goes. But the Buhari government was in a hole, as Nigeria’s economy suffered its first annual contraction in 25 years, yet it was still digging, with irrational and destructive economic policies. What Osinbajo thought about those barmy policies we didn’t know, although his body language suggested he favoured bold economic reforms but for his boss’s adamantine opposition. So, let’s return to our thesis: the vice president is only as effective as the president allows. But there is a little window. The constitution provides a rare op-

portunity for the vice president to demonstrate to the nation, albeit temporarily, his ability and leadership style. If the president is on vacation or otherwise unable to discharge the functions of his office, he is expected to transmit a written declaration to the President of the Senate and Speaker of the House of Representatives transferring his powers to the vice president. And under those circumstances,

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But, hold on, what kind of government is this that gets nothing done, and allows policy paralysis or inertia, until the president is out of the country and executive power is transferred to his deputy?

according to s.145 of the Constitution, the president’s functions “shall be discharged by the Vice President as Acting President”. Well, on the few occasions that Osinbajo has been Acting President, he used the opportunity to prove his mettle! Recently, when President Buhari was on a 10-day vacation in London, Osinbajo, as Acting President, took bold decisions that earned him praise from most Nigerians, prompting a BBC Africa journalist, Ishaf Khalid, to call him “Nigeria’s favourite leader”. For instance, the Acting President sacked the powerful director-general of the Department of State Service (DSS), Lawal Musa Daura, for sending DSS operatives to lay siege on the National Assembly, an act Osinbajo rightly described as a “gross violation of constitutional order”. He ordered the Inspector-General of Police to “overhaul”the police unit called Special Anti-Robbery Squad (SARS) for alleged human rights violations. And he took the decisive step of recognising the Pinnick-led Board of the Nigerian Football Association to avert the threatened ban of the association by the world football governing body, FIFA. These were decisions that President Buhari had not, and probably would not have, taken himself. Last year, Osinbajo had a chance to step into Buhari’s shoes for a longer period when the president was on medical vacation for 50 days. During that period, he caught the world’s attention with the way he got things done. For instance, he intervened to stabilise the naira by getting the CBN to inject millions of dollars into the forex market; took steps, with the CBN, to address the problem of multiple unofficial exchange rates; and ensured the completion of the government’s long-delayed economic recovery plan.Osinbajo

was hailed by Nigerians and the international media. David Pilling of the Financial Times said he “injected real energy into policy-making”. But, hold on, what kind of government is this that gets nothing done, and allows policy paralysis or inertia, until the president is out of the country and executive power is transferred to his deputy? Buhari’s presence in the country, it seems, is a real obstacle to effective government. Femi Adesina, Buhari’s senior media adviser, said the president was consulted on, and approved, all the decisions that Osinbajo took in his absence. Okay, but why did Buhari not take those decisions himself when he was at home? Does he have to be away on long vacation or medical leave before this country can make some progress? Last week, the FT reported that President Donald Trump had described President Buhari as “lifeless”.Of course, Trump was being typically rude. But,let’s face it, Buhari’s government is lifeless, lame, slothful, name it! The president is laid-back and lethargic; he is not called “Baba Go-Slow”for nothing. What’s more, he is an obstructionist. He refuses to, and would not let anyone, take difficult yet critical decisions on the economy, and, indeed, on security and social issues. He has a phobia for making positive, farreaching decisions! But the result is a failed, sclerotic government. Think of it: the economy has flatlined, growing at just 1.5%; corruption, according to Transparency International, remains widespread; insecurity, thanks to the impunity and spread of Boko Haram and the killer Fulani herdsmen, is debilitating; and poverty and inequality are deepening. We now know, thanks to the Bookings Institution, that Nigeria has the largest number of extreme-poor in the world. A recent World Bank report also says that 92.1% of Nigerians live at below $5.5 a day. Yet, the government keeps saying that it is taking Nigerians out of poverty, trumpeting its “achievement” of putting 500,000 graduates on its N-power programme, after three years in power, to earn N30,000 per month, less than $3 a day! All of which puts Osinbajo’s popularity in perspective. The vice president is being praised not because his government has significantly touched the lives of ordinary Nigerians; rather, because he is always, as Acting President, taking steps to address some of the critical things that Buhari deliberately left unaddressed when at home. Secondly, Osinbajo is popular because his dynamism puts Buhari’s performance in the shade. As Buhari himself once said, “youth and intellect are squarely behind Osinbajo; age and purely military experience are behind me”. That, let’s face it, is why Osinbajo makes Buhari pale in comparison; why he is the acceptable face of a sluggish government! Note: the rest of this article continues in the online edition of Business Day @ https://businessdayonline. com/

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