BusinessDay 03 Sep 2020

businessday market monitor FMDQ Close Benchmark NTB* & CP*

Bitcoin

NSE

Everdon Bureau De Change

Foreign Reserve $35.7bn

Biggest Gainer NB 2.56 pc

N39

Biggest Loser

25,460.00

GBP-$:

BUY

-4.9 pc

+0.59 Gold

Cocoa US$2,676.00

$1,941.14

NEWS YOU CAN TRUST I ** THURSDAY 03 SEPTEMBER 2020 I VOL. 19, NO 643

Crude Oil $44.85

I

N300

SELL

$-N 450.00 £-N 600.00 €-N 540.00

g

I&E FX Window CBN Official Rate as at August 28, 2020

NTB

MTN Nigeria plc CP

FGN

Dangote Cement plc

Axxela NSP-SPV Funding 1 (Natural Gas) PowerCorp plc plc

Spot ($/N) 25-Feb-21 5-Mar-21 23-Jul-30 30-Apr-25 20-May-27 27-Feb-34

Market

Commodities

Glaxosmith N5.1

Cross Rates

FOREIGN EXCHANGE

Benchmark Sovereign & Corporate Bonds

379.00 379.00

0.00 2.40

0.00 5.33

0.00

0.15

0.14

0.00

8.90

9.20

10.04

11.44

466.00 3M 60M 1M 2M 6M 36M 12M 616.00 Currency Futures SEPT-30-2020 OCT-28-2020 NOV-25-2020 FEB-24-2021 AUG-25-2021 AUG-30-2023 AUG-27-2025 389.54 392.38 395.23 403.75 420.81 498.32 590.10 554.00 ($/N)

www.

*NTB - Nigerian Treasury Bills; *CP - Commercial Paper

@

g

g

BUSINESSDAY JOBS & GROWTH SERIES

Economy, jobs in peril as Nigeria flirts with hunger CALEB OJEWALE

T

he economics of food access is not so straightforward. It involves eliminating poverty, first, to enable 86.4 million Nigerians have access to food and important nutrients. This could translate into high consumer spending and improved margins for firms.

Companies will then create jobs to match increasing purchases from millions of households.

But this, again, is not straightContinues on page 29

Nigeria’s retail boom will only happen with boost in consumer income $40bn in missed retail opportunity since 2013 Policies needed to fuel growth in retail jobs

BUNMI BAILEY

N

igeria needs deliberate policies that will eliminate poverty, grow consumer income and spending to rejuvenate its

ailing retail industry, and as well boost jobs.

After the US and Vietnamese negotiators signed a sweeping bilateral trade agreement (BTA) in 2000, Vietnam opened up its economy to foreign investment, expanding the role of

the private sector with marketbased reforms and economic liberalisation.

It relaxed taxes, registration and other limitations to business, prompting foreign invesContinues on page 31

Inside

Dollar falls to N430 as BDCs fund account ahead of CBN’s P. 2 allocation UBA delivers N300.6bn gross earnings, declares N0.17k interim dividend P. 26

2

Thursday 03 September 2020

BUSINESS DAY

news Dollar falls to N430 as BDCs fund account ahead of CBN’s allocation HOPE MOSES-ASHIKE

T

he value of Nigeria’s currency improved further on Wednesday by N10 as the cost of dollar dropped to N430 (selling) compared to N440 traded on Tuesday on the black market.

Foreign exchange users who want to buy from black market operators can buy dollar at N425 in some areas of Lagos State.

The improvement in the exchange rate is due to the Central Bank of Nigeria’s planned resumption of dollar sales to Bureau De Change (BDC) operators next week.

BusinessDay had earlier reported that the Central Bank plans to resume dollar sales to BDCs on Monday.

The apex bank said it would allocate $10,000 twice a week to BDCs, which implies $20,000 weekly to 5,000 BDCs, amounting to a total of $100 million in a week.

With the new amount of FX allocation, the BDCs are losing about 73.3 percent or $55,000 when compared to $75,000 they were getting from the CBN before the outbreak of Covid-19 pandemic.

Uche Uwaleke, a pro-

fessor of capital market at Nasarawa State University, Keffi, reckons that the reduction is justified by the fact that the rate of international travel and the real, as opposed to artificial, demand for dollars to meet invisibles will take quite some time to return to pre-Covid-19 level as many countries are yet to fully reopen their economies.

The foreign exchange has been under intense pressure since March 2020 following sharp drop in prices of oil – Nigeria’s major foreign exchange earner – due to outbreak of Covid-19.

Nigeria’s currency has lost N108 to the dollar since March 2020 to trade at N476 as at August 2020 compared to N368/$ in March.

“It is common knowledge that the FX pressure is partly due to the speculative demand for dollars. The reduction is also a product of the drop in crude oil price and external reserves compared to pre-Covid-19 era. I am sure the CBN will increase the volume of weekly sales to BDCs as oil prices recover and the level of reserves improve,” Uwaleke said.

According to the CBN’s circular announcing re-

Banks lure MSMEs into commercial loan as BoI, DBN, AfDB facilities remain fallow Iheanyi Nwachukwu & Hope Mose-Ashike

J

ohn Adebayo (not real name) is a small business owner who recently approached his Nigerian lender for a serviceable loan facility to enable him boost working capital of his small business as the year-end fast approaches.

Adebayo trusted his banker to the extent that every information or advice from the man on suit is considered without much doubt, but as Covid-19 pandemic ravages businesses, he (Adebayo) could not have opted to access higher interest bearing loans while there are other onlending facilities accessible at lower interest rate.

Interestingly, this is how most banks relationship man-

agers are sweat-talking their credit worthy corporate customers into accessing high interest bearing commercial loans, just to earn higher interest income and boost their profits.

The interest rate on Bank of Industry (BoI) facility is 13 percent, Development Bank of Nigeria (DBN) (14.6%) for 3 years and below while it is 16.6 percent for facilities above 3 years. For African Development Bank (AfDB) loan, the interest rate is 13.5 percent; while commercial bank loan interest rate ranges between 19 percent and 25 percent.

While MSMEs carry high financing costs of all sizes when sourcing for funds from commercial banks, many bank relationship managers still prefer not to sell cheaper on-lending funds like that of

BoI, DBN and AfDB because of their desire to make more money from interests and grow profit margins.

“The appetite for on-lending of development funds is gradually gaining momentum, given the low interest rate environment, albeit banks would want to lend their own funds to meet minimum loanto-deposit (LDR) of 65 percent before exploring the on-lending windows,” an informed banking industry source told BusinessDay. Our source noted that many bankers appetite for on-lending was low “because the return on such loans to banks do not adequately compensate for the risk they take in the loans, as banks take full risks for the loans and would be required to pay back both principal and interest in

Continues on page 29

T

he Central Bank of Nigeria (CBN) has said it will not shift grounds on its decision to escrow the accounts of power distribution companies (DisCos).

In a meeting with Vice President Yemi Osinbajo and senior government officials, on Friday afternoon, the DisCos sought to convince the government to postpone the decision but were unsuccessful.

Recall that the apex bank recently directed Deposit Money Banks (DMBs) to take full responsibility for collection and remittance on behalf of DisCos if they are providing guarantees to NBET and TCN, a move expected to solve the liquidity challenge facing Nigeria’s electricity sector.

“No DMB is permitted to open or continue to maintain a collection of account for a Disco without the express noobjection of the DMB that guaranteed its exposure

to NBET or TCN,” the CBN said in the circular addressed to all banks dated August 24.

The implication of escrowing DisCos’ account is that they lose control over their accounts.

Recall also that Etisalat Nigeria in 2017 failed to reach an agreement with local banks to renegotiate the terms of a $1.2 billion loan obtained in 2013. As a result, Etisalat’s shareholder structure was changed with the lenders taking over Etisalat Group’s stake, which was written down to zero.

A similar fate could befall the DisCos who are also heavily indebted if they cannot improve collections to the market.

Remittances to the market have been around 60 percent and the regulator by its new review of the Multi Year Tariff Order (MYTO) 2015, which kicked in the Service Reflective Tariff, has ordered DisCos to remit at least 80 percent of the market Continues on page 29 www.businessday.ng

Continues on page 31

L-R: Gideon Ikhine, deputy director-general, Edo State PDP Campaign Council; Peter Obi, former vice presidential candidate of the PDP, and Godwin Obaseki, gubernatorial candidate of the PDP/Edo State governor, during the governor’s courtesy visit to the Dukes in Orhionmwon LGA, at the palace of Enogie of Evbobanosa.

CBN not shifting grounds on decision to escrow DisCo accounts ISAAC ANYAOGU

the event that the customers defaults.

“When interest rate was high and banks could make credit margins as high as 12 percent or above on loans funded with the deposits, the 7 percent margin on most on-lending does not seem attractive, especially as such loans have capital charge and carry the full cost of risk, among others.”

Commercial banks, due to their wider network of branches and closeness to MSMEs than any other player in the finance sector, are veritable vehicle of reaching to the MSMEs who create job and wealth for the citizens.

DBN said it disbursed N100 billion to over 100,000 MSMEs in the country last

Winners, losers of interest rate cut on savings deposits LOLADE AKINMURELE & ENDURANCE OKAFOR

… options for Nigerian savers

new directive from the Central Bank of Nigeria (CBN) that slashes the minimum interest rate banks pay on savings deposits to 1.25 percent from 3.75 percent holds a mixed bag of fortunes for the economy.

While banks are expected to be the biggest beneficiary of the rate reduction as it boosts their profitability, Nigerian savers are going to be negatively hit.

Nigerian savers By reducing the minimum interest rate on savings deposits to 1.25 percent per annum, the negative interest earned on deposits by Nigerian savers will widen to -11.5 percent from -8.7 percent when inflation rate of 12 percent is factored.

What this means is that if

a person deposits N1 million in a savings account, while the money would have appreciated in nominal terms

by N12,500 (1.25%) to N1.0125 million by the end of the year, the money would be worth 8.7 percent less in real terms.

With this in mind, Nigerian savers are perhaps better served looking for other ways to protect their savings from losing value. The problem with that however is the current subdued interest rate environment in the country.

Analysts however say the limited investment outlets available to savers due to the subdued interest rate environment may see interest in equities increase.

“We believe that some bank customers might be encouraged to take a second look at

A

https://www.facebook.com/businessdayng

alternative asset classes such as equities,” analysts at Lagosbased FBN Quest say in a note.

“In our view, with most banks trading below book value, we believe that a significant portion of banks’ credit risks is already reflected in their share prices,” FBN Quest analysts said.

In addition, the dividend yields of some bank stocks will still be better than the 1.25 percent implied interest on savings deposits and the c.2 percent yield on T-Bill instruments and that could be another attraction.

The attraction of the equities market, which is down 5 percent this year, is however muted due to the risk involved.

Every other account holder in a bank will be faced with a @Businessdayng

wider negative real interest rate as this could also be a trigger for lower rates on fixed deposits.

Banks Nigerian bank stocks gained by the most in three months Tuesday after the CBN reduced the interest rate on savings deposits to a minimum of 1.25 percent per annum from 3.75 percent.

The rate reduction that became effective September 1 is expected to translate to increased profitability for banks, as it reduces their cost of funds.

It means they can save money that would have gone into paying higher interest on savings deposits. Banks with already low cost of funds like GTBank and Zenith Bank, are

Continues on page 31

Thursday 03 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

3

4

Thursday 03 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 03 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

5

6

Thursday 03 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 03 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

7

8

Thursday 03 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

BUSINESS DAY

Thursday 03 September 2020

comment

comment is free

9

Send 800word comments to comment@businessday.ng

Emeke E Iweriebor - the exit of a ‘common ground’ leader Positive Growth with Babs

Babs OlugbemI

O

death, where is your sting?

O grave, where is your victory. Emeke E. Iweriebor triumphed over death and grave at the young age of 51 with the multitude of good works and impact on others.

I never thought I would be writing this eulogy for you, Emeke. I planned to write part two of my article on sales coaching using the peaks and valleys mentality.

Suddenly, the news of your untimely death got to me yesterday. I was told you finished the race without notice on Sunday, 30th August 2020 but with lots of hope, value, and impact on people you have mentored both in your private and career life. It is indeed a rude shock, and I cannot stop reflecting on you since yesterday.

The dash in Emeke Iweriebor’s life was lined with 18,725 days, (51years, 3months), but his impact will remain in the minds of his friends and colleagues forever. Who is this Emeke?

Emeke Iweriebor retired as an executive director in the Nigerian banking industry in 2020 after over two decades of meritorious service in different banks and locations across the continent. He was at a young age in his career spotted by an ultimate leader who mentored him with lots of opportunities clothed in the dress of work. Emeke took his chances. He proved to be ever ready for leadership roles. He

excelled in every area of his responsibilities, leading to his progression on the job in a fast-track but justifiable manner. His justification is the result, and he was not short of any during his lifetime. He was at a time tested with the role of handling the two of a bank’s biggest directorates with huge bottom-line impacts and demands.

The outcome of the test led to his elevation and recognition.

Emeke followed his mantra at duty posts and in his relationship with others.

His mantra ‘to lead well, you must serve well’ showed in his work, the result he generated and the people he led during his career. Words cannot express the beautiful impacts of Emeke’s life on his direct reports and colleagues in the banking industry.

At a time, Emeke was transferred to an uncharted terrain outside Nigeria.

Within 6months, the transformation Emeke broke-even and developed pools of leaders who took the company to the next level in ranking and to the delight of the stakeholders.

Emeke was indeed a unique leader both in the development of people and in achieving result when it matters most.

As a leadership coach who sees everything from a leadership bias, I took my time to study Emeke as one of the proteges of an ultimate leader I have studied for two decades. I had a direct work relationship with Iweriebor, and my summary of Emeke’s leadership quality is simple. Emeke Iweriebor was a leader with an enormous capacity to identify the common ground and exploit that to maximise the potential in others.

I need to explain Emeke’s common ground leadership further, and I hope it connects and consoles Emeke’s friends and proteges reading this eulogy as well as a set standard of relationship for upcoming leaders. Any leader who wishes to be remembered not only for their results but for the impacts made on oth-

ers must identify common ground with their followers.

I met Emeke at the lobby of the bank we both worked for after two years of not working in the same team. He looked at me and asked how well my branch was doing. He did not wait for any answers but rolled out my branch’s figures and commended me for doing well. He was not my direct boss, though we had worked together, and I wonder why he was still interested in checking my performance after two years. His next comment swept me off the ground. He said, please do not let your performance drop and tell me the next book you are writing, I read your books. I was surprised with his doubleedged encouragement at the same time value his ability to identify a common ground which other leaders will not consider as important to me. We developed a friendship bond, and I do make it a duty to send him a copy of my book each time a new one is released. I later realised there is an author in Emeke, but it takes a real leader to identify the common ground and use it to build friendship and loyalty.

When one of Emeke’s trusted aids wanted to advance his career by moving to another role with the same bank, he was afraid and developed goosebumps.

He believes no boss will want to be selfless enough to release his or her excellent staff. Contrary to his belief, he met a different leader in Emeke when he approached him with his desire to change his role within the bank. Emeke identified the common ground. The common ground between supervisors and subordinates is progress. The first progress is on the work, which is the expected result for the organisation. The second progress is the personal and professional development of the goose that is laying the golden eggs. To his surprise, Emeke developed a three months replacement plan and personally looked for a vacant position where his strengths will be most utilised. Today,

‘

Emeke came, saw, and conquered in his 51years journey and touched so many lives.

His leadership success hinged on hard work, respect for others and his inspiring nature

the staff will never forget the impacts of Emeke on his life and career.

Before his untimely death on 30th August 2020, Emeke Iweriebor was about to publish and release his book titled ‘Mind Money Matter-Pan-African Integration in the 21st Century’. A book described by Ngugi wa Thiong’ o, a renowned Kenyan writer as a practical way into our Pan-African future. The book is not Emeke’s first as the compilation of his inspiring quotes worth more than a dozen of books. To his former staff and the leaders he had developed his words like ‘challenge yourself more than others challenge you’, ‘you cannot stand still, and expect doors to open’, why are you holding yourself back?’, and a host of others will be evergreen in their minds. To his wife and three children, it is an irreplaceable loss but with a fortitude. The fortitude is in Emeke’s short life but a life worth living.

The family should be proud of their support of Emeke, the support that gave him enough peace to lead and propel others to the highest height of performance and development on the job.

Emeke came, saw, and conquered in his 51years journey and touched so many lives. His leadership success hinged on hard work, respect for others and his inspiring nature. He was devoid of the usual leadership arrogance and seized the moments to impacts others quietly. No wonder there are lots of eulogies from his colleagues and friends on all the professional and social media networks. Emeke will be remembered for creating a legacy of respect, support, and mutual common ground for those he led and for the banks he worked during his lifetime.

Adieu Emeke Iweriebor.

Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, the Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

SMEs: Alleviating financing constraints

G

lobally, Small and Medium Enterprises (SMEs) are critical to the development of any economy as they possess great potentials for reducing poverty through employment creation and income generation. This sector also improves innovation, local technology, output diversification, development of indigenous entrepreneurship and forward integration with large-scale industries. Further to this, in Nigeria, many people work for these Small and Medium-sized Enterprises (SMEs) for subsistence. Therefore, the importance of SMEs is well recognised and documented in Nigeria. Regardless of the significant contribution to the economy, SMEs’ survival rate is significantly lower than that of large corporations.

Unfortunately, SMEs in Nigeria have underperformed over the years. However, these SMEs in Nigeria constitute more than 90 percent of the businesses around; their contribution to the nation’s GDP is below 10 percent according to recent data. Empirical evidence shows that finance contributes about 25 percent to the success of SMEs, and one of the key issues attributed to nonperformance is lack of access to funds. Having access to finance gives SMEs the chance to develop their businesses and acquire better technologies for production, therefore ensuring their competitiveness.

However, funding has remained one of the key SME internal issues that confront most enterprises in Nigeria today. SMEs in Nigeria face the financing gap, and this restricts their economic prosperity. Consequently, the lack of external finance availability for small and medium enterprises (SMEs) is the focus of this article.

Recall, Small and Medium Development Agency of Nigeria (SMEDAN) is the Nigerian government’s institution to develop the SME sector. The agency provides insights into the definition of small businesses based on the number of employees. The agency defined small and medium enterprises (SME) as a business employing 1 to 200 persons. Therefore, in the context of this article, this definition is relied upon. The SME Sector in Nigeria is bedevilled with many challenges. Among these, a shortage of finance occupies a very central position. The economic and funding importance of the small and medium enterprise (SME) sector is well recognised in academic and policy literature and also evident globally. Access to financing for these SMEs remains severely constrained, restricting their business growth.

For several reasons, large firms may have a comparative advantage over SMEs because of business their structure, credibility in the market and easy access to funding. The limited access to financing by SMEs usually impedes their productivity and growth. Evidently, SMEs face credit discrimination from banks because of opacity their information, lack of structure and it is quite common that these SMEs do not have in place audited financial statements. For these reasons and more, it is usually difficult for SMEs to show credit quality to banks and other financial institutions.

So, SMEs are seen to constantly experience financially constrained, and they experience more stringent credit terms than the large companies, which are seen to be less risky.

Access to finance can give SMEs the chance to develop their businesses seamlessly and acquire better technologies for production, therefore ensuring their competitiveness.

www.businessday.ng

However, funding has remained one of the key SME internal issues that keep confronting most enterprises in Nigeria today. To substantiate this perennial issue, an opinion poll was conducted SMEs in Lagos State- (computer village Ikeja, Alaba international market and some market associations (Auto Spare Parts and Machinery Dealers-ASPAMDA and Balogun Business Association) the findings also revealed one of the main constraints faced by SMEs to be lack of access to finance.

Typically, most of the respondents cited funding and access to finance is the most important constraint. About 79 percent of small firms cited a lack of finance and access to financing as the main constraint to their business growth. That means only 21 percent of them have access to required funding for the development of their businesses, and this crucial enabling factor is difficult for SMEs to access. Consequently, the access to the necessary financing or credit required to expand and continues to perform the business operation, growth, innovation and employment will be affected greatly.

Banks and credit institutions perceive SMEs in Nigeria as risky structures: not very resilient, fragile in terms of activity, solvency and management. Context observation also revealed that many banks do not have specialised products targeted at SMEs, particularly start-ups and micro-businesses in Nigeria.

The absence is due to the banks’ reluctance to lend funds to start-up firms, as it is found that these younger firms’ survival rates are lower than the established large firms. The opinion poll conducted also indicated that constraints are larger for SMEs in relation to larger firms due to inadequate assets for use as security or collateral. From the opinion poll, it

https://www.facebook.com/businessdayng

Timi Olubiyi was further gathered that a very high-interest rate is one of the most significant barriers for small businesses to access funding.

SMEs are discouraged from taking loans from banks, as they cannot agree with the loans’ price. Because it will only increase their debt burden, and that can negatively affect the value of the businesses. Other factors discovered that affect the access to finance for SMEs are cumbersome application procedures, short loan maturities, collateral requirements and the novel coronavirus (COVID-19), which has drastically changed the lender characteristics, among others. The COVID-19 has had devastating economic effects on the world, and countries are experiencing a decline in economic output. Majorly SMEs have been hard hit in Nigeria with their business continuity severely threatened.

Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Timi Olubiyi is an Entrepreneurship and Small Business Management expert. He is a prolific investment coach, business engineer, Chartered Member of the Chartered Institute for Securities & Investment (CISI) and a financial literacy specialist. He can be reached on the twitter handle @drtimiolubiyi and via email: drtimiolubiyi@gmail.com, for any questions, reactions, and comments.

@Businessdayng

10

Thursday 03 September 2020

BUSINESS DAY

comment

comment is free

Send 800word comments to comment@businessday.ng

Six months later (27/2 to 27/8): Oga-Coro brazenly defies our sacrosanct federal character

ik MUO

S

ix months ago, 27/2/20, the global celebrity, Oga-Coro, made a grand entry into Nigeria. On 27/8/20, the NNDC as it has been doing before, the state-by state-statistics. I have looked at the figures with the eyes of an elder.

I have also undertaken an econometrics analysis, aided by the SPSS, version 26. And one thing is obvious: Oga-Coro has treated our cherished Federal Character, as it is being practiced in this centralised and islamised federation, with utter disdain. This is my focus today but, before then, let’s review some recent Coro and non-Coro developments.

One major non-Coro development in recent times is the outcome of the simmering internecine power struggle at UNILAG, where the elephants are doing their own things at the expense of the grass, where they went to the extent of eating their own flesh and drinking their own blood (Isaiah 49:26). I shall not interrogate the matter here. However, something unusual has happened. The Federal Government disbanded the combatants, appointed an acting VC, appointed an acting Chairman of Council and swore in a visitation panel, all within a jiffy. This government has never been this decisive and this fast. The only time the government was this fast was when it criminalised and proscribed IPOB or whenever our soldiers attacked IPOBians singing songs and waving flags. As we await the outcome of these ‘fast-fast’ interventions, I state without equivocation that this decisiveness is worthy and indeed commendable.

Sometimes ago, one laggard in your village school came third from behind in an exam and when his parents wanted to roast him for his woeful performance, the unrepentant young man said: after all I did better than 2 others. The other day, the National Bureau of Statistics

reported that our GDP growth for Q2’20 was -6 percent. Oga-Coro is surely the chief culprit though we were already by the fireside before the onset of harmattan. But rather than heap all the blames on Coro, make more promises and move on with life, the Government decided to behave like the boy who failed his exams; it started beating its chest and comparing its performance with those of US (-33 percent), UK (-20 percent), France (- 14 percent), Germany (-10 percent), Italy (-12.4 per cent), Canada (-12 per cent), Israel (-29 per cent).

And I ask, why not compare with those countries in all realms: poverty, unemployment, inflation, governance standards and transparency, standard of leaving and cluelessness index? We can also compare budget per capita where we stand at about $150 per capita with South Africa at $2,000 , Algeria $1700, Morocco, and Cameron,$300! Comparison is never a good way out and if you want to compare sincerely, then, do so comprehensively. I have heard about the formation of New NBA (just like the nPDP?) and … no comments for now.

Cairo Ojougbo has also declared that if he released the list of NDDC looters, Nigeria will break. So what is holding him? At least, the country will break without any bloodshed. I however take exception to his assertion that the FG shared N30,000 to EVERYBODY as a Coro palliative. I did NOT receive a dime and I have not seen those who received.

And then, Japanese PM Shinzo Abe has apologetically announced his resignation for health reasons, saying he did not want his illness to get in the way of effective leadership and decision making. He had resigned in 2007 for the same reason. Nearer home, 82 year old Guinea’s President, Alpha Conde has humbly accepted to run for a third term, as nominated by his party, Rally of the Guinean People (RPG). You want my comments? Different strokes for different folks and it will be a waste of efforts, in Nigeria where ‘they’ will think that the Japanese fellow is crazy, while adopting the Guinean President as role model! Other important developments are: that our refineries which were idle for 12 months had incurred expenses of N142bn.. just for being idle and that the ‘government pikins’ on NDDC scholarship have been ‘settled’, months after some NDDC officials were paid hundreds of millions to go and see how

they were faring. The most newsworthy news is the decision of Zamfara State Government to introduce death penalty for reckless driving! And please, do not forget to collect the latest palliative and Christmas gift in advance from our caring government: higher NEPA tariffs (yes; it is still NEPA as nothing has changed) starting from the ember months (1/9/20).

On the Coro-front, I am glad that Abayomi can now continue with his good works unhindered as he has escaped from Coro captivity. The numbers are dropping in Nigeria (138 on 30/8/20) and we have an enviable fatality rate of 1.8 percent. This is happening as India set world record of highest single-day spike at 78,761 just as it began easing restrictions to help economy( 30/8/20) that was the 4th consecutive day India recorded more than 75000 infections.

However, the PTF warns that the declining figure was due to lower testing, and even if the fatality rate is 0.001, you will only know what it feels like when you have lost someone dear to you. The PTF has also cautioned states about hasty reopening of schools, just as ASUU (still in the trenches) has warned it would be disastrous for public schools to resume now.

However a faceless group of renegades masquerading as Congress of University Academics (CUA) had announced that they were ready to resume.

Lagos has however reopened its schools and LASU has announced that students would return in batches just as schools in Osun and Delta States are resuming on 21/9/20. Probably they will be operating with CUA members. Meanwhile, here is an interesting news:The University of Alabama has recorded 566 cases of Coro just six days after it reopened the school for activities in August 2020!!!

International flights are to resuming this week (5/9/20) four days after our frenemy, Ghana, had opened its skies (1/9/20). That is good; our big men who make their money in Nigeria but live abroad are now celebrating but I have not heard any exciting offers from our Airlines. This is what I mean: Emirates is offering free COVID-19 insurance to all of its passengers, which covers medical expenses, quarantine costs, and repatriation if you miss your flight home. It also covers the cost of repatriating your body and your funeral if you die from the virus. This is an authentic

‘

Oga-Coro has treated our cherished Federal Character, as it is being practiced in this centralised and islamised federation, with utter disdain

Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye

Nigeria’s maternal health crisis calls for good journalism, but we need better tools

M

aternal mortality is one of Nigeria’s most persistent health issues. It is not news that Nigeria has consistently ranked among the countries with the highest number of maternal deaths. In 2017, the World Health Organization estimated that Nigeria contributes 12 percent of global maternal deaths. Government administrations have responded with new programmes backed by international donor funding amounting to millions of dollars, and even community organisations have banded together introducing programmes of their own to get Nigeria’s maternal health crisis under control. Some of these programmes, like Ondo State’s Abiye and the Midwives Service Scheme have been outstanding.

For most other programmes the situation is different. When launched, they are reported about but very little can be found about their impact months after. Did they work? How was the money spent? Which women or communities were affected? We need more solution stories.

It must be said that this is not a failure of journalism. Journalists have been known to uncover the dangerous effects of international business deals in local communities or lay bare the sexual harassment that is rampant in West

African higher institutions. The lack of follow up about how Nigeria is working to reduce its maternal mortality is an issue of access and accountability.

Lack of access to accurate data showing Nigeria’s maternal mortality is a well-known issue. International agencies have given varying accounts about where Nigeria stands. WHO has published three different estimates for the country’s maternal mortality ratio over the last five years, all of which give different figures for the same time frame.

Political leaders have openly questioned these numbers and others developed by international bodies calling them “wild estimates.”

But the National Demographic Health Survey doesn’t offer any more clarity. Published every five years, the survey reports have only released maternal mortality ratios in three editions. If we look closely at the data from these surveys, it would show that the reduction in Nigeria’s maternal mortality ratio has not met the country’s own expectations.

In ten years, Nigeria and a host of other countries will be evaluated by whether they were able to achieve a set of goals to ensure a better future for their citizens. Achieving a maternal

www.businessday.ng

mortality ratio less than 140 maternal deaths per 100,000 live births is a big-ticket item of the third Sustainable Development Goal. If we’re going by the estimated maternal mortality ratio in the 2018 National Demographic Health Survey, Nigeria has ten years to reduce its maternal mortality ratio by more than 70 percent.

The best way to conclude whether or not this will be possible is to look at Nigeria’s track record so far. This is why we built Maternal Figures, a database of maternal health interventions implemented in Nigeria over the past 30 years. We wanted to put together a resource that would help journalists, researchers, and other stakeholders answer the question of how well interventions are working and what is the evidence available. For the last year, we surveyed dozens of donor agencies, federal and state budgets, and non-profit reports following the money allocated to these programmes.

We’ve charted maternal health policy and legislation over the last 30 years, including a policy that approved the use of a life-saving drug to treat postpartum haemorrhaging. And have collected close to 500 source documents: reports, evaluations, research, and interviews relating to these interventions. These are now available on

https://www.facebook.com/businessdayng

assurance to its passengers. Furthermore, as we are awaiting September 5, let’s note these developments: Last week, Coro-enforcers stormed a plane minutes before take-off from London Stansted and dragged off a Coro-patient who had bolted from quarantine. IndiGo Air quarantined all crew for 14 days after a passenger on Chennai-Coimbatore flight teste Coro-positive. I hope we have factored in all these, including our irresponsible elite who are too big to obey the simple protocols.

Meanwhile, the ferocious global scramble for vaccines continue as Canada, with a population of 38m has ordered for 76m doses of Novavax Coro vaccines just as US, which supported the firm’s research efforts with $1.6bn has cornered the first 100m doses.

Russia also starts the distribution of its own vaccines this month. How does WHO enforce its vaccine equity policy and what is our fate? If we cannot pay hazard allowances, cannot afford PPEs and have challenges conducting tests, how do we join the scramble for vaccines? Anyway, as we would always say, God de! There are 173 candidate vaccines as at August at various stages of trials. And as that is going on, anti-Coro groups stormed the German Parliament on Saturday, 29/8/20 in protest against coro protocols just as anti-restriction protest is rocking Sydney( Australia) while their friends in Nigeria, youths of Nassarawa state, are forcing corocompliant residents to REMOVE their masks! Curious, isn’t it?

Now, we come to Oga- Coro’s defiance of our cherished and inviolable Federal Character Policy (FCP). We know what the FCP is and how it operates. It is a principle that ensures that Emeka, who lives in Kebbi State and who scored 250marks is not admitted into so called Unity Schools while Umaru, his class mate who scores 5 marks is admitted. When applied in breach, it ensures that appointments (especially security and juicy ones), projects and programmes are concentrated in the North, especially the Muslim north.

Ashley Okwuosa and Chuma Asuzu our website.

As a result, we’re able to provide insights into who the largest funders are or what regions of the country receive the most or least amount of funding according to our research. Maternal Figures does not claim to be an exhaustive look at maternal health in Nigeria, but it is a start. In the right hands, Maternal Figures will encourage better record keeping of how Nigeria aims to meet global and national goals to keep pregnant women safe during childbirth.

In a journalist’s hands, Maternal Figures is a research tool to find stories on how well Nigeria is doing to end the maternal health crisis. It is a guide to asking the right questions, interviewing the right people, and seeing the reports first hand. With more stories, we build more awareness and hopefully we end this crisis once and for all.

Okwuosa and Asuzu are the researchers behind Maternal Figures, a database of maternal health interventions implemented in Nigeria over the last 30 years. To learn more about their work and access the database, visit maternalfigures.com.

@Businessdayng

Thursday 03 September 2020

BUSINESS DAY

comment

comment is free

Send 800word comments to comment@businessday.ng

Nigeria’s institutions are not up to scratch CHRISTOPHER AKOR

P

resident Muhammadu Buhari does not speak much, at least in public, but anytime he speaks, its from the heart. He says it exactly as he feels and thinks it and that has not always helped him politically. This explains why when the Southwest All Progressive Congress (APC) wing adopted him as their candidate for the 2015 election, they expertly managed him, curated all his speeches and public engagements, however after winning the elections, they could no longer manage his public utterances as they had done during the campaigns that was when we began to see and hear from the real Muhammadu Buhari.

At one of the first occasions where he had to speak extempore, in July 2015, at the United States Institute of Peace (USIP), he revealed his truest feelings about the Southeast and Southsouth.

After his prepared address, members of the public were invited to ask questions in a moderated session by Johnnie Carson. Pauline Baker asked him about the security situation in the Niger Delta in relations to the amnesty programme and the issue of bunkering in the region.

Buhari struggled with the question and had to confer with Carson. Thereater he looked at Baker and said with a straight face: “I hope you have a copy of the election results. The constituents, for example, gave me 97 percent [of the votes] cannot in all honesty be treated

11

on some issues with constituencies that gave me 5 percent.”

Here’s a newly elected president admitting to the world that in all honesty he can’t treat constituencies that gave him 97 percent of votes equally with those that gave him a mere 5 percent.

And he has kept to that promise since then.

I have since learnt to discount his prepared and curated speeches and rather pay close attention to his extempore remarks to know exactly what the president really thinks and plans to do. It is from an extempore remark, for instance, that we knew that as late as 2018, after his government has successfully repatriated some of Abacha’s loot, that he still believes that Abacha is a patriot, did not steal any money from Nigeria and was one of the best leaders this country ever had.

So when early last month while hosting governors from the Northeast, Buhari declared that he could have sent the army police and other security agencies to overrun the states during the 2019 general elections, but he didn’t do it because he was kind hearted, I felt it told us everything we need to know about our country.

The bitter truth remains that the sustenance of our so-called democracy really rests on the goodwill of the leader in charge at a particular point in time and not on any assumed institution(s) we may think we have built. For avoidance of doubt Buhari was quoted as saying: “With the use of the army, the police and the rest of them, we could have overrun you. We just wanted to show that we are humane and we are Nigerians.”

That admission should send chills down the spines of Nigerians but it has largely gone unnoticed.

What we have done is to build a system that confers almost absolute

powers on the president and where the president can use his powers not only to subvert just any institution and bend it to do his wish, but where the occupier of the office of the president can decide the fate of the country’s democracy.

Nigerians tend to celebrate the defeat of Obasanjo’s third term as a sign that democracy has taken roots and its institutions are working, what they didn’t realise is that our institutions are not up to scratch and they can be easily destroyed by a power-hungry president like Buhari has done to the legislature, judiciary and any other institution that stood on his way.

The only reason why Obasanjo’s third term gamble failed was because he threatened the elite inter-ethnic alliance and pact to rotate power among themselves and not because of any institutions we may think we have.

Nigeria, unlike many other African states, has a diffused power base with no one person or region strong enough to control or dominate the entire country. That fact makes inter-ethnic/ inter-regional pact inevitable.

Nigeria, like most underdeveloped countries, suffers from the personalisation of power by the leader, this necessarily involves the deliberate destruction and weakening of state institutions to ensure that the machinery of government depends on the whims and caprices of the leader.

Generally, as I enunciated on this page before, such practices play out in three ways: there are no institutions in place, the institutions are weak and unable to check the excesses of politicians, or there is what is called isomorphic mimicry - the creation of institutions that act in ways to make themselves “look like institutions in other places that are perceived as legitimate,” but which, in reality, are not.

Nigeria suffers from isomorphic mimicry. We have all the institutions a

‘

The bitter truth remains that the sustenance of our so-called democracy really rests on the goodwill of the leader in charge at a particular point in time and not on any assumed institution(s) we may think we have built

supposed democracy has, but in reality, they are not effective or are designed not to be. We may have an Independent National Electoral Commission (INEC) for instance, that is supposed to ensure that elections are conducted freely and fairly, but we all know in reality that those who vote do not really determine the outcome of elections as much as those who do the counting of the votes.

We supposedly have a third arm of government – the judiciary, which is theoretically independent from the executive and adjudicates on dispute between the other arms of government and protects individual liberties from government overreach, but the very head of the judiciary was illegally booted out of office, justices of the Supreme Court harassed and intimidated into silence and the courts have become more or less the mouthpiece of the executive such that no one is left in doubt as to where the courts stand these days.

We could all see how the judges disposed off the electoral cases against the election of the president. Both the judges at the court of appeal and the Supreme Court were not just content with dismissing the cases for lack of proof, but they actively turned defendants of the president in the case on perjury.

The little said about the legislature, the better. But we see how all the obnoxious bills rejected by the 8th National Assembly have all been illegally brought back in the 9th National Assembly and are all being passed without any questions or debate.

Like I have always argued, the major task facing Nigeria and indeed Africa is that of institution building; strong institutions of restraints that will rein in the worst instincts of our politicians.

Until we can assure that our institutions can without the intransigence of our leaders, we do not really have institutions yet and ultimately, our democracy is not safe.

CAMA Act 2020: Appraising the legal, commercial & political implications on NGOs and religious bodies (1)

S

ince its passage, the Companies and Allied Matters Act 2020 (CAMA) has continued to generate reactions, mostly from the religious bodies and NonGovernmental Organisations (NGOs). Chief among the concerns is that Part F of CAMA gives the Corporate Affairs Commission (CAC), and by extension, the Federal Government, the power to significantly interfere with the administration of incorporated religious bodies and NGOs (the Bodies).

This power includes the authority to suspend and replace the Bodies’ leadership (Section 839); to spy on and effect transfer of funds from the (dormant) accounts of the Bodies (Section 844); to obtain the financial records and other information from the Bodies and impose penalty in the event of noncompliance (Sections 843-846 and 848), (Sections 839, 843846 and 848, together the Provisions).

Following this controversy, this article examines the validity of the Provisions within the ambit of the 1999 Constitution of the Federal Republic of Nigeria as amended (the Constitution) and certain treaties which Nigeria is signatory; also the commercial and political implications of the Provisions. This article finds that the Provisions are valid, albeit debatable, and the Provisions present Nigeria with enormous commercial and political benefits. It concludes with recommendations on how the concerns can be addressed and the opportunities harnessed.

The provisions and the constitution There are concerns that the Provisions threaten rights to freedom of religion, association, privacy and fair-hearing. Most worrisome

is the provision on the power of the CAC to replace the trustees and officers of the Bodies, which may arguably lead to the intrusion of the Bodies by persons with contrary beliefs and orientation.

The burning question is whether the Provisions are indeed a threat or violate the identified human rights protected by the Constitution.

Sections 36, 37, 38 and 40 of the Constitution guarantee the rights to privacy and to freedom of religion and association respectively. These rights are however not absolute. They are circumscribed, in the main, by Section 45, which subjects the rights to the dictate of “any law that is reasonably justifiable in a democratic society- in the interest of defence, public safety, public order, public morality or public heath, or for the purpose of protecting the rights and freedom of other persons.”

Put differently, the rights can be restricted or interfered with by a law if the law is reasonably justifiable in a democracy and is for the promotion of the listed metrics. A law will only meet this threshold if it is reasonable and or it is not capable of stifling or rendering illusory, the enjoyment of the rights. See IGP v ANPP & Ors (2007) LPELR-8932(CA); Media Rights Agenda & Ors v Nigeria (2000) AHRLR 200 (ACHPR 1998). The law will be deemed “reasonable” if it is fair, proper, moderate, suitable under the circumstances- See Etajata & Ors v. Ologbo & Anor (2007) LPELR-1171(SC).

Notably, the onus to prove that the Provisions do not meet the threshold is on the Bodies. See Osawe & Ors. v. Registrar of Trade Unions (1985) LPELR-2792(SC). The ability of the Bodies to discharge this burden is doubtful. The

www.businessday.ng

exercise of the power to suspend and replace in Section 839, is not at the whims of CAC, but it is only exercisable after the CAC has: (a) made reasonable findings of mismanagement, fraud etc; (b) furnished a competent court with “all reasonable evidence” regarding the findings; and (c) obtained the court’s order to suspend.

A competent court would, in view of Section 251 of the Constitution, be the Federal High Court, and not a magistrate court which is historically easier to abuse. Arguably, this is fair, proper, etc. relative to the negative impact such mismanagement or fraud may have on the Nation’s financial system, and by extension, on defence, public safety, order and morality; and on the rights of the Bodies’ unsuspecting members.

Meanwhile, the fairness of the section can be questioned on the grounds that the wordings (especially of Subsections 2 and 3) suggest that CAC can secure the order ex parte, that is, behind the back of the concerned entity and without an opportunity to be heard before the order is made. Argument can be made that such an ex parte mode violates right to fair hearing. Except where the Bodies are able to demonstrate an exceptional injustice such an ex parte order will cause, the chances that the court will hold that the provision violates right to fair hearing are slim, considering the recent decision of the Supreme Court in FRN v Jonathan (2019) LPELR-46944(SC) where the Court held that Section 17 of the Advanced Fee Fraud and Other Related Offences Act, 2006, which empowers law enforcement agents to obtain an interim (ex parte) forfeiture order does not violate the defendant’s right to fair hearing

https://www.facebook.com/businessdayng

Isaac Ibikunle

or right to own property, and the provision is therefore constitutional.

By Sections 842-844, CAC can have access to the “dormant” accounts of the Bodies and direct the transfer of the fund therein to another entity. A dormant account is one in which, for five years, there is no tangible transaction, other than payment of money into the account or deduction of bank charges (Section 844 (2)). An obligation of secrecy or restriction on disclosure under common law or statute is explicitly said to be no bar (Section 844 (1)).

Thus, to the extent that the transfer of the fund is required to be done only after the affected party has been given an opportunity to defend itself (Section 842 (2)) and the provisions are legitimately meant to prevent the adverse effect of illicit funds in dormant accounts, it remains to be seen how these provisions can be faulted. Our jurisprudence is replete with decisions where the courts have upheld the validity of similar provisions. See UBA v. CAC & Ors (2016) LPELR-40569(CA); Chrome I.B. Ltd & Ors v. EFCC & Ors (2018) LPELR-44818(CA).

A similar reasoning applies to Sections 846 and 848 which border on the power of CAC to request for audited financial records and other information from the Bodies.

Ibikunle is an Associate at Olaniwun Ajayi LP in Lagos

@Businessdayng

12

BUSINESS DAY

Thursday 03 September 2020

Editorial Publisher/Editor-in-chief

Frank Aigbogun

Nigeria and the single-digit interest rate, is this a new normal?

A key question for investment and business decisions

editor Patrick Atuanya DEPUTY EDITORS John Osadolor, Abuja Tayo Fagbule NEWS EDITOR Osa Victor Obayagbona NEWS EDITOR (Online) Chuks Oluigbo MANAGING DIRECTOR Dr. Ogho Okiti EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure ADVERT MANAGER Ijeoma Ude MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai COPY SALES MANAGER Florence Kadiri DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

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

EDITORIAL ADVISORY BOARD

n fulfilment of monetary policy authority’s aspiration for a single digit interest rate environment, the sovereign yield curve continues to trend lower, with yields on Federal Government Bonds hitting decade low.

Across all tenors, including the 30-year maturity, yields on FGN Bonds are at single digit. This new interest rate environment reinforces the confidence of the Central Bank of Nigeria (CBN), under the leadership of Governor Godwin Emefiele, on the effectiveness of unorthodox measures in easing the cost of capital for businesses.

Quoting the CBN Governor, at his inaugural press briefing in June 2014, he emphasised, “we shall pursue a gradual reduction in interest rates. A comparison of selected macroeconomic aggregates from some emerging market countries including South Africa, Brazil, India, China, Turkey, and Malaysia indicate that Nigeria has one of the highest T-bill rates. Such high rates create a perverse incentive for commercial banks to simply buy virtually riskfree government bonds rather than lend to the real sector”.

Economists and policy analysts globally are encouraging governments and corporates to take advantage of low interest rate environment to finance infrastructure and real sector expansion, particularly in developing markets, where sustainable growth will be dependent on the concerted ability of government and private sector to bridge the huge infrastructure gaps.

I

The CBN has over the past year reiterated this perception and responded with a number of administrative policy measures, including the prescription of a minimum loan-to-deposit ratio of 60 percent (subsequently increased to 65 percent) for banks, with continuous implementation of its strict penalty for non-compliance, in the form of extraordinary cash reserve requirement.

In reinforcing its support to the CBN and renewed accommodative and progrowth stance, the monetary policy committee (MPC) lowered the benchmark rate by 100 basis points to 12.5 percent at its meeting held in May 2020, citing the need to stimulate credit, crate jobs and reflate the economy against the risks occasioned by the COVID-19 pandemic.

Interestingly, the federal government, which has been the single largest borrower in the country with about N15 trillion debt obligation in the domestic market, is perhaps the biggest beneficiary of the current low interest rate environment.

Notably, the lower interest rate affords the government the opportunity to fund the 2020 budget deficit, which is some 49.7 percent of projected expenditure and 3.7 percent of GDP, at a relatively lower cost.

Importantly, the government would be able to refinance maturing and perhaps existing debt obligations at lower interest rate, thereby reducing the debt service burden and mitigate the lingering concern of fiscal cliff. With a debt service burden, defined as debt service cost to actual revenue estimated at 99 percent in the first quarter of the year, the lower interest rate may improve the fiscal position of the federal gov-

ernment, particularly as COVID-19 pandemic, lower oil price and latent macro challenges may undermine Nigeria’s revenue generation prospect over the near term.

As the sovereign yield curve declines, lending rates are easing, as reflected in the steady ease of the prime lending rate to 14.7 percent in May 2020. More so, yields on corporate bonds have come off the peak levels, as investors seek higher yield alternative debt notes to the single-digit FGN Bonds and treasury bills. Investment grade rated corporate bonds are trading at a tight premium to FGN benchmarks.

For instance, the Infra-Credit backed GEL Utility Bond, rated “Aaa”

by Agusto, with approximately 14-year term-to-maturity trades at 9.58 percent, a significant 557 basis points yield tightening when compared to the yield of 15.15 percent at issue in August 2019.

Will rising inflation rate be the showstopper? Orthodox economics, founded mainly in monetary theories such as the Mundell-Fleming model or “impossible trinity”, established a strong nexus amongst three core macroeconomic variables; inflation, exchange rate and interest rate, with each being a prominent tool for taming or managing the others.

Implicitly referencing the causeeffect relationship amongst the three variables, Governor Emefiele in reviewing the Nigerian macros at its inaugural presentation on assuming office in June 2014 noted, “owing to the tight monetary policy of the Bank coupled with improved food harvest, inflation moderated to a six-year low of 7.9 percent at end-April 2014. Debt-to-GDP ratio fell

to 11 percent, while foreign exchange reserves stood at $37.15 billion as at 27th May 2014”.

This assertion succinctly describes how monetary policy tightening, manifested through high interest rate can help rein-in inflationary pressures and attract foreign capital, which is requisite for shoring up external reserves and ultimately stabilising the local currency, Naira.

As the era of high yield fades, fund managers may have to explore alternative assets in corporate debt and private equities by working with reputable intermediaries, capable of de-risking otherwise non- investable assets.

This is particularly important, as the current dynamics where pension funds, the largest institutional asset manager, with over N10.8 trillion funds under management, depend mainly on government paper is unsustainable.

Notably, the pension fund industry currently has over two third exposures to FGN securities, thus creating a monopoly market for the federal government, another major factor why it may be justifiably easier for the government to sustain the negative real rate environment.

Therefore, fund managers may have to seek new investable assets in the real sector, particularly in critical sectors like agriculture, telecommunications, power, industrials, utility and energy, where the higher multiplier effect of private sector investments on the economy may help stimulate inclusive growth, sustainable job creation, mitigation of social vices and ultimately increase per capita income, pension remittance and broader fund flow in the Nigerian economy.

Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo Wiebe Boer Paul Arinze Boye Olusanya Ayo Gbeleyi Haruna Jalo-Waziri Clement Isong

Enquiries NEWS ROOM 08169609331 08116759816 08033160837

} Lagos Abuja

ADVERTISING 01-2799110 08033225506 SUBSCRIPTIONS 01-2799101 07032496069 07054563299 DIGITAL SERVICES 08026011296 www.businessday.ng The Brook, 6 Point Road, GRA, Apapa, Lagos, Nigeria.

01-2799100 Legal Advisers The Law Union

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

OUR Core Values

BusinessDay avidly thrives on the mainstay of our core values of being The Fourth Estate, Credible, Independent, Entrepreneurial and Purpose-Driven.

• The Fourth Estate: We take pride in being guarantors of liberal economic thought • Credible: We believe in the principle of being objective, fair and fact-based • Independent: Our quest for liberal economic thought means that we are independent of private and public interests.

• Entrepreneurial: We constantly search for new opportunities, maintaining the highest ethical standards in all we do • Purpose-Driven: We are committed to assembling a team of highly talented and motivated people that share our vision, while treating them with respect and fairness. www.businessday.ng

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 03 September 2020

BUSINESS DAY

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

13

In association with briu@businessday.ng

08098710024

Appraising solid minerals’ contribution to government’s coffers 0.02 per cent and 0.001 per cent respectively.

ISAAC ESOWE

T

he mining and quarrying sector consists of crude petroleum and natural gas, coal mining, metal ore and quarrying and other minerals sub-sectors. The sector recorded a slip in its revenue contribution to the country’s coffers for the period ended Q2 2020.

Findings show that the sector is largely unexploited despite the huge potential it has in providing alternative revenue sources for the country.

Although, over time, there have been different policy and measures put together by the relevant authority to boost the sector as part of the efforts to diversify the economy, little was achieved because of insufficient geo-data, weak infrastructure and limited policy enforcement.

These, however, impacted negatively or rather held the industry back.

“However, despite Nigeria’s extensive and globally competitive regulatory framework, Nigeria’s mining industry is largely unexploited and contributes very little to the country’s industrial output. As at 2016, the Mining Index for Nigeria was still comparatively the lowest at 84.1 per cent, in comparison with that of the United States of America (USA) at 133.9 per cent, Australia at 131 per cent or even South Africa at 98 per cent.

This is expected since these are known destinations with long-tested mining cultures, and consistency in the formulation”, NEITI’s 2019 report titled “Improving Transparency and Governance for Value Optimisation in Nigeria’s Mining Sector” stated.

NEITI data shows that the solid minerals sub sector contributed a total sum of N43.22billion to government’s coffers in 2016 and this represents a 33 per cent decline compared to the preceding year 2015. The dip in revenue can be

Source: NEITI, BRIU

attributed to the recession that almost halted the Nigerian economic activities.

However, the breakdown of the receipts shows that the mining taxes collected by the Federal Inland Revenue Service (FIRS) accounted for N40.38 billion or 93.43 per cent, while fees collected by the Mining Cadastral Office stood at N1.15 billion or 2.66 per cent.

In 2017, the sector recorded a moderate feat as a contribution to the government’s coffer increased by 21 per cent from N43.22 billion in 2016 to N52.75 billion in 2017. Further analysis shows that out of the N52.75 billion revenue contribution, the FIRS accounted for N49.162 billion, which represented 93 per cent of the revenue realized during the reference period.

On the other hand, the payments to the Mines Inspectorate Department (MID) and Mining Cadastre Office (MCO) amounted to N1.59billion and N2.08 billion or about 3 per cent and 4 per cent respectively

www.businessday.ng

of the total revenue generated from the sector.

In 2018, the sector contributed N69.47 billion to federation revenue the highest so far since NEITI commenced reconciliation of payments in the sector. The figure shows an increase of N16.71 billion, representing 31.67 per cent over the 2017 revenue of N52.76 billion.

The 2018 earnings of N69.47 billion also accounted for 16.69 per cent of the total revenues (N416.3billion) that accrued from the sector from 2007 to 2018.

Solid mineral production volume and value for 3-years period The Nigerian mining and quarrying sector recorded a total volume of 123.88 million metric tonnes for 3 years, that is, from 2016 through 2018 with a total value of N114.74 billion. Interestingly, the sector recorded 22 per cent growth in production in 2018 when compared to 35.33 million metric tonnes recorded

https://www.facebook.com/businessdayng

in 2017. A breakdown of the production volumes showed that limestone and granite accounted for about 80 per cent of the total minerals produced in 2018. This represents a 5.72 per cent decline compared to 2017. In 2018, limestone alone contributed 54.85 per cent while granite accounted for 23.88 per cent of minerals mined in the country.

Mineral production on a state-by-state level On state-by-state production, the NEITI’s Report disclosed that in 2018, most of the mining activities in the country took place in Ogun State. The state accounted for 12.66 million metric tons (27.13 per cent) of the total volume produced.

Ogun State was followed by Kogi and Benue states, each accounting for 22.88 per cent and 10.10 per cent respectively.

However, on the bottom of the table are states like Enugu and Borno states which contributed

@Businessdayng

Contribution of the mining sector to GDP The pandemic-induced lockdown and business disruption have put the mining and quarrying industry on a life-support machine, according to the recent National Bureau of Statistics (NBS) data. The sector declined ostensibly by 16.02 per cent (year on year) in Q2 2020.

Quarrying and other minerals exhibited the highest growth rate of all the sub-activities at 44.02 per cent, followed by coal mining activity at 18.75 per cent. However, crude petroleum and natural gas was the main contributor to the sector with a weight of 97.53 per cent in Q2 2020.

The Q2 2020 growth rate was 0.80 per cent points higher than the rate recorded in the previous year (Q2 2019) but lower by –5.45 per cent points than the preceding quarter.

Overall, the sector contributed 7.76 per cent to aggregate nominal GDP, lower than the contributions recorded in the second quarter of 2019 at 8.99 per cent and the previous quarter recorded 7.97 per cent.

Real GDP of the mining and quarrying sector contracted by 6.60 per cent (year-on-year) in the second quarter of 2020.

Compared to the same quarter of 2019 and the first quarter of 2020, this represents a decline of 13.60 per cent points and 11.18 point respectively.

Quarter on quarter basis, the sector growth rate recorded a decline of some 9.66 per cent, which means value-added in the second quarter of 2020 was lower than the first-quarter of 2020.

The contribution of the mining and quarrying to the real GDP in the quarter under review stood at 9.08 per cent, lower than the rate of 9.12 per cent recorded in the corresponding quarter of 2019 and the 9.54 per cent recorded in the first quarter of 2020 respectively.

14

Thursday 03 September 2020

BUSINESS DAY

COMPANIES&MARKETS The Companies and Allied Matters Act 2020 - what you need to know UDO UDOMA & BELO-OSAGIE

Part 7 – Private Companies

T

Background he Companies and Allied Matters Act (Chapter C20) Laws of the Federation of Nigeria 2004 (“CAMA 1990”) was initially made law in Nigeria in 1990 as a decree of the military government. It was modelled on the English Companies Act 1985. For thirty years, there were no significant amendments to the CAMA 1990, notwithstanding t hat Eng la n d ha s, over the past three decades, amended and replaced its own Companies Act. Nigerian companies had to, essentially, rely on a 30year old law to govern the way businesses operate in our dynamic and exponentially evolving global community. However, this all changed on Friday the 7th of August 2020, when President Muhammadu Buhari, gave his assent to the Companies and Allied Matters Act 2020 (“CAMA 2020”).

In the course of a 12part series, Udo Udoma & Belo-Osagie will provide a review of the provisions of the CAMA 2020, highlighting changes that have been introduced into the body of Nigerian company law by this ground-breaking legislation.

Restrictions on transfers of shares and assets of private companies Under the CAMA 1990, a pr ivate company was required, in its Articles, to restrict the transfer of its shares. The CAMA 1990 imposed this requirement without specifying how private companies should do so, thereby giving companies the flexibility to determine how they restrict the transfer of their shares.

This was usually done in the form of a discretion given to directors to approve or reject a proposed transfer – this discretion could be absolute or applicable in cer tain circumstances. Some private companies went further by conferring a right of first refusal on shareholders in respect of any shares that any shareholder wished to transfer to any person or to non-shareholders.

T h e C A M A 2 0 2 0 ha s gone further than the CAMA 1990 in relation to the restrictions that may be imposed on the trans-

fer of shares and assets of private companies. It provides that “subject to the provisions of the articles, a private company may restrict the transfer of its shares and also provide that: (a) the company shall not without the consent of all its members sell assets having a value of more than fifty percent (50%) of the total value of the company’s assets; (b) a member shall not sell that member’s shares in the company to a nonmember, without first offering those shares to existing members; ( c ) a m e m b e r, o r a group of members acting together, shall not sell or agree to sell more than fifty per cent (50%) of the shares in the company to a person who is not then a m e mb e r, u n l e s s t hat non-member has offered to buy all of the existing members’ interests on the same terms.”

The restriction in (a) is new and relates to a proposed disposal of assets of a private company. The restriction in (b) is a right of first refusal in respect of any shares that any shareholder wishes to transfer to non-shareholders, and (c) is essentially a mandator y takeover bid requirement that is triggered where a non-member acquires 50% of a private company. The wording of the CAMA 2020, however, provides companies with enough flexibility to determine whether to include these provisions in their articles, and to indicate, in the articles, whether these restrictions would apply.

Without this flexibil-

ity, these restrictions will create concerns for investors, such as private equity investors, that require c l a r i t y a n d a s su ra n c e s regarding their ability to exit their investment as required by the terms of their funds.

Electronic innovations In recognition of evolving business dynamics, the CAMA 2020 provides that a private company may hold its general meetings electronically provided that such meetings are conducted in accordance with the articles of the company. Other electronic innovations include the following: i.company records can be maintained in electronic format; ii. electronic share transfer forms will be accepted by all companies; iii. in addition to the notice given personally or by post, notice may also be given by electronic mail to any member who has provided the company an electronic mail address; iv. any document required to be annexed to the annual return may be delivered to the Corporate Affairs Commission (“CAC”) either in hard or soft copy; v. Any document required to be filed with the Commission for registration may be filed electronically; and vi. any document or proceeding requiring the authentication by a company can now be signed by an electronic signature Company limited by guarantee Under the CAMA 1990, the approval of the Attorney-General of the Fed-

www.businessday.ng

eration (“AG Fed”) was required in order to register the memorandum and articles of association of a company limited by guarante e (“ Ltd/Gte”).

This approval was a prerequisite to the registration of such companies at the Corporate Affairs Commission (“CAC”), and in practice, resulted in significant delays in the process of registration, usually dragging out the registration process for months.

The requirement for the AG Fed’s approval is still retained in the CAMA 2020, albeit with specified timelines. Under the C AMA 2020, if all re qu i si te d o cu m e nt s have been submitted but the AG Fed does not grant his approval or communicate his refusal within 30 days, the promoters may place an advertisement in 3 national newspapers inviting the general public to make any objections to the incorporation of the company which will be considered by the CAC. If the CAC is satisfied that the memorandum and articles of association of the company are compliant with the CAMA 2020, the CAC will advertise the application in 3 national newspapers, inviting objections from the public to the proposed incorporation. If no objections are received from the public within 28 days from the date of the advertisement (or the CAC receives, considers, but rejects such objections), the CAC can assent to the application and register the company without the consent of the AG Fed.

https://www.facebook.com/businessdayng

Poverty proving to be bigger threat to Nigerians than COVID-19 OLUWAFADEKEMI AREO

N

i g e r i a’s C O VID-19 curve is currently flattening rapidly, but the share of households whose safety nets are being threatened by economic shocks continues to ascend.

Statistics from the Nigerian Centre for Disease Control (NCDC) on 30th of August showed that the number of daily confirmed COVID-19 cases was 138 persons, the lowest daily report recorded since April 27th.

Nonetheless, the hardship being faced by Nigerians as a result of COVID-19 continues to exacerbate.

Increases in the prices of major food items consumed and farming/business inputs continues to be the most widely experienced shocks in the country, according to third round of the Nigeria COVID-19 National Longitudinal Phone Survey by the National Bureau of Statistics (NBS).

On its own, the increased prices of major food items have affected about 90 percent of households while increases in prices of farming/ business inputs affected 64 percent of households.

Interestingly, the Nigerian COVID-19 curve started to flatten from the end of July as daily confirmed cases started dropping, according to an

analysis carried out using data from the NCDC. The same can however not be said about the number of job losses, the percentage of households reducing their consumption as well as the constraints on the ability of households to meet their basic needs.

NBS report on the third round of the Nigeria COVID-19 National Longitudinal Phone Survey reveals a 27 percent increase in the number of households that have had to reduce their consumption as this rate moved to 69 percent by the end of July from 54 percent at the end of May. Also, the percentage of households relying solely on their savings experienced a 6.8 percent increase to 31 percent, from 29 percent between mid-march to April and May. “The projected rebound of the Nigerian economy by 2023 which contracted by 6.1 percent in the second quarter of 2020 will not necessarily reflect on different units of the economy”, said Boboye Olaolu, Sub-Saharan African economist at CSL Stockbrokers. “As long as total population growth is higher than GDP growth, the economic recovery will not translate to an increase in living standards as wealth is not adequately transferred”, he said.

World Bank says Nigeria’s diaspora remittances to decline 25% in 2020 on COVID MERCY AYODELE

D

iaspora remittance flows into Nigeria w ill tumble by 25% this year as the coronavirus pandemic drags on the economic crisis, deepening hardship for households that receive remittances, according to the World Bank.

In a recent webinar by the World Bank tagged “Nigeria in the time of COVID-19, Rising to the challenge”, the institution said there are 1517 million Nigerians living abroad who send home over $25 billion dollar annually.

53 percent of this population reside in Europe and North America, where rising unemployment rates are already choking incomes, the Bank says.

With most advanced countries already in recession being dragged by the coronavirus pandemic, it will become more difficult for Nigerians in diaspora to send money home.

“Remittances are a vital source of income for developing countries. The ongoing economic recession caused @Businessdayng

by COVID-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies,” said World Bank Group President David Malpass.

Global remittances were projected to dip sharply by about 20 per cent in 2020, said the World Bank.

According to the World bank, the fall in remittances will affect household consumption as 1 in 2 of Nigerians live in households that receive remittances.

According to the National Bureau of Statistics (NBS), Nigeria received $17.57 billion diaspora remittances in 2019, up by 56.4 percent from $11.23 billion in 2018.

“Diaspora remittances into the country could fall to $17 billion in 2020, a 32 per cent drop from the $25 billion inflows recorded in 2019”, Bismarck Rewane, chief executive officer, Financial Derivatives said.

On the average, remittances received per household is $224 or N84,741 and over 80 percent of the received remittances goes to consumption, the Bureau noted.

Thursday 03 September 2020

Innovation

Apps

BUSINESS DAY

Start-up

Gadgets

Ecommerce

IOTs

15

TECHTALK

Broadband Infrastructure

Bank IT Security

Iroko cuts 150 jobs in Nigeria, other African countries to checkmate losses FRANK ELEANYA

N

igeria’s video streaming service, Iroko has kicked off a companywide lay-off this week that would affect 150 jobs across its offices in Africa including Nigeria. The company would also be reducing its investment focus on the continent as a measure to contain losses.

As a soft landing for the affected workers, the company said it is speaking with a number of companies that are keen on recruiting its trained telesales agents.

“We are still working on the numbers. The ambition in this terrible job market is to try and give our departing teams the best odds of success in what is, unfortunately, one of the worst job markets in decades,” Jason Njoku, founder and CEO of the company said in a statement.

The company will now focus on North America and Western Europe where it has recorded the highest average revenue per user (ARPU), with 80 percent of revenue coming from the regions.

Njoku projects that by taking out Africa growthrelated costs, the company is reducing $300,000 per month in expenses to only about $50,000 per month.

“Still high, but once things normalize we should have a clear path to free cash flow + profits in 2021,” he said.

Iroko’s business has been severely affected by the COVID-19 pandemic. The company’s fortunes began to head downhill in April when revenue dropped to 70 percent. This also affected the agents’ productivity. The company distributed its content through a network of agents who earn commissions. While April saw the peak of productivity, it began to decline in May and continued till July.

With an imminent loss facing it, Iroko tried its hands on productivity hacks, shrinking the team sizes, and increasing the supervisors. They were all futile including its work from home policy.

“We couldn’t adjust prices as the primary aim was to defend revenues and cash flows, so cutting subs revenues and vanity subscribers were not going to contribute

to salaries come month’s end, nothing really worked.

Internationally, we were effortlessly growing. All of the macro and individual issues plaguing West Africa were essentially not major issues in the West,” Njoku said.

Iroko’s challenges may have also been accelerated by growing competition in the on-demand streaming service market.

Although the COVID-19

forced a lockdown and many people took to digital platforms such as Zoom to conduct their business video-on-demand services like Netflix also reported massive downloads and new subscriptions. Netflix also expanded its service in Nigeria, forging alliances with several Nollywood producers including EbonyLife TV in June.

The alliance requires Eb-

onyLife TV to adapt two literary works by authors Lola Shoneyin (The Secret lives of Baba Segi’s Wives) and Wole Soyinka (Death and the king’s Horseman) into a series and film respectively.

Netflix also announced that Abudu’s company will produce two yet unnamed original shows, licensed films, and another series.

Following its deal with Netflix, EbonyLife TV announced in July - the next month - it was going to pull the plug on Pay-TV platform, DSTv to begin life as a video streaming service. It finally left DSTv in August.

Although it is yet to fully launch its streaming service, EbonyLife TV is believed to be planning a massive onslaught on the market that will see it grab significant market share.

Iroko is also fending off unwanted advances from Nigerian regulators who recently released a new guide that mandates the sharing of licensed content with other platforms. Jason Njoku has been a vocal critic of the new code released by the National Broadcasting Commission (NBC). Earlier in August, the authorities accused Njoku of not investing

in Nigeria.

“The involvement they do is like a creative investment that allows them to take artistic, cultural materials, original to the Nigerian people and export, maximize the profit, suck it out Nigeria, and still take abroad,” Armstrong Idachabe, directorgeneral of NBC said during a show on Youtube.

Njoku also suggests the naira devaluation has had an adverse effect on Iroko’s revenue. The exchange rate crisis in Nigeria has seen prices of its subscription plans not able to cover the costs of the services. It has faced a similar situation in 2016 and 2017 when devaluation led its N3,000 subscription to drop to $8.33 (360/$). The situation is worse now that the naira is trading at N477/$. N3000 subscription now amounts to $6.3. Njoku does not see the naira getting any stronger in the short term.

“Some are saying it is just starting and will end up at 550-600/$ before year’s end.

What we are seeing now is distorted as the access to FX has been cut off for almost 6 months. A lot of our costs are in dollar - AWS, tech tools, etc.,’ he said.

Telecom operators have slowest response time to customers in Africa FRANK ELEANYA

C

onsumers in West Africa have identified the telecommunication industry as the sector with the most unresponsive customer experience centres according to a report

by BrandsEye. The report which utilised a blend of artificial intelligence and human crowds to analyse 688,154 social media posts in three sectors from May to July, found that more than half of telcos’ conversations featured either a request for assistance from a customer or a customer providing feedback to the brand.

Airtel received the lowest scores out of the companies analysed in different countries with a peak of 57.8 percent negative sentiment for Airtel Kenya.

While the Airtel brand stands out across the nine countries examined including Nigeria, all the other telecom-

munication operators had a negative net sentiment. The difference was in the degree.

For instance, while Airtel Nigeria had a 44.8 percent negative sentiment, MTN Nigeria 7.8 percent.

The telecommunication sector also had the most con-

versation on social media, which according to consultancy Omdia, was not really a surprise given that financial services are the most important category of digital services for most African telcos.

Safaricom, MTN and Airtel dominate mobile money ser-

vices in most parts of Africa.

In fact, 2 percent of conversation was about mobile money transfers suggesting a growth in demand for integration from banks to mobile money systems.

Omdia projects that users of mobile financial services

in Africa are set to increase from 148 million in 2019 to over 200 million by 2021. The rapid growth could explain the relatively higher volumes in the sector and its potential for future growth, Omdia says.

Overall, less than half of all customers who reached out to their bank, insurer, and telco on social media received a response from their provider.

“When organisations did respond, they took anywhere from one hour (in the Southern African insurance industry) to four days (in the East African banking industry),” the authors of the report noted. “Across regions the banking industry was the most responsive on social media, however, the industry also saw some of the slowest response times, with customers waiting for up to 99 hours (4 days) for a response from their bank.”

In West Africa, customers who claimed their data and airtime disappeared without explanation accused the telco of unethical behaviour

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

https://www.facebook.com/businessdayng

@Businessdayng

as a result. Consumers also claimed they found their balances depleted. Only a few blamed poor connectivity for using more data than warranted. West Africa had 315,844 conversations in total behind East Africa with 329,676 conversations.

Nic Ray, CEO of BrandsEye said the analysis became necessary to understand how consumers interact online with key brands and industries, particularly during the pandemic which boosted demand for digital services across the world and in Africa.

“As African governments and businesses encourage the use of digital platforms, and mobile internet penetration increases, more consumers are going to seek customer service on social media,” Ray said.

“How organisations identify, interpret, and respond to this growing source of consumer feedback will be critical to building sustained brand loyalty, reducing risk, and growing market share.”

16

Thursday 03 September 2020

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

A President with an agenda Over the weekend, corporate lawyer, Templars Partner and former Chairman of the NBA Section on Business Law, Olumide Akpata was officially sworn in as the 30th President of the Nigerian Bar Association (NBA) by the outgoing President, PAUL USORO, SAN. Akpata who had been declared winner of the NBA presidential race by the Electoral Committee of the NBA on July, 31st 2020, will steer the affairs of the bar for the next two years. In this edition, we share EXCERPTS of his Agenda for Nigerian lawyers from 2020-2020.

I

UNITY AT THE BAR am not oblivious of the cleavages that emerged during the campaign and the attempt to pitch senior members of the bar against their younger counterparts. We were all witnesses to the widespread agitations against the holders of the enviable rank of Senior Advocates of Nigeria to the extent that some people were eagerly anticipating a revolution.

In some ways, this was understandable, having regard to the issues that characterised the election and the uniqueness of my candidacy, being the first non-Senior Advocate of Nigeria to win an election as NBA President in thirty years. However, the elections are now over, and we must, of necessity, retrace our steps.

One of the cardinal pillars of my campaign and on the basis of which I made myself available to run for this high office, was the promise to run an all-inclusive Bar. There is no gainsaying the fact that this necessarily includes giving due recognition and deference to the senior members of the Bar who are the builders of, and significant contributors to, our noble Association. Even as a candidate, I never saw myself as a harbinger of division between senior and young members of the Bar, but as bridge candidate to build better rapport between young and senior lawyers.

This is a role I will approach will all seriousness.

One of the first things I did after

INSIDE

Olumide Akpata

the result declaration was to call on my supporters to desist from joining issues or otherwise attacking other lawyers, especially senior members of the Bar, but instead to be magnanimous in victory. Permit

Real estate market is extremely diverse, yet lawyers focus only on sales and lettings - TOSIN AJOSE

17

me to repeat what I said in that publication. Ours is a noble profession that prides itself on a high sense of discipline, learning, respect for seniority and character for which its members are reputed. Let us therefore join hands to move the NBA forward. The mandate that I have from Nigerian lawyers is to work for all members of the Bar irrespective of who they voted for. There is so much work to be done to revitalise our Bar and make it work for everyone without discrimination.

I am also not unaware of very recent events and agitations that have tended to divide our Bar along regional and religious lines. This is rather unfortunate for an egalitarian Association like ours. The Bar that I want to lead henceforth is one that is united on all fronts and that recognises that our diversity is, perhaps, our greatest strength. I plead with all Nigerian lawyers to bear this philosophy of unity in mind as we commence a new journey together today.

This enormous task cannot be achieved if we continue to fan the embers of division at a time when

New NBA-SBL council commit to 18 institutional growth

we desperately need to unite and speak with one firm voice. We must be kind, magnanimous, respectful, and sensitive in our words and actions, as doing otherwise would be a great disservice to our vision of building a stronger and formidable Bar. Now is the time to come together because a divided Bar is a defeated Bar. ELECTORAL REFORM It is pertinent to state categorically that, in my view, the 2020 Election – the voting and result of which were monitored live by a significant proportion of Nigerian lawyers and non-lawyers alike – was ultimately free and fair, and the result was, by all estimation, truly reflective of the will of Nigerian lawyers. The above notwithstanding, it would be remiss of me not to acknowledge that there were several glitches in the build up to the Election. As Nigeria’s foremost professional Association, our electoral process ought to be the standard for others to follow and should, to the extent humanly possible, be devoid of the glitches that we witnessed. It was with this in mind

Legality and practicability of the guidelines on GSI: the Central Bank Of Nigeria got it right

19

that I personally wrote two separate letters to the ECNBA Chairman on 20th July 2020 and 29th July 2020 to highlight the issues that threatened the conduct of a credible election and to recommend measures to immediately address those concerns.

The consensus is that there is need to urgently review the 2020 elections and to institute urgent reforms of our electoral systems.

Indeed, the Board of Trustees of the NBA in their letter of 19 August 2020 to Deacon Dele Adesina, SAN called for a major transformation of our electoral process and framework. Let me repeat what I said to the Board of Trustees in my letter to them in response to the petition of Deacon Dele Adesina, SAN; “as an Association that prides itself as Nigeria’s foremost and oldest professional membership organisation, we need to manage our electoral processes better. I pledged during the electioneering period to introduce an efficient data management system for the NBA and to follow that up with other institutional and structural reforms that would enable NBA to serve the benefit of its members and the Society. In the wake of the criticisms that trailed the Election, this is now a top priority issue for me.”

One major complaint about the last election was the issue of the database of lawyers and resultant difficulties in coming up with a credible voters’ register. To address this, my administration will improve upon the membership portal introduced by the President Paul Usoro administration. Additionally, I am immediately constituting an Electoral Audit and Reforms Committee, comprising distinguished practitioners of the highest standards to audit our 2016, 2018 and 2020 elections and recommend reforms for our electoral systems and processes.

I pledge to implement whatever recommendations they come up with well ahead of time to ensure that the 2022 election is devoid of those glitches that we noticed in the 2020 election and that we truly set a standard that others will aspire to.

WELFARE OF LAWYERS The improved welfare for our members was a cardinal part of my campaign. I assure you today that those were not mere rhetoric. I hereby Continues on page 19

CAMA 2020 - Giant Step towards standardizing Nigeria’s Corporate Law and Insolvency Practice

www.legal.businessday.ng legalbusiness@businessday.ng

20

Thursday 03 September 2020

BUSINESS DAY

INTERVIEW

BD

17

LegalBusiness

Real estate market is extremely diverse, yet lawyers focus only on sales and lettings - TOSIN AJOSE TOSIN AJOSE, Lead Advisor at Deal HQ is the most recent recipient of The Woman in African Real Estate award. She is well-known for her commercial savvy, excellent analytical skills, and vast transactional experience. In this interview with LB’s UZOAMAKA NWAIWU, Ajose speaks about her journey in the real estate industry, Post-COVID considerations for the industry, and the necessity for women’s involvement in real estate investments and practice. EXCERPTS…

C

ongratulations on your award as The Woman in African Real Estate; Tell us about your real estate practice and how this has developed over the years?

Thank you so much. In a few months a new woman in Africa real estate will emerge.

I usually tell a story about how real estate chose me and not the other way around. I started out as a young girl of about 10years writing quit notices and increment letters for my dad’s tenants. By the time I got to the university, I was fully managing his portfolio 4 properties with about 12 tenants, thereafter, he took over the estate of his uncle adding an additional 4 properties to the mix. Within a year from when I started my practice as a commercial lawyer, my boss, shared with me his vision to build the most sophisticated real estate practice run by any Nigerian Law Firm, and in that employment we handled some of the most novel and most sophisticated transactions in the market including REITs, Property Securitizations, Real Estate backed notes amongst others.

A few years later, I became the practice lead of the Firm’s real estate practice and after I left the Firm to start DealHQ Partners, we quickly earned our spot as the go to firm especially for complex, green field real estate projects spanning Construction, Project Finance, Hospitality, Real Estate Capital Markets to mention a few.

in various practice areas (capital market, financial restructuring, infrastructure)?

I am thankful that I was welladvised as a young lawyer on the value of versatility, I started out as a generalist lawyer and became well grounded in corporate commercial which is the bedrock for all other specialist practice areas. My solid grounding in corporate commercial makes it easy for me to work across different practice areas.

That said, my core expertise is in Capital Markets, Real Estate/ Construction, Finance and most recently Technology.

The Nigerian real estate market was currently valued at N59 trillion; how can Nigerian lawyers position themselves to be key players in this sector?

First and foremost, the real estate market is extremely diverse, yet most lawyers focus only on sales and lettings. There is real estate development/construction, real estate finance, real estate capital markets, real estate hospitality, proptech with other areas emerging daily. To be a key player in the industry you must understand how diverse the industry is including the various asset classes (industrial, commercial, residential, retail, hospitality, healthcare amongst

others), you must also determine what segment of the market you want to play in and then grow your expertise in the select area or areas.

What notable shifts in investments and legal practice focus have happened in Real Estate sector, postCOVID? I think that primarily it would be focusing on technology and innovation to achieve efficiency and cost reduction. This rings true as much for the legal industry as it does for real estate.

As a Lead Advisor at Deal HQ Partners, how do you balance being a player

What are some values that have kept you on track, and motivated you up the success the ladder?

Interesting you would ask; I will say my biggest motivation is past failures which I wear proudly like a badge. Over the years, I have also tried to consistently model the values of patience (or what some call delayed gratification), integrity, hard work and fairness in everything I do.

From experience, do you think that there is sufficient opportunity for women, especially young women in the legal industry?

Surprisingly, I think that the legal industry is way ahead of others in terms of opportunity for women especially within the last decade. There has been an upsurge in the number of female nominations and elevations to the bench, number of womenowned law firms, number of

female partners in law firms and number of women in general counsel roles within Nigerian Corporates. I do hope however that more will be done by stakeholders to promote more gender diversity and better opportunities for younger lawyers.

What are some of the best ways to support women into becoming excellent players in the real estate industry in Africa?

I think I will answer in two parts, first of all, women must understand that property ownership is not an exclusive reserve for men and that real estate is at the core of wealth creation.

To be able to take a place at the table of power and leadership we must be economically empowered. Since last year, I have been making a conscious effort to support women on their journey to home ownership by training women for free in different focused groups. Secondly, for women that want to develop a career in real estate sector, the women who have gone ahead must be available and committed to mentoring younger women knowing that we have a better fighting chance when we support each other.

Looking back at how far you have come and accomplished in the legal industry, what would you have done differently?

Wow! This one is quite tough! Ok, I think I would have paid more attention to peer networking.

I would also have been more actively involved in the activities of industry associations.

INDUSTRYFILE

TNP takes its services to Abuja, sets up new office …outlines exclusive services for the market LB CORRESPONDENT NP, Nigeria’s “Glocal” and commercially oriented law firm and a collaborating firm of Andersen Global has made yet another bold move by taking its business into the city of Abuja, Nigeria’s Federal Capital. This new development is in line with the firm’s goal to boost service delivery to meet the business needs of our clients.

The Abuja office is set to offer services in line with TNP’s outstanding track record of delivering expert legal advice and value to its clients’ businesses across multiple practice sectors

T

which include; Capital Markets, Commercial Dispute Resolution, Corporate Finance, Infrastructure, Construction & Real Estate; Technology, Media & Telecomwww.businessday.ng

munications; Energy & Natural Resources; Setup, Compliance & Restructuring; Corporate Commercial, M&A, Private Equity and Business Advisory.

https://www.facebook.com/businessdayng

Speaking about this development, the firm’s Managing Partner, Baba Alokolaro said that the launch was borne out of an increased demand for the firm’s @Businessdayng

services.

“In our culture of constantly exploring new possibilities to deliver results and solutions for our clients’ businesses, the opening of this new office is strategic with our growth plan and will further aid our clients’ compliance and regulatory business needs,” he said.

TNP is comprised of innovative, keen and result-oriented lawyers who are dedicated to being highly responsive and accessible. With over a decade as business savvy lawyers, the firm remains committed to delivering excellence and value with its global outlook and local footprints.

18

Thursday 03 September 2020

BUSINESS DAY

INDUSTRYFILE

BD

LegalBusiness

New NBA-SBL council commit to institutional growth …As Ayuli, Adefulu, Ozofu and Bozimo take the reins LB CORRESPENDENT he new leadership of the Nigerian Bar Association Section on Business Law (NBASBL) has pledged its commitment to strengthening the institutional and governance structure of the section and building systems to enable the section increase its value proposition to members and constituents.

The newly elected Chairman of the section, Ayuli Jemide who made this known to members during his acceptance/inaugural message, also said that his administration would aim to achieve these through ad-hoc task forces.

“I enthusiastically look forward to working with the new Council, Committee Chairs, Committee Members and SBL Members in the coming days. We will knock on doors from time to time as we aim to achieve a lot through ad-hoc task forces. We would as great listeners be all ears, please bring on every thought and many new ideas. I love new ideas and I think new ideas are the best diet for great institutions, like the SBL,” he said.

The NBA-SBL on Friday August 28th, 2020 inaugurated a new council to steer the affairs of the section for another two years.

Elected alongside Ayuli Jemide,

Council, whose composition is inclusive and caters for all demographics particularly people who represent yesterday, today and tomorrow.

This new leadership has increased the number of women on Council from four to Eight. Also introduced, is the office of a Membership Secretary, whose duty it is, to ensure value to members of the Section; while the chair of young lawyers committee has also been co-opted to Council.

Also in line with its developmental strides, an email address has been set up (Chairman@ nba-sbl.org) for members to share their thoughts, ideas and complaints, while this communication channel will also be open for the

T

Chairman to report to members as frequent as possible.

Ayuli Jemide, who is the Lead Partner at Detail Commercial Solicitors, is also a pioneer member of the NBA-SBL. He served under George Etomi as a Committee Chair, and thereafter served every other Chairman of the section in various capacities – Mfon Usoro, Gbenga Oyebode, Asue Ighodalo, Olu Akpata, and Seni Adio SAN. He has been re-elected to the SBL Council three times in various capacities – including Treasurer and Vice Chairman. He has also been a conference planning committee (CPC) Chair.

In his earlier remarks, he described his SBL journey as a long engaging road with lots of fine and

rewarding moments. “All these experiences make me realize the amount of hard work that has been deployed by all preceding Chairmen and Councils to bring our dear SBL to its enviable state as an Association known for trail blazing and innovation. I have no doubts that our major immediate tasks would include strengthening the institutional and governance structure of the SBL and building systems for SBL to increase its menu and value proposition to paying members and constituents,” the Chairman said.

The NBA Section on Business Law is a specialist section of the Nigeria Bar Association set up to promote the professional development of commercial lawyers.

Ayuli Jemide

are Dr. Adeoye Adefulu, Vice Chairman; Ozofu Ogiemudia, General Secretary, who recently chaired the Conference Planning Committee of the just concluded Section on Business Law Conference; and Isaiah Bozimo, Treasurer. The council was elected unopposed.

The Chairman and his Exco have hit the ground running with the announcement of a new

Dr. Adeoye Adefulu

Isaiah-Bozimo

Ozofu Ogiemudia

IN-HOUSE

Independent Directors – How Independent?

AYOKUNLE AYOKO

T

he need to have Independent Directors on the Boards of Companies has in recent years changed from being desirable to mandatory. Most codes of corporate governance now insist on one or two of the Non-Executive Directors on the Board, being independent. Indeed, the Nigerian Code of Corporate Governance 2018 recommends that the majority of Non-Executive Directors (NEDs) should be independent.

The recently signed Companies and Allied Matters Act (CAMA) further codifies this requirement and makes it mandatory for public companies to have at least three Independent directors. This requirement becomes effective from the date of gazetting the Act. You may then wonder why it is desirable for NEDs to be independent. Perhaps an understanding of who an Independent Director is will be helpful at this point.

Simply put, an Independent Director is a Director who does not have a material or pecuniary relationship with the Company or related persons, except sitting allowance, reimbursable and director fees.

According to the Central Bank of Nigeria (CBN) Circular on Guidelines for The Appointment of Independent Directors: ‘an Independent Director is a

member of the Board of Directors who has no direct material relationship with the bank or any of its officers, major shareholders, subsidiaries and affiliates; a relationship which may impair the director’s ability to make independent judgments or compromise the director’s objectivity in line with Corporate Governance best practices.’

The Nigerian Code of Corporate Governance (NCCG) 2018 provides that: ‘An Independent Non-Executive Director (INED) should represent a strong independent voice on the Board, be independent in character and judgment and accordingly be free from such relationships or circumstances with the Company, its management, or substantial www.businessday.ng

shareholders as may, or appear to, impair his ability to make independent judgment.’

In the United States, the NASDAQ and New York Stock Exchange (NYSE) standards for Independent Directors are similar. Both require that “a majority of the board of directors of a listed company be ‘independent,’ The NYSE states that: “no director qualifies as ‘independent’ unless the board of directors affirmatively determines that the director has ‘no material relationship’ with the listed company, either directly or as a partner, shareholder or officer of an organization that has a relationship with the company.”

Whilst the requirement for Independent Directors in Nigeria is not as stringent as that of the United States where Independent Directors ‘must’ (as against ‘recommended’ in the NCCG 2018) be a ‘majority’, most codes of corporate governance, require that two or at least, one Independent Director must sit on the Board of a public company.

As may be gleaned from the foregoing, the generally accepted rationale for appointing Independent Directors to the Board is to have a Director who does not have a material pecuniary relationship or transactions with the company, its promoters, its management or its subsidiaries, that may affect his/ her independence of judgment.

The need to have Independent

https://www.facebook.com/businessdayng

Directors on the Board developed out of the need to have independent minded business managers who are able to exercise sound judgement independent of any affiliation or personal interests in the Company.

However, a pertinent issue arises from the current selection process of Independent Directors which may influence and impact their independence of thought and judgement. The question of the selection process of the Independent Directors is often overlooked but critical in the determination of the Director’s independence.

A review of the current selection process for most companies reveal that the Chairman of the Board, initiates the appointment of proposed Independent Directors. In rare instances, another member of the Board makes the nomination and subsequently considered by the Board. Barring any exceptional reason, such nominations pass the usual selection hurdles, if any, and the nominee becomes the Board designated ‘Independent Director’.

Perfect process? Not exactly.

Embedded in the above described process is a beneficiarybenefactor relationship. If the intendment of the NCCG 2018 was for a Director to be appointed without relationships which ‘may, or appear to, impair his ability to make independent judgment’, then the process needs to be reviewed as having a benefactor relationship with the Chairman, or any other @Businessdayng

nominating director, will have, or at least appear to, impair his ability to make independent judgment.’

How then can this process be improved upon?

It is considered opinion that the NCCG and the newly enacted CAMA be amended to recommend to Boards that the best practice should be for the Independent Director selection process be chaperoned by an independent consultant. These consultants, which have, in recent times been building up an independent director database may thereafter recommend a list of Independent Directors from which candidates may be selected for the Board’s consideration. The Institute of Directors (IoD) or other consulting firms with an Independent Director database should be encouraged to become involved in the process as they may prove a useful partner in this regard.

An alternative to the foregoing is for sectoral regulators to develop a list of candidates who have good standing in the society, demonstrated expertise in the industry and who may have been vetted by the regulator. A list of these individuals may then be provided to requesting companies intending to make such appointment.

Ayokunle Ayoko Company Secretary/ Legal Advisor Company, Berger Paints Nigeria Plc

Thursday 03 September 2020

BUSINESS DAY

19

LEGALPERSPECTIVE

Legality and practicability of the guidelines on GSI: the Central Bank Of Nigeria got it right

T

MUYIWA ATOYEBI

he Central Bank of Nigeria (CBN) approved the implementation of the guidelines on Global Standing Instruction (GSI) to ensure practical debt recovery machinery through the use of which outstanding loans can be legally recovered from defaulters who have refused to offset the debt advanced to them by the crediting banks, long after they have become overdue.

It has its objectives as the facilitation of an improved credit repayment culture, the reduction of Non-Performing Loans (NPLs) in the banking industry and watchlisting consistent loan defaulters.

The guidelines make clear provisions requiring the borrower to execute a GSI mandate at the point of obtaining the loan authorizing the bank to recover the sum advanced, by deducting from all the accounts (including Joint Accounts) standing to the credit of the borrower to which the latter’s Bank Verification Number (BVN) is linked, to the satisfaction of the debt owed.

On its part, the creditor bank is

not to deduct from any of the borrower’s accounts, penal charges accruing from non-repayment of the loan as and when due, only the exact principal loan sum and accrued interest are to be recovered as contained in the guidelines.

Also, the Participating Financial Institution (PFI) is proscribed from shielding the accounts of the defaulter.

This arrangement creates a strong systematic synergy between CBN as the regulatory agency for

all banking transactions in Nigeria, the Creditor Bank which financial interest is at stake, the PFI and Nigerian Inter-Bank Settlement System (NIBSS) the windows via which the monetary status of the borrower (mostly private sector entities) can be traced for the smooth reclamation of the loan.

The GSI has been commended, in many quarters, as innovative and essential at this point.

THE POWERS OF CBN TO

ISSUE GUIDELINES The dual laws establishing and conferring unfettered regulatory powers on the CBN are the Central Bank of Nigeria Act (CBN Act) and the Banks and Other Financial Institutions Act (BOFIA), the combined provisions of which allows CBN as the banker’s bank to make regulations (including releasing of guidelines) and do such other things ancillary and necessary to the promotion of good banking services and policies and the con-

stant galvanization of the nation’s economy.

Also, CBN has the power to issue guidelines to regulate the activities of Banks in Nigeria. The powers conferred on the CBN by its enabling statutes give it the powers to issue guidelines such as the guidelines on GSI. It is pursuant to and in a concerted exercise of this statutory assignment that the regulator bank deemed it timely and expedient to wheel out the guidelines on GSI. It cannot even be remotely averred that the CBN acted outside the scope of its powers and functions, as this has not been restricted by the enabling Act, when it made allowance for the carrying out of incidental functions by the Bank to augment the discharge of its duties. The relevant provisions of enabling statutes are: To be continued next week

Muyiwa Atoyebi, SAN is the Managing Partner at O. M. ATOYEBI, SAN & PARTNERS (OMAPLEX LAW FIRM)

A President with an agenda Continued from page 16

restate my promise to ensure that we improve on the welfare of our members along the lines that I promised in my manifesto.

I also stated that it is at the core of my mandate to expand and deepen the market for legal services in Nigeria and consequentially improve the financial standing of our members. In the coming weeks I shall constitute an NBA Task Force to determine the scope of legal work that is statutorily prescribed to be the exclusive preserve of Nigerian lawyers and to work out modalities for ensuring that only members of our Association get to do such work.

In recent times we have witnessed the brazen encroachments into our turf by other professions and private organisations like banks, consulting firms, property firms, amongst others. I will personally engage the leadership of these organisations and prevail on them to refrain from the practice of encroaching into areas that are the exclusive preserve of lawyers. In cases where this is not heeded, we shall not hesitate to challenge such encroachments in court. It is no longer business as usual.

One hallmark of my administration shall be the constructive engagement with the heads of the major regulatory agencies to ensure better synergy with the NBA in the interest of our members. In this regard, one of my first tasks as President of our Association shall be to engage with the Registrar General

of the Corporate Affairs Commission (CAC) to resolve some of the outstanding issues that led to the recent protests by members of our Association and to find a lasting solution to them. Criticisms from some quarters have also trailed the passage of Companies and Allied Matters Act 2020. We shall constructively engage with the CAC in this regard to allay the fears of our members and indeed the general populace. In this regard I must immediately commend the NBA Section on Business Law for their illuminating and timely Webinar on the CAMA 2020. More of such events will be promoted under my administration. Where however, there are provisions of the Act that cannot stand the test of time, the NBA shall not hesitate to advocate their urgent amendment so that they do not constitute a clog in the wheel of progress. This shall be the template to engage other regulatory agencies throughout my administration.

On the vexed issue of the poor remuneration which has made the legal profession in Nigeria a laughingstock, I said during the campaign that the NBA can no longer afford to fold its hands in the face of this most unfortunate state of affairs. I hereby restate that the NBA under my leadership will devise measures to tackle this issue. I will in the coming weeks, establish an NBA Remuneration Committee to recommend feasible ways to improve the poor remuneration of legal practitioners.

One of my major tasks as President of the NBA will be to table www.businessday.ng

before the Legal Practitioners Remuneration Committee a request for the review of the Legal Practitioners (Remuneration for Legal Documentation and Other Land Matters) Order to reflect current economic realities. It is my strong belief that the standardisation of the fees charged by legal practitioners holds the key to the resolution to the poor payment of legal practitioners.

On the NBA STAMP AND SEAL, I pledged in my Manifesto that the NBA under my administration shall issue at no costs, one pack of 24 Stamps to legal practitioners between 1-5 years of call, upon payment of practising fees. After due consultations, we have decided to extend the gesture by issuing two packs of 48 Stamps for free to all verified legal practitioners who pay their Bar Practising Fees not later than 31 March 2021. Those who require additional copies of the NBA Stamp and Seal would then free to request additional pages at extra costs to them. I also restate my promise to ensure further improvement on the Stamp and Seal application, collection process and the digitization of the stamp and seal.

I also pledge to ensure the continuation of the NBA Members’ Life Assurance scheme. Considering our numerical strength, I will negotiate a more favourable deal with our current insurance policy provider for an upward review of benefits to members. We shall also institute a comprehensive health insurance scheme and establish a medical health fund to help deserving members subscribe to the scheme.

https://www.facebook.com/businessdayng

In addition to the above, my administration will, working with the leadership of the various branches of the NBA, establish working relationship with good hospitals across Nigeria to agree discounts on bills for members of our Association.

One major promise I made to Nigerian lawyers is to TACKLE THE MENACE OF HARASSMENT AND BRUTALITY OF LAWYERS BY THE SECURITY AGENCIES. As I have said in the past, while it is part of the aims and objects of the NBA to promote and protect the fundamental rights of citizens, which we take very seriously, charity must necessarily begin at home and the NBA must take steps to forestall the breach of the fundamental rights of lawyers.

For the past few years, there is hardly a month that passes without an incident of harassment of lawyers by men of the security agencies. This is completely unacceptable. While we are still on the case of Emperor Ogbonna a lawyer from Abia State who has been in custody despite being granted bail twice by the courts, we also heard just last week, of the case of a senior member of the Bar, Mr Paul Igwe, who was detained and brutalised by the Divisional Police Officer of Eastern Ngwa Police Division of the Nigerian Police also in Abia State. To say that lawyers have become endangered species is putting it mildly. This dangerous trend and we must immediately address.

The NBA that I now lead will strengthen the NBA Human Rights Institute and also engage the heads of the various security agencies proactively and constructively from @Businessdayng

the outset, to set the tone for a collaborative and mutually beneficial relationship between their respective agencies and our Association.

The engagements would secure assurances that any officer of the security agencies found to have abused a lawyer would be sanctioned and such sanction made public.

CAPACITY BUILDING FOR MEMBERS At the core of my mandate for the NBA is the championing of a structured reformation of the system of legal education in Nigeria and actualise a system that produces knowledgeable, competent and ethically conscious lawyers. It is also top of my agenda to initiate programmes that are designed to enhance the capacity of Nigerian lawyers and equip them with the tools required to improve on their ability to meet the expectations of a highly sophisticated clientele. The truth is that we are not even scratching the surface in terms of what we can contribute to the servicing of not just the Nigerian economy but for the wider Africa in view of the coming into effect of the Agreement establishing the African Continental Free Trade Area.

OLUMIDE AKPATA President, Nigerian Bar Association Read FULL ADDRESS on our website: legal.businessday.ng

20

Thursday 03 September 2020

BUSINESS DAY

AELEXNOTES CAMA 2020 - Giant Step towards standardizing Nigeria’s Corporate Law and Insolvency Practice President Muhammadu Buhari recently assented to the new Companies and Allied Matters Act 2020, bringing into effect widely-lauded changes in the Nigerian business environment. Recently, BD Legal’s Onyinyechi Ukegbu sat with Olanipekun Orewale, partner, Ælex Law Practice, who was involved in drafting provisions of the Act. EXCERPTS…

Y

ou were involved in drafting some of the provisions of t he CAMA, what provisions were those?

Along with other experts, I was involved in drafting the insolvency provisions of the new CAMA 2020. These provisions introduce robust business rescue mechanisms of company voluntary arrangements and administration into insolvency laws and practice in Nigeria: Section 572 increases the monetary threshold necessary to trigger compulsory liquidation from N2,000 to N200,000; section 577 preserves the right of the fixed charge holder or any other validly created and perfected security interest, other than floating charge, to enforce their security during compulsory liquidation; section 657 ranks the claim of secured creditors in priority to all other claims, among other sections. Also, I drafted sections 704 to 709 on the qualifications of an insolvency practitioner.

Apart from my involvement in the drafting, I defended the insolvency provisions before the appropriate committees of the two houses of the National Assembly.

How are they an improvement on the old provisions?

The old provisions established an insolvency regime that was business-liquidation focused.

With the various amendments to CAMA, Nigeria’s insolvency regime is business-rescue focused, is in line with international best practices. Under the old provisions, a company in financial distress is typically either subject

to liquidation or receivership.

Now, a company can make a proposal to its creditors for a composition in satisfaction of its debts or a scheme of arrangement to ultimately preserve the company. A company may also enter into administration for the main purpose of rescuing the company. Moratorium on enforcement actions has also been included for companies in financial distress.

Additionally, the monetary threshold for a company being deemed unable to pay its debts has been increased to N200,000 and N100,000 for registered and unregistered companies respectively, to reflect the commercial realities of doing business in Nigeria. Previously, where a registered company was unable to pay N2,000 or where an unregistered company was unable to pay N100, after the expiration of a demand notice served on such company, the company would be deemed unable to pay its debts.

Under the old provisions, there was neither categorization of persons acting as liquidators and receivers, nor educational qualification requirements and training for people to act as insolvency practitioners. Given the importance of adequately balancing the rights of both debtors and creditors in an insolvency

while ensuring best practices, the inclusion of qualification of insolvency practitioners is an improvement on the insolvency regime.

Furthermore, the interests of secured creditors are protected under the new Act such that the secured creditors can enforce their securities during liquidation and their claims are accorded priority above any other creditors in the distribution of the liquidation dividends.

What impact will this have on the insolvency sector?

The insolvency sector will be primarily driven by the goal of rescuing a financially distressed company as against winding up of such company or receivership.

Also, there would be balancing of the interests of both creditors, debtors and critical supplier of essential services to the distressed company.

What changes will this elicit in insolvency practice?

One of the notable features of the new insolvency provisions of CAMA is that all the on-going cases of liquidation and receivership are free to take the advantage of the window of business rescue mechanisms provided under the Act. That apart, the directors or shareholders of a financially-distressed company,

having formed the opinion that the company is unable to pay its debts, can promptly enter into binding arrangements with the creditors through the voluntary arrangement procedure, or utilize the administration procedure by bringing an application to the court to appoint an administrator for the company.

This obviates the need for enforcement actions by creditors.

Consequently, business liquidation will no longer be the first course of action against insolvent companies. Creditors are also more likely to opt for one of the business rescue options, rather than liquidation, in the hope that they would realise better returns than if the company were to be wound up.

Sec. 705 c) of CAMA requires that to qualify as an insolvency practitioner, you must be a lawyer or account and a member of Business Recovery and Insolvency Practitioners of Nigeria (BRIPAN). There have been questions about why membership of BRIPAN, a private association is a statutory requirement. Can you speak to this?

It is true that Sec. 705 (c) requires an insolvency practitioner to have a degree in law, accountancy or any other recognized discipline; at least five years PQE in insolvency matters; and be a member of BRIPAN. However, the provision also creates an alternative to associating with BRIPAN, by stating that the insolvency practitioner may be a member of any other professional body recognized by the Corporate Affairs Commission (CAC).

Therefore, it is not mandatory for the insolvency practitioner to be a member of BRIPAN, where the CAC recognizes any other

professional body.

Qualification to act as insolvency practitioner was introduced into the Act as a result of the need to regulate insolvency practitioners such that only competent professionals with requisite specialism in insolvency, in the light of these fundamental provisions, can act as insolvency practitioners in Nigeria. Other jurisdictions also have provisions for the specific qualifications of insolvency practitioners as well as the agency or board or organization responsible for certifying such insolvency practitioners.

It is not the first time that a professional association would be recognized under the Act. Afterall, Nigeria Bar Association was recognized under the LPA. Under CAMA, BRIPAN was specifically identified because it is the only professional body in Nigeria which sees to the education, training and certification of insolvency practitioners, and it is also a member of INSOL International, a world-wide federation of associations of accountants and lawyers who specialize in business turnaround and insolvency.

Before becoming a member of BRIPAN, an applicant has to undergo a compulsory insolvency training in stages, and like any other professional body in Nigeria, BRIPAN charges a fee for the training, and induction of members. Thereafter, the inducted members pay the annual membership dues. This procedure for membership has been in force for a long time, prior to the passing of CAMA 2020.

To be continued next week

Waiver of Sovereign Immunity and Controversies Surrounding Nigeria’s Agreements with International Investors Continued from last week

C

redit Enhancements and Guarantees provided by the Federal Government of Nigeria Due to the significant funding provided for the Azura-Edo IPP, which was estimated at Nine Hundred Million United States Dollars, the project was structured with several layers of credit enhancements and guarantees including the partial risk guarantee provided by the World Bank. However, to obtain the partial risk guarantee, the FG was also required to provide corresponding guarantees of its own, in form of an indemnity agreement between the FG and the International Bank for Reconstruction and Development (“IBRD”) to align with the guarantee provided by the World Bank.

The guarantees provided by the FG in the Azura-Edo IPP where quite substantial and there are reports that the FG has been un-

willing to grant similar guarantees for new power projects [(https:// businessday.ng/energy/power/ article/fgs-unwillingness-togrant-sovereign-risk-guaranteeconstrains-new-power-projects/ FG’s unwillingness to grant sovereign risk guarantee constrains new power projects

by ISAAC ANYAOGU On Mar 19, 2019)]. However, this must be understood in the context of the substantial debt and equity financing provided to fund the project, as well as the number and status of the local and international investors.

Waiver of Sovereign Immunity Sovereign immunity is a wellsettled principle of international law with significant historic roots, which protect a sovereign nation from being sued in the courts of other states, without its consent (Federal Republic of Nigeria & Ors V. Alhaji Mohammed Sani Abacha www.businessday.ng

& Ors (2014) LPELR 22355(CA)).

Sovereign immunity precludes the courts of a nation from exercising jurisdiction over a foreign country unless the foreign country agrees to submit to the jurisdiction of the court.

Simply put, sovereign immunity is a legal doctrine giving immunity to a sovereign state, such as Nigeria, from being sued in a foreign court or having any order or injunctive relief, judgment issued against it by a foreign court or otherwise having any judgment executed against it or its assets by any foreign court, without its consent.

Where a country waives its right to sovereign immunity in a contract, it simply means that where it breaches its obligations under the contract, the counterparty is entitled to institute proceedings and obtain a judgment against it in a foreign court and to enforce judgement, order or relief against the country and its assets,

https://www.facebook.com/businessdayng

especially those over which security was granted in favour of the counterparty. This is an entirely different concept from a country ceding its sovereignty to the foreign counterparty or the country of the foreign counterparty.

Conclusion Where the terms of the AzuraEdo IPP transaction and other agreements the FG has signed with foreign lenders to fund infrastructural projects are viewed in isolation, they may appear to be unfavourable terms. However, as this article has shown, understanding these agreements in the context of the important commercial and practical considerations in projects of such a scale, it is easy to understand the necessity of these clauses and to dispel any allegations of impropriety based on the terms in an isolated sense.

Nigeria is a country with a significant infrastructural gap, generally, and particularly so, in @Businessdayng

the power sector and without the ability to generate enough revenue to sufficiently fund infrastructural projects to bridge the gap.

To guarantee access to the foreign investment which is essential for development, the FG needs to agree to terms which provide investors with adequate security that they will obtain the projected returns on their investment and that they will be able to compel the FG to perform its obligations under the contract. No reasonable investor will agree to provide several millions of dollars to fund a project without any means of holding the FG to its obligations and guaranteeing its ability to recoup the principal invested and a percentage of returns.

Dr. Ayodele Oni (ayodele.oni@ bloomfield-law.com) specializes in international energy (oil, gas & power) investment law.

Thursday 03 September 2020

BUSINESS DAY

21

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

‘We will deepen natural gas utilisation in the country through policy advocacy’ Oga Adejo-Ogiri is the Executive Secretary of the newly formed Association of Local Distributors of Gas (ALDG). In this interview with Olusola Bello, he speaks extensively about the challenges gas distribution subsector of the economy. Excerpt There are so many associations within the gas value chain, what informed the formation of your own (ALDG)? he Association for Local Distributors of Gas (ALD G) was borne out of the need to have a distinct platform to cater specifically to issues affecting the players in the downstream natural gas distribution space. These are the players supplying natural gas to commercial and industrial end users in the Nigerian domestic market either via physical distribution pipelines or virtual pipelines, such as CNG and LNG, enabling a switch to a cheaper and more environmentally friendly energy source. The establishment of the ALDG was also instigated by the declaration of the Honourable Minister of State for Petroleum Resources’ indicating 2020 as the ‘Year of Gas’, and his drive to expand gas supply to the domestic market which is the space our members operate. At the moment, there is no association that caters specifically to target this sub sector.

T

What gap(s) have you noticed that you want close?

The non-existence of an association specifically targeted at players in this segment until the establishment of the ALDG, meant that issues peculiar to the downstream natural gas distribution was not getting the necessary attention and focus. For our members supplying natural gas to the quasi-regulated domestic market, there was a need for regular engagement with the various stakeholders responsible for policy formulation, implementation, legislation and regulation

Talking about the Gas Master Plan, what is your position on this initiative of the government which seems to have stalled?

The Nigerian Gas Master Plan was a great initiative, which consisted of a series of policy interventions with the objective of developing the nascent gas sector at the time and transitioning it to a fully-fledged competitive market with willing buyer and willing sellers.

Some of the interventions include the introduction of the Domestic Supply Obligation (DSO) and establishment of the Gas Aggregator, the Gas Pricing Framework and the Gas Infrastructure Blueprint identifying critical gas infrastructure like the OB3 pipe-

Finally, what can be done to achieve domestic pricing parity that favors distributors and end-users reflective of other climes?

Let’s address the required understanding for pricing origination and comparisons between African and Western markets. A recent article I read compared the Henry Hub price in the United States to the retail price of gas for the commercial sector in Nigeria.

It is important to note that Henry Hub is not the enduser price of gas in the US, but the price of natural gas purchased at a hub which then interconnects to several interstate and intrastate transmission pipelines. It is similar to the commodity cost of natural gas. Next, you add the transmission and distribution costs to take the gas to the end user. So, when local markets across the US price natural gas, they tend to do so based off a differential to the Henry Hub to account for the

associated transmission and distribution infrastructure required and also reflecting regional market conditions.

For instance, according to the US Energy Information Administration (EIA), average Henry Hub price for 2020 was $1.81/mscf, while the average retail price for the commercial sector was $7.35/ mscf, with average residential prices going as high as $10.23/mscf. For commercial industries in Nigeria that are situated further down the value chain, and require local distribution infrastructure development, natural gas is currently priced at aggregate tariff of $7.89/mscf.

It is also important to state the other challenges investors face in our environment which adds to the cost of providing services. We have a much higher cost of financing than in other climes, shorter tenors for infrastructure, which requires long term cost recovery, issues around payment assurance which poses a significant risk to the business and low capacity utilisation of the built pipeline infrastructure because of the nascent phase of the gas industry we are in. However, we are also mindful of the challenges facing the commercial sector like the increase in the exchange rate, which has implications on industries’ energy costs, and the decline in crude oil prices, which has significantly eroded the cost competitiveness of natural gas relative to alternative fuels. These are amongst several factors, which have led the government to thoroughly review the domestic gas pricing framework. The ALDG is part of the ongoing discourse, and we continue to provide input that will be beneficial for all parties involved.

At CypherCrescent, he said, they are constantly researching and innovating to assist E&P companies leverage their data to optimise their asset value.

At a time in the industry evolution, he stated that it has become expedient that experienced entrepreneurs are required to properly harness other primary factors of production.

“We are now at the stage where entrepreneurs need to be appropriately equipped and informed to make the best decisions at every point in

time. Efficient asset management now requires getting the right insight for the right foresight. These insights are derivable from unstructured well, reservoir and facility management (WRFM) big data, using the right technologies for the human brain to effectively process. This makes the ultimate difference between asset management efficiency and inefficiency.”

It is interesting to note that while many companies are still experimenting their way up to competitiveness, others who have identified the key

have already recognised real value in their WRFM data using analytical technologies.

Business models have evolved and asset managers have gone ahead to leverage contemporary data and digital technologies to reduce their cost of operations and enhance production from brown fields without over reliance on drilling of new wells and expensive workovers.

He said it is imperative to realise that factors of production are not static; they are dynamic and will continue to evolve with civilisation.

specifically affecting the gas distribution sub-sector of the Nigerian Gas Industry. This is one of the gaps we intend to close and a key objective of the ALDG. Other objectives of the ALDG include promoting best practices in the operations and management of gas distribution, particularly exploring and promoting new technologies , promoting knowledge sharing and local capacity building—with an emphasis on local content development, deepening natural gas utilisation and gas-based industrialisation in our domestic market, as well as being a platform to resolve sector issues and disputes amongst members which may arise.

line, the Ajaokuta – Kaduna – Kano pipeline (AKK) and the QIT – Umuahia – Enugu – Ajaokuta pipeline. The National Gas Policy, which was released in 2017, built further on the foundations laid by the NGMP and improves on the institutional, legal, regulatory and commercial frameworks for the development of the gas sector. These initiatives haven’t completely stalled, because we are progressing, although a bit slower than initially anticipated, with the various policy recommendations already in place or ongoing. Just recently, President Muhammadu Buhari commissioned the construction of the AKK pipeline project, one of the critical projects identified under the infrastructure blueprint of the NGMP.

Oga Adejo-Ogiri

How would your association deepen domestic gas penetration in the country?

ALDG members are mainly private sector players who have made significant investments in developing the gas distribution network we currently have in the country. Over the last 10 years, we have seen a three-fold increase in the expansion of the distribution pipeline network by the Local Distribution Companies (LDCs), and witnessed the birth of several CNG projects to expand gas supply to off-grid markets.

The expansion of this gas distribution infrastructure has led to a corresponding increase in gas supply to the commercial sector over the same period. As an Association, we will engage in regulatory, legislative and policy advocacy to ensure a conducive business environment is in place to encourage our members make further investments to drive economic growth.

Is the current drive for gas utilisation good enough and if it is not, what do you think should be done?

There has been some progress in the drive to deepen gas utilisation in Nigeria compared to where we were a decade ago, especially before the Nigeria Gas Master Plan (NGMP) era. We now consume about 1.2bscf/d of gas in the domestic market compared to barely 0.3bscf/d, preNGMP. However, when you consider where we are now relative to the potential, there is still a lot of work to be done, as the NGMP forecasted a 4–5 bscf/d present consumption rate. We definitely need the government to formulate inclusive fiscal policies to attract private sector investments to build out critical gas infrastructure required to deepen gas utilisation. It is also important that the government resolve the commercial and regulatory challenges in the power sector, which is

a key driver of consumption for the domestic gas market.

Additionally, stable government policies, regulatory and policy environment are essential frameworks to attract long-term investments.

Why exploration and production companies fail olusola Bello

T

he inability of exploration and production companies to invest in Data and the right digital technologies has been responsible for the failure of many of them.

According to ThankGod Egbe, Technical Director of CypherCrescent, he said, from years of research and consulting, it has been have discovered that these undesirable trends that has bedevilled the companies came about Olusola Bello, Team lead,

because the operators are contented with the way they are doing business without given it a thought that they should deplore some new innovations that could enhance their businesses.

He stated that energy demands have skyrocketed with oil and gas assets ageing further with unavoidable changes in structure and behaviour due to decades of production and intervention operations.

He explained that because of the failure of these companies to invest in new innovations, a lot of their as-

Graphics: Joel Samson.

sets are experiencing declined production and increased cost of production amidst declining oil price.

“Consequently, many E&P companies are facing the challenges of taking the hard punches of low profitability and reduced competitiveness.”

To mitigate this situation some companies have resulted to either drilling new wells in a bid to increasing production or carrying out expensive workovers and interventions with unreliable proposals/ programmes resulting to low success rates, he said.

www.businessday.ng

Email: energyreport@businessdayonline.com, Tel: +234-8023020011

https://www.facebook.com/businessdayng

@Businessdayng

22

Thursday 03 September 2020

BUSINESS DAY

INTERVIEW ‘To attain economic security, justice, Black Africandescents population must address funding equity’ African-descent population are not getting a fair piece of the global funding and this is reducing the economic impact of philanthropic giving to local African communities. JACQUELINE BOUVIER COPELAND, founder of BPM /CEO, The WISE Fund in this interview with KELECHI EWUZIE, speaks on how BPM is devising new black funding principles for community rebuilding from Covid-19 in Africa. Excerpt:

W

hat are some of the challenges facing Philanthropy, Venture Capital, Angel Investing, Social Impact Funding activities in Africa and to what extent can you say the Black Philanthropy Month platform has contributed to solving them?

The key challenge is that Africandescent people regardless of national origin or ethnicity are not getting a fair piece of the global funding pie. For example, in the US, depending on the study, Black-led organisations only get about 2 to 5 percent of foundation funding.

Black American businesses only get 1 percent of venture funding. In Africa, some studies show that Indigenous NGOs only get about 20 percent of the global philanthropy given in Africa, since many donors still give through expatriate-led intermediaries, thereby reducing the economic impact of philanthropic giving to local African communities.

Also, Africans only get $726 million of the $130 billion global venture funding capital market. Black donors and investors are giving at high levels.

Black Philanthropy Month is promoting increased and more strategic, coordinated giving to help our communities rebound from the Covid-19 Recession, as we hold private funding institutions for fair funding levels and policies. Funding equity is necessary for Black economic security and justice everywhere.

How does BPM structure its annual programmes to drive global participation across the African Diaspora and address peculiar challenges facing Africa?

BPM was inspired by the work of a diverse coalition of Black women founded in 2003 now called Reunity: The Pan-African Women’s Philanthropy Network. Now with 400 members from 40 countries, Reunity includes African-American, African and African diasporan women and allies of all backgrounds united in our belief that giving is key to healing and empowering our communities everywhere. Because of its Pan-African roots and volunteer base, BPM has included Africa and its Diaspora from its founding and will continue to do so.

We deepened African inclusion this year by having a two-day Black Giving and Beyond Summit coorganised and hosted by Africans, namely Thelma Ekiyor, Chairperson of Afrigrants, who was the Africa partner. Una Osili, Associate Dean of the Lilly Family School of Philanthropy was Africa Summit Planning Chair, and helped recruit the Africa Summit panelists. The event was a resounding success with Dikembe Mutombo, Founder and Chairman of a foundation by the same name and Aisha Oyebode-Muhammed, Founder and CEO of Murtala Muhammed Foundation as keynotes.

We devised New Black Funding Principles for community rebuilding from Covid in Africa and its global diaspora. We will publish the principles

Jacqueline Bouvier Copeland

soon. We have organised a Reunity Summit, a virtual revival, coaching session and retreat for Black women philanthropists worldwide for August 29th at 11 AM EDT and 7 PM WAT. Readers can visit bit.ly/FundBlackSummit (case sensitive link) to register for Reunity, playback all BPM sessions and vote on the New Black Funding Principles too.

The first 100 Reunity registrants will get a free copy of “Everyday Ubuntu” by Mungi Nglomane, patron of the Tutu Foundation, as well as Bishop Tutu’s granddaughter. All BPM 2020 events are free thanks to the support of our generous sponsors like you.

Attracting funders in Africa is a huge challenge. What measures have been put in place to fund Black communities for post-COVID recovery and rebuilding?

We are hoping that BPM speakers, sponsors, partners and all participants become a united network for funding to Africa and its global Diaspora, as this needs to be part of the solution to support the massive post-Covid recovery effort that needs to start now.

We will establish ways to track our progress and expand the Black funding equity movement through BPM and support of our constituents with our time, talent, treasure and voice as much as we can.

Partnership with the private sector is very critical to achieve the vision of BPM. How do you see the role of high-profile social investors and philanthropists towards achieving 21st Century Black Funding Principles?

One of my favourite African proverbs is that “Wealth is not what a person owns; it is what they give away.”

And the African-American version is “To whom much is given, much is expected.” Especially with Covid-19 and the resulting recession literally www.businessday.ng

killing our people and decimating our communities, African-descent people of means should stretch giving funding to innovative organisations that can make a difference but also use their influence to stand up for Africa and its Diaspora in corridors of power. But Black Philanthropy is not just about giving money by wealthy people. Everyone has something to give, even financially poor people, including moral support, just sharing what we can.

What inspired you to start Black Philanthropy Month (BPM)?

I have been inspired by my family and community heritage as an AfricanAmerican person. Philanthropy from Black and non-Black allies enabled me to get an excellent education and jumpstart a career of service, paying it forward to others the way I was taught by my community and mentors.

I also have been fortunate to work and live in Africa and its global Diaspora from age 19. This experience as well as the amazingly creative ways African immigrants in the US and elsewhere self-fund community empowerment, often led by women, along with the United Nations declaration of the International Year and later Decade for People of African Descent inspired me to create Black Philanthropy Month in 2011.

The world has this mistaken impression that African-descent people are supplicants, that we do not give.

With Black Philanthropy Month, I am hoping that all people understand the power of our ancient giving traditions, the ways it has funded our progress from African Liberation to Black Lives Matters Movements, and its power to make a better future real for our people, humanity and the planet.

Can you tell us about the BPM programs globally and the works it has done since inception in 2011?

https://www.facebook.com/businessdayng

Our primary programme has been the annual, global BPM as well as Summits that convene our Movement for inspiration, hope, capacity building and visibility.

We operate year-round and this year will focus on implementing the emerging New Black Funding Principles. With savvy use of technology, this has been a mostly volunteerdriven effort, involving social media, cloud computing, online fundraising and virtual reality tools.

To date, we have engaged about 17 million people worldwide and are growing. We are grateful for our growing list of sponsors and donors, as we want to keep BPM support free for our Movement and afford the staffing that we will now need for the next phase of impact.

For you to come this far, you must have had some ups and downs in the journey. Was there any point in time when you felt like quitting? Any regrets being where you find yourself?

I am proud that especially with the support of my sisters in struggle, particularly Valaida Fullwood, Creator of Soul of Philanthropy and Tracey Webb, Founder of Black Benefactors as well as the stalwart volunteers of Reunity, we have been able to keep BPM going. Reunity volunteers involved from 2003 and still leading are Elsa Vega-Perez, Independent Cultural Worker; Mojubaolu Olufunke Okome, Professor of Political Science, African and Women’s Studies Brooklyn College, CUNY and Bring Back Our Girls NYC Leader; Antonia Apolonario-Wilcoxon, Founder of Equity Partners and Midwest Center for Brazilian Culture; and Jean Fountain of Via Fountain Associates. Our biggest struggle has been keeping Reunity™ going for now almost 17 years and BPM for 10 years.

Like everyone else we have jobs and great demands on our time as family and community leaders. Volunteerism will always be vital for us but now we are also organising for sustainability so that we can continue to support our communities and grow the Movement across Africa and its Diaspora.

Coronavirus pandemic has greatly impacted organisations globally, Is this in any way impacting operations of your company, The WISE Fund, and what measures have been put in place to overcome these challenges?

The Women Invested to Save Earth (WISE) Fund works on two fronts and has taken measures to help our communities survive and recover from Covid. First, I founded The WISE Fund just in February 2020 as an extension of my personal philanthropy and commitment to keep Black Philanthropy Month going and to support our new social action Summit series, Black Giving and Beyond.

The Summit is creating New Black Funding Principles for Equity and Covid Recovery that we will help execute to help our communities @Businessdayng

weather the coronavirus and come out of this crisis stronger. Second, The WISE Fund will do its first funding round this September supporting Black and Indigenous-led women’s organisations with novel solutions to environmental challenges, such as Covid-19, that heal people, provide economic opportunity and address global warming that disproportionately impact lower-income African and other women.

As part of this commitment, we have taken the Council on Foundations pledge to do Covid relief and recovery funding to help promising community organizations survive the crisis and continue their most needed innovation and services.

Increasingly, technology is narrowing the space for professional practices across all sectors with its disruptive impact. How true is this? How prepared are you as a chief executive officer of a company for this new normal going forward?

I have had the good fortune of studying the use of technology as a tool throughout human history as an anthropologist and deliberately using it as a tool of social change in my career as an activist. It is a doubleedged sword; just like any aspect of material culture, it can be used for good or evil. As a serial social justice innovator, digital technology has been a powerful tool, allowing me to work with people across the world doing giving, creating virtual communities, creating new social impact applications, using AI for evaluations and more with collaborators at times when we did not have much money and/ or, in the case of Covid now, could not serve together in-person. On the other hand, it is increasingly becoming clear that sometimes technology can undermine human rights as well as destroy our natural environment and economy.

Technology is shaping everyone’s future at an increasingly rapid rate. We must ensure that we and our children are technology literate; understand how it should be used responsibility; and demand true social and environmental justice from technology companies and leaders.

The WISE Fund will continue using technology but also emphasize the need to create ethical technologies to develop Black communities everywhere; supporting grassroots technologists who solve our communities;’ challenges; and partner with allied technology and other companies that share our values to empower African-descent people.

What are your projections for Black Philanthropy Month programs in the next 5 years?

If our past success is any indication of our future, I anticipate that our Movement will grow to at least 40 million participants and we will become a key player in empowering Black and allied donors and investors to use our giving to leapfrog the development of Africa and its global Diaspora. Together, we are the change we seek.

Thursday 03 September 2020

BUSINESS DAY

23

Garden City Business Digest CINFORES:

How ICT is automating Rivers agencies and creating jobs • BrainFriend app soon to shake the world • And, taking the youth away from hacking specialisation in ICT Ignatius Chukwu

A

team of young men in Rivers State who broke out from a Nigerian university are making waves around Africa and beyond with ICT deployments under CINFORES that change the way things are done.

Already, the group is creating jobs, having over 150 IT experts t the hub in TransAmadi area of Port Harcourt, the state capital. Their exploits in the information and communication technology (ICT) seems to be transforming many agencies, institutions and departments in Rivers State.

Their latest foray may be the development and deployment of an application (app) known as BrainFriend which may change teaching and learning around the world.

At a pre-launch briefing in Port Harcourt, the director of finance and administration at CINFORES, Ikechi Nwogu, demanded for a new narrative in the Niger Delta saying the region deserved it.

He rejected the casting of the Niger Delta as a zone of

Ibifuro Asawo, CEO, CINFORES

death whereas many innovative developments were being created by young people.

“There is need to show the world that beyond violence and militancy, there are positive things happening in the oil region, the Niger Delta, and in the south-south of Nigeria.

We must show that Nigeria is making headways in some areas as leaders”.

Pointing at the creative works in the Niger Delta, the CEO, Ibifuro Asawo, said its about ICT for development with such benefits as e-filing now being done in the Rivers State judiciary. There is

Ikechi Nwogu

e-affidavit system, and an entire system of automating the judicial processes.

“The Rivers State University Teaching Hospital is now to do e-booking e-consulting, etc.. Land administration is also to be on e-system. The Rivers State Internal Revenue Service system is being automated and digital. Filing is now done electronically and even tax certificates are processed online. These areas are exiting the pilot stage.”

He hinted that the BRACED Commission, (the economic body for Bayelsa, Rivers, Akwa Ibom, Cross River and Delta

states) which went moribund years ago is coming back, this time, through IT Union. “There would be huge collaboration through IT to make all the states in BRACED to work in synergy and be on same page.”

On how the IT initiative is being developed, the CEO said demand drives improvement.

He said the best way to discourage youth from specialising in hacking in the IT industry is to show them better prospects. “This initiative helps to push the youth to positive initiative instead of hacking as the most attractive proposition in IT.

“For instance, ours is 17 years journey with zero capital. The vision will continue of the strong business model which is an enterprise. Schools use our product and we have over 2000 partner-schools all over Africa. Many states in Nigeria, schools, Nigeria Union of Teachers (NUT), are working with us. Its an education support app.”

BrainFriend coming: It is something that we think would bring school to our homes. We always say we go to school, but we are thinking that more than ever before, school can come to our homes.

Asawo said: “Today we have come to do a pre-launch of BrainFriend which is Nigeria’s foremost e-learning and exam preparatory software conceived some 17 years ago.

It has evolved in the past 17 years and today, we are calling the world to come and see some of its new features.

“This is an educational software that encourages effective teaching and learning by offering e-books, questions, answers with explanations, videos, animation, games, edu-social media, etc, as well as career guide and the national curriculum for teachers. Features and benefits of

the solution app include over 70,000 questions and answers, over 25,000 theorems, definitions, formulae; over 60,000 subjects in primary and secondary schools including the three major Nigerian languages and entrepreneurial studies; prototype questions, Advance level questions in key subjects, etc.

“We have now included what we call ‘Study Groups’ for collaboration, live classroom, etc. The pandemic taught us that we could do things differently. So, we now have the live classroom. We have educational games all bundled together in the new BrainFriend.

“It is something that we think would bring school to our homes. We always say we go to school, but we are thinking that more than ever before, school can come to our homes.

“We are looking at opportunities where students, schools, parents and others would embrace this solution after the launch next month and use this to solve their problems.

“We started as four friends but now we are seven directors. We are now over 150 in the organization, but one third of this number is made up of people developing the solutions.”

PHED; Journey to number one Disco possible?

Port Harcourt

by Boat

IGNATIUS CHUKWU

E

ach of the 11 electricity distribution companies in Nigeria today in the power sector is autonomous. In that sense, competition is allowed. The Port Harcourt Electricity Distribution Company (PHED), says it wants to be the number one energy disco in Nigeria and the world. They are entitled to their ambitions, but what would be the hallmark or benchmark of such a title?

Their customers would expect regular supply. There must be justice *transparency) in billing which can only com via prepaid metering system where a customer bills himself by deciding how much to consume per month.

The third most important is prompt attention to complaints, because they must occur, anywhere in the world.

Final point: There must be zero tolerance to connivance with their personnel. It would not

mean that their staff members would not be tempted by offers from thieving consumers out there but there must be demonstrable evidence that PHED people don’t do deal.

How is the PHED responding to the above important standpoints? First, the company brought in Henry Ajagbawa, a doctorate degree holder in accounting and management expert.

He sounds brainy but very tough. He sounds like a man that won’t tolerate vices such as indolence, laxity or dull thinking anywhere near him; let alone the mention of fraud.

It is upon this plank that other factors seem to lean. Adequate power supply: The new CEO seems crazy on this. PHED scratched for funds to begin a power plant project that ought to be executed by TCN, just to create 60 mw power and send at least 48 mw to Rumosi sub-station.

This began on August 31, 2020 to power western PH so that Afam could keep powering eastern PH. Billing justice: PHED has shown determination to install meters to their 500,000 customers which may rise to 1000. This way, the argument of estimated billing would be a thing of the past.

The moment a customer knows he is paying for exactly what he consumed, even if tariff goes up, he at least would be glad that nobody was robbing him. This looks possible if N40Bn could meet PHED. To boost this hope, there is this $200m fund on the way at national level to support meter scheme; also the FG just gave waiver on importation of meters.

Lets look at energy theft before we continue.

www.businessday.ng

The biggest threat to the discos and to the entire power sector is energy theft including meter bypass. This is said to be worse in the Niger Delta; remember militants, kidnappers, refuseniks who blatantly say they wont pay, etc. On this, PHED says it is soon to deploy smart meters that will report back if any tampering occurs.

The headquarters can disconnect the customer from base. PHED is said to be ahead in this plan, but trust others to go for it, too. Tribunals to try offenders instanta may help.

Now complaints! PHED has rolled out what it calls IVR (Interface Voice Response). This means 24/7 call service with integrated services such as ability to identify workers, pay bills, borrow token, do research on the platform, etc.

On August 31, this technology was unveiled

Henry Ajagbawa, CEO PHED

https://www.facebook.com/businessdayng

to the world where about 12 call agents would be ready to handle all problems from calling customers. It was a day the customer care manager, Angela Ajere, shone like a thousand stars selling her unique skills and those of the PHED. The CEO, Ajagbawa, who was represented by the GM (general services), made it clear that Rome, truly, was not built in a day. “We have taken that challenge and we are gradually moving towards our own Rome.”

He went on: “Yesterday, in collaboration with the Transmission Company of Nigeria and the ever supportive Rivers State Ministry of Power, our Rumuosi 48 mw project was commissioned.

Today, we are taking another giant step in launching our State-of-the- Art 24/7 call centre.”

He said ATM is commonplace in Nigeria now as it was in the UK 20 years back. So shall Nigeria continue to advance in technology and solve most of its present problems in service delivery sphere. “Today, we are telling our esteemed customers that you really do not have to come physically (especially the peculiar times we live in, Covid -19 pandemic) to get your issues resolved; from payment transaction to complaints of whatever magnitude, we have it all sorted out in just this small room from the comfort of your homes and offices.

“Standardising our call centre with the interactive voice response (IVR) will not only enhance customer satisfaction but will also increase efficiency in three ways”. He named them.

So, is PHED close to number one? The answer is in your palms.

@Businessdayng

24

Thursday 03 September 2020

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph Editor, (08023314782)

Denzel to Chadwick: Legacy Transcendent ONUWA LUCKY JOSEPH

L

ife as we know it is about the ongoing succession of generations. The generation nurtured by the one before it, settles down to the business of raising and equipping a new generation.

And for vulnerable groups, this is a duty most sacred. Without the tending that’s so critical, the newborns will be unable to navigate properly and so will be easy prey for the many predators out there.

Of all those stories about Chadwick Boseman that came out after he died, the one I found most relatable was the one about Denzel lending a hand a youngster looking to improve his craft by going for a summer exchange programme at Oxford. The great man did it without fuss of any sort. He did as a Big Brother would for his kid brother and his kid sisters (Boseman wasn’t the only one he sponsored).

Whether Boseman turned out the star that he became or not, Denzel would have done the bounden generational duty of helping a younger navigate

the path that the older had trodden afore. Might we repeat, it’s a sacred obligation. To be there, to be present, to shine the light, to lend the hand. That’s how a generation bows out fulfilled, knowing it’d done its bit. And in this respect, the Black Race needs to do a bit more. The stories of where we’re coming are dissonant with our reality.

And our kids are asking questions about our place in the world. Why is it generally at the bottom, wherever we find ourselves?

Maybe one major reason is

30 MTN Musical Scholars Graduate from MUSON ONUWA LUCKY JOSEPH

T

he Musical Society of Nigeria (MUSON), on Saturday 29th August 2020 graduated 30 music scholars whose studies had been enabled by a two year MTN Foundation scholarship. As expected, and as has become the norm, it was a virtual event, in accordance with Covid 19 protocols.

MTN Foundation is involved with different aspects of Nigerian society, its massive operations powered by funds from MTN’s 1% profit after tax that’s exclusively devoted to prosecuting social and community enhancement programmes.

Its partnership with MUS ON is only one of the many areas where MTN intervention in Nigeria is evident. And appropriately so. Nigeria is a hotbed of musical excellence especially in contemporary music. The MTN/MUS ON partnership is however geared stronger towards classical and folk songs, the genres generally thought to be the underpinnings of good music. Contemporary music is not left out altogether, how-

ever. What’s on offer just is more tasteful and backed with the rigour of study as a discipline as against the freestyle that performers opt for whenever ‘inspiration’ perches but for some while on them.

Graduates of the programme are equipped for different aspects of the music spectrum, including composition, performance, production, etc.

Dennis Okoro, Director, MTN Foundation, thanking the graduands on behalf of MTN “for entrusting us with your gift through this programme”, affirmed that the Foundation was honoured “to be part of your success story and look forward to the great things you will achieve”.

His MUSON counterpart, Banke Ademola, Director MUSON School of Music, was full of thanks to the Foundation for the scholarship availed the students to enhance and showcase their musical talents. She was also happy that MTN staff came by routinely to monitor the progress of the students. She maintained that Covid 19 had nothing on the ceremony, which though virtual was still glamorous and lived up to its billing. www.businessday.ng

because we’ve not done enough of the lift: one generation pulling up the other and setting them on their way. Every new generation shouldn’t have to start at the bottom. And the help must not come from immediate family alone. The Black race is a family. We are up against too many odds. We need to ensure that the kids who succeed us are indeed successful. Not just as individuals. But as a people.

Look out for the one with the Black skin like you. Kill not your brother/sister because they’re black or brown like you. There

are too many others who’ve assigned themselves that role of keeping us down and powerless. Be like Denzel. Look out for Chadwick. The many Chadwicks out there will make us proud if we show up strong for them. Show up strong for them.

Hear Denzel: “Black Panther, I shed a tear. And the 40 years I’ve been in this game came back to me. Man, look at those young boys, man. And I actually just thought it, and was like whew, Sydney (Poitier) to now? But it was like, man, I felt like the third leg in a relay race.

Heineken aids WaterAid against Covid 19 in Africa ONUWA LUCKY JOSEPH

S

o, Covid 19 is not exactly cutting a swathe through the African population as was feared. But vigilance is still of the essence. And as it turns out, water, which Fela declared ‘no get enemy’, can be a worthy ally in the cause.

Which is why Nigerian Breweries, Heineken Africa Foundation and WaterAid Nigeria, as part of the World Water Week, are teaming up to promote lifesaving hygiene education and make provision for hand washing facilities in countries across the continent.

The sad statistic in 21st century Nigeria is that about 60 million people still have no access to clean water.

This makes them a lot more vulnerable to the virus should it be present in their environment.

So Heineken Africa Foundation, whose mother company has clean water as a major resource for its product and has therefore built quite a

reputation around Water Access, Sanitation and Hygiene (WASH), has stated a commitment of 5million euros in 2021 towards setting up hand washing facilities and to provide hygiene information in health centres, markets and communities in Nigeria, South Africa, Rwanda, and Mozambique.

Specifically in Nigeria, Heineken’s contribution of 622,000 euros will go towards enabling WaterAid Nigeria install over 1,000 hand washing stations in health care facilities and other public places.

The General Manager Heineken Africa Foundation, Suzanne Giele lamented that while clean water, decent sanitation and hygiene ought to be a basic human right, “unfortunately, many countries in Africa do not have access to it.” For which reason, she said, the partnership would focus on WASH activities. She promised that there would be additional support as the needs arise in the first half of 2021.

https://www.facebook.com/businessdayng

Like, here, go! Now, I ran behind them, I’m still running, but I was like man, they gone! You never know who you’ll touch or where they’ll end up. I mean, I had no idea that it would work out this way and look where Chad is now. (This was before Chadwick’s death) I’m so glad to be, in a very small way, a part of that.”

Hereunder is Chadwick Boseman’s speech at the AFI Lifetime Achievement Award in June 2019. He was already looking quite frail but he was still full of gratitude to Denzel and evidently believed he was going to be around for longer.

Unfortunately…..

“I know personally that your generosity extends past what you have given on the stage and screen. Many of you already know the story that Mr. Washington when asked by Phylicia Rashad to join her in assisting nine theatre students from Howard University who had been accepted to a summer acting programme at the British Academy of Dramatic Acting in Oxford, he gracefully and privately agreed to contribute.

As fate would have it, I am one of the students that he paid for.

“Imagine receiving a letter that your tuition for that summer was paid for and that your benefactor was none other than the dopest actor on the planet.

I have no doubt that there are similar stories at Boys & Girls Clubs, in theatres and churches across the country where I know you have also inspired and motivated others. An offering from a sage and a king is more than silver and gold. It is a seed of hope, a bud of faith. There is no Black Panther without Denzel Washington. And not just because of me, but my whole cast; that generation stands on your shoulder. The daily battles won, the thousand territories gained, the many sacrifices you made for the culture on film sets through your career.

The things you refused to compromise along the way laid the blueprints for us to follow, and so now, let he who has watered be watered. Let he who has given be given to.

“It is an honour to now know you, to learn from you, and join in this walk with you. May God bless you exceedingly and abundantly more in what’s in store than He ever has before.

God bless you.”

ENTREPRENEURSHIP: Dangote, MTN, Others Help Narrow the Funding Gap requirement cut.

He also talked about the National Economic Susf you are young and enterprising and an en- tainability Scheme – (guartrepreneur to boot who anteed off take) – where just happens, like millions of others, to not have the funds the undertaking entails, there’s some hope.

It’s competitive, of course, but that’s why you are an entrepreneur.

According to Shekarau O m a r ( E D, SME) for the Bank of Indusgovernment pays busitry, BOI, access to funds nesses to produce what has been boosted consid- government guarantees erably by Aliko Dangote to buy from them; a sort of and MTN who have placed grant for those struggling to with the BOI, substantial stay in business. funds that can be accessed These all sound too without the roadblocks good to be true. But you usually associated with the won’t know unless you try. endeavour.

So visit the BOI website and According to Mr Omar, see how well Mr Omar’s who made this known words stand up deep digat the virtual-conducted ging entrepreneurial scruMTN Revv Masterclass, tiny Dangote Foundation has Good luck. placed a N5bn no interest facility with BOI, while the MTN Fund also domiciled with BOI all of N100million (Kindly send feedback to 08023314782 / csrmomento be disbursed to entre- tum@gmail.com) preneurs who make the ONUWA LUCKY JOSEPH

I

@Businessdayng

Thursday 03 September 2020

BUSINESS DAY

25

Investor Helping you to build wealth & make wise decisions

Market capitalisation

NSE Premium Index

The NSE-Main Board

N13.158 trillion

25,221.87

N13.203 trillion

2,194.86

NSE All Share Index

Week open (21 -08–20)

25,221.87

Week close (28- 08–20)

25,309.3

Percentage change (WoW) Percentage change (YTD)

0.35

-0.45 3.72

-5.71

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

1,063.17

740.58

128.80

422.28

187.36

1,832.03

1,112.21

973.23

1,074.60

1,069.73 1,074.57

294.64

740.58

132.41

426.99

187.36

1,839.57

426.99

973.72

1.08 -6.70

0.00 0.00

0.45 -8.77

293.97

-0.23 -17.62

2.80

1.12

5.24

-27.98

0.00 -28.64

NSE Lotus II

NSE Ind. Goods Index

0.41 0.26

NSE Pension Index

0.64

0.05

4.06

-7.62

‘We need to demonstrate that there is a lot of value in listing’ Lamido Yuguda, Director General, Securities and Exchange Commission (SEC) spoke to journalists during the first virtual Capital Market Committee (CMC) meeting held recently. Iheanyi Nwachukwu brings you excerpts from the DGs responses to questions.

Can you outline your strategies in dealing with issues of unclaimed dividends? n unclaimed dividend, this is something that we are actually looking at very carefully. This problem is in two folds.

One is that we have the existing stock of unclaimed dividends, and the second is to prevent the accumulation of the unclaimed dividend in the future. Now we have the e-dividend and the mandate at the moment which substantially takes care of the accumulation of the unclaimed dividends in the future.

Even though it is not working perfectly but substantially it has reduced the accumulation of unclaimed dividends. But the task now is to work with the registrars, to make it easy for shareholders on boarded onto the system. Although there have been some complains in the capital market that the shareholders are finding it difficult to key in and most probably the registrars are not working really quick enough to get investors on boarded but we are going to tackle these issues.

Now the existing stock of unclaimed dividends, some of these have been returned to the companies and a little percentage is still with the registrars. These are issues that we are also looking at and we will come out to the market very soon with a statement. This is all for now.

On Know Your Customer (KYC), using the stockbrokers the KYC for identity management, this is an issue that is quite broad, we listened to Nigerian Stock Exchange (NSE) and Central Securities Clearing System (CSCS) and the kind of work they are doing, we need to look at the entire issue. But this is something that is really at the fore front, as we have been discussing it, we have the National Identity Number, the BVN, all capital market transactions start off from a bank account and end in a bank account and so on. On the issue of information the stockbrokers have on their clients, it is something that we will also need to look at.

A lot has been done and more will still need to be done, the stockbrokers and even within the stockbroking community –the Association of Stockbroking Houses – working with the CSCS and the Registrars, we are all working together to get this issue resolved.

There is a backlog, the first thing

O

Lamido Yuguda

or one of the key important things is to make sure it doesn’t keep accumulating and everybody has a part to play, clients should give their details including the bank account number, so that the registrars can promptly credit them.

On the issue of backlog, as you are well aware the Commission directed to a good extent the registrars complied, by making repeated publications, having information readily available on the website of the offices, encouraging clients even with multiple subscriptions, because am aware in the time past the Commission had to give like two extensions, allowing multiple subscriptions to be unified so that all these things can be captured. I won’t dwell on the issue but it is a consented effort and we will continue to make sure that the unclaimed dividends issue gets reduced.

Whether it is the issue of unclaimed dividend or the issue of multiple application, all the issues are around identity management, and the Commission is really working to see that the issue of identity management is resolved in the Commission, there is a committee that has been setup, which is working with other www.businessday.ng

stakeholders, to come up with a single form to be used by all the capital market operators and once that is done, the issue of unclaimed dividend will be an issue of the past. We already have an existing issue of unclaimed dividend, that is the legacy issue and that is where there is a problem.

The legacy issue is also connected with this issue of multiple subscriptions and there are a lot of investors who used different accounts and some of them cannot even remember the name they used in applying for shares is the issue.

The other issue is in respect of the new issue, so what the Commission has done is that the Commission has given the directives to all stockbroking firms to get their clients update information in respect to BVN and account number.

During the boom in the capital market there was no BVN but now there is BVN which the Commission is also trying to use for identity management. The Commission has directed all stockbroking houses to get their client to update their information in respect to BVN and account number. The information will be sent to CSCS, CSCS will send same information to the registrars

https://www.facebook.com/businessdayng

and the registrars will use in payment of dividend.

What is the SEC doing to support the market during this pandemic?

COVID-19 presents real economic crisis, not only for Nigeria but all over the world. This is because we have seen massive drop in output, we have seen a collapse in the price of oil; we have seen essentially a halt in economic activities in many, many respects. Now what can we do?

First is to make sure that the capital market and the SEC continues to work. The SEC has been open for business throughout the pandemic and also the major operators in the capital market have been working remotely, so we have not really had a stop in the capital market activities.

What can we now do? The thing is that even before the pandemic the capital market really needed a kind of revamp. We need to attract more investors into the market, and we also need to attract more issuers to the capital market. Now what do you do to attract more investors? You need to demonstrate to investors their investments are very secured and long term the returns are really worth their investments, but we will be able to generate returns that are above the inflation and you can only do this when you invest in the stock market because you cannot have these kind of returns except when you invest in the market.

For the issuers also, we have seen a lot of issues coming to the market, but we know that there have been a few cases of companies that have been delisted from the market, we need to demonstrate to issuers that there is a lot of value in an issuer listing in the market and also listing securities periodically in the market.

We are going to continue to attract investors by making sure that the market is a fair play and instruments traded in the market are fairly valued and in the end investor is actually going to gain by having their money in this market. For issuers, we are going to make sure that the benefits of listing in the market far outweigh walking to a bank to borrow money. On the issues of pension funds, pension has been accumulating funds at a very fast rate and essentially these funds are compulsorily deducted from the salaries and wages of workers.

Pension Funds Administrators (PFAs) are supposed to invest significant a significant amount of their portfolio in the capital market @Businessdayng

but that is really not happening at the moment. Pension funds are very much underweighted to what actual allocation to the Capital market should be, the capital market needs to understand that there is this pool of money waiting to be invested in the market, but what is stopping pension funds from investing in the capital market?

We need to have that evaluation and that dialogue with that important class of investors so that we can attract as much of the pension funds as possible. If we achieve that, we will see that even with the pandemic, the capital market will really soar in Nigeria. Right now if you look at the number of CIS accounts, with less than 400,000 CIS accounts for a country that has a population of almost 200 million, that tells you that there is really a lot of potential.

It is really left for the capital market to show that there is value in this investment and also there is protection for the investor.

What does the SEC hope to do regarding various issues of infractions?

Yes, we have a number of cases that we have inherited. We have been working right from the first day to resolve all cases of infractions.

Really, our aim is to have as little as possible the infractions in the market. We intend to work with all Self-Regulatory Organisations (SROs) and all the various Capital Market Operators (CMOs) to make sure that infractions are reduced to the barest minimum. Where they happen, we have a very strong resolve to really fight infractions to mete out sanctions as appropriate as quickly as possible.

We have a number of cases that we are looking at, we are reviewing each case in a case-by-case basis, and we are working to make sure that these cases are resolved in the shortest possible time. However, make no mistake about it; we have a zero tolerance for market infractions. We need a capital market that is actually very fair; fair to investors, a market that is not really tilted or biased one way or the other or in favour of any market operator that seeks to make a gain at the expense of investors. We have a fiduciary duty to the people that we serve and it is only by doing that they will know that this market is for them. If you look at the statistics the average age of the client is over 50 years.

26

Thursday 03 September 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Wednesday 02 September 2020

Top Gainers/Losers as at Wednesday 02 September 2020 LOSERS

GAINERS Company STANBIC

Opening

Closing

Change

N36.5

N37.5

1

NB

Company

ASI (Points)

Opening

Closing

Change

N5.1

N4.85

-0.25

DEALS (Numbers) VOLUME (Numbers)

GLAXOSMITH

N39

N40

1

VITAFOAM

N5.71

N5.5

-0.21

GUINNESS

N13.8

N14

0.2

WAPCO

N12.2

N12

-0.2

FLOURMILL

N18.8

N19

0.2

MANSARD

N1.84

N1.67

-0.17

VALUE (N billion)

N5

N5.1

0.1

UBA

N6.55

N6.45

-0.1

MARKET CAP (N Trn)

UBN

Nigeria stocks climb further Iheanyi Nwachukwu

N

igeria equities rose further on Wednesday S e p t e mb e r 2 as the nearly relentless rally in banking stocks continued to support upward trend despite pockets of profit taking activities.

Investors were upbeat to qualify for 40kobo interim dividend by Stanbic IBTC Holdings, while shares of UBA Plc which declared 17kobo interim dividend was weighed by profit taking. At the close of trading, Stanbic shares rallied most, from N36.5 to N37.5, up N1 or 2.74percent.

The NSE ASI increased by 0.18percent to 25,460

points while the value of listed stocks rose to N13.282trillion as against preceding day lows of 25,413.76 points and N13.258trillion respectively.

Investors gained N24billion; the negative return year-to-date decreased to -5.15percent. In 3,408 deals, investors exchanged 181,320,844 units valued at N1.121billion.

Presco shareholders okay N2bn dividend payment

S

hareholders of Presco Plc on Wednesday September 2 approved the payment of N2billion dividend which the board declared for the financial year ended December 31, 2019. The approved dividend of N2billion translates to 200kobo per share, which the shareholders also commended at the company’s 27th Annual General Meeting (AGM) held by proxy at Obaretin Estate, IkpobaOkha Local Government Area, Edo State.

Speaking on behalf of shareholders, Goodluck Akpore, commended efforts by the board and management of Presco Plc to boost the company’s operations, adding that shareholders were particularly impressed with the company’s resolve to pay dividend and sustain growth agenda.

The meeting was held by proxy in accordance with COVID-19 guidelines issued by World Health Organisation (WHO), Ni-

gerian Centre for Disease Control (NCDC), Edo State Government and Corporate Affairs Commission (CAC).

With about 8,000 staff strength, Presco Plc range of products includes Special Palm Oil, Palm Kernel Oil, Refined Bleached and Deodorant Palm Oil, Olein, Stearin, Palm Fatty Acid Distillate and Palm Kernel Cake.

Earlier in his address to shareholders, Pierre Vandebeeck, chairman of Presco Plc, explained that COVID-19 pandemic which has significantly impacted on global economies is also having accounting implications for many entities.

Vandebeeck also disclosed that in the year under review, the construction of a new 350 tons per day palm kernel crushing plant was completed “and so also was the construction of a new 30 tons palm kernel boiler”.

According to him, construction work on the extenwww.businessday.ng

sion of the palm oil mill from 60 tons Fresh Fruit Bunches (FFB) per hour to 90 tons was completed in January 2020. The chairman also said work on the new 500 tons per day vegetable oil refinery has been completed with its commissioning scheduled for this year.

Vandebeeck, who was represented by a Director of the company, Osa Osunde said, “Our company is not difference, which is why we have put in place protective measures in keeping with WHO guidelines to minimize the risk to our workforce and ensure minimum disruptions to operations”.

Making reference to the industry, the chairman said, “Following the moves initiated by the Federal Government to check and fight the illegal importation and malpractices, fourth-quarter (Q4) 2019 witnessed a gradual recovery of average unit selling prices of crude and refined products from the hitherto downward pressure.”

25,460.00 3,408.00 181,320,844.00 1.121 13.282

Global market indicators FTSE 100 Index 5,940.95GBP +78.90+1.35%

Nikkei 225 23,247.15JPY +109.08+0.47%

S&P 500 Index 3,543.44USD +16.79+0.48%

Deutsche Boerse AG German Stock Index DAX 13,243.43EUR +269.18+2.07%

Generic 1st ‘DM’ Future 28,820.00USD +198.00+0.69%

Shanghai Stock Exchange Composite Index 3,404.80CNY -5.81-0.17%

UBA delivers N300.6bn gross earnings, declares 17kobo interim dividend Iheanyi Nwachukwu

A

frica’s leading financial institution, United Bank for Africa (UBA) Plc, has announced its audited financial results for the half year (H1) ended June 30, 2020, showing commendable growth across key performance indices as well as increased contribution from its African subsidiaries.

Notwithstanding the challenging business and economic environment occasioned by the Covid-19 pandemic, the pan African financial institution was able to deliver growth in its gross earnings which rose to N300.6billion up from N294billion recorded in the same period of 2019.

According to its results filed with the Nigerian Stock Exchange (NSE), the Group recorded N2.2 trillion in net loans to customers, representing a 6.1 percent growth even as deposits from customers increased impressively by 25.2 percent to N4.8 trillion.

Net interest income grew by 8.4 percent to N119.3 billion, whilst net fee and commission income stood at

N38.6 billion representing a 7 percent increase compared to the similar period in 2019.

As at June 30, 2020, the Bank’s Total Assets surpassed the N6trillion mark as it leaped to N6.8 trillion.

Operating income also grew by 7.7 percent to N197.1billion compared to N182.9billion while profit before tax stood at N57.1billion from N70.3billion in 2019, yielding a 14.4 percent annualised return on average equity.

The bank’s Shareholders’ Funds remained strong at N634.7billion up from N597.9billion in December 2019, driven by growth in retained earnings, a reflection of UBA’s capacity for business growth.

In line with its culture of paying both interim and final cash dividend, the Board of Directors of UBA Plc declared an interim dividend of 17kobo per share for every ordinary share of N0.50 each held by its shareholders.

Commenting on the re-

sults, UBA’s Group Managing Director/Chief Executive Officer, Kennedy Uzoka said “Our 2020 H1 results are yet another demonstration of the resilience of our business model in an extremely uncertain and tough operating environment.

We recorded commendable growth in our underlying business in terms of customer acquisition, transaction volumes and balance sheet whilst inflation, depressed yield environment and exchange rate volatilities impacted our net earnings as anticipated.

He further stated, “Despite the short-term challenges to various economic sectors occasioned by the Covid-19 pandemic, we focused on the fundamentals of businesses in growth-driving sectors of various economies in which we operate and achieved 6.4 percent growth in gross loan to customers, reaching the N2.3 trillion mark.

The Group achieved N114.3 billion (a 10percent year-on-year growth) in interest income from loans and advances to customers, as well as credit related fees and commissions.

Allianz Nigeria recommends safety measures as cyber attack heightens Modestus Anaesoronye

A

s if the Covid-19 pandemic in itself wasn’t devastating enough, hackers have leveraged the opportunity to attack vulnerable networks as office work moved to personal modes. This is as US FBI has reported a 300 percent increase in cybercrimes cases since the pandemic.

According to statistics, only 51 percent of organizations in Nigeria are confident in their team’s security ability to act and 71 percent have reported an increase in data breach threats since the pandemic outbreak with financial institutions bearing the brunt of each attack.

These were key data from an interactive webinar titled ‘The Ever Increasing Impact of Cyber Attacks: A case for Cyber Insurance’ organised by Allianz Nigeria, in its bid to create awareness and educate business owners on safely mea-

https://www.facebook.com/businessdayng

sures and how to mitigate these risks.

From the outcome, it was discovered that Cyber risk trends that are likely to affect organizations include - Phishing (55 percent), malicious websites (32 percent), malware (28 percent) and ransomware (19 percent).

Among other highlights from the speakers was the need for organisations to focus not only on cyber security but more on cyber resilience. This entails a fusion of information security and business continuity strategies. In other words, cyber resilience is the ability of an organisation to withstand attacks or failures and in such instance re-establish itself quickly back to operational mode.

To achieve this, a seven fold approach which includes being strategic, building capacity, strengthening the process, automate inform and transform, measure and monitor, cyber insurance and collaboration was recommended. @Businessdayng

In an era of unprecedented security risks, companies should determine more pragmatically how they intend to curb these risks and build capacity termed as “human fire wall”. Organisations should create awareness internally, train and educate staff members as a way to minimize the ability of intruders to compromise their information security.

Organisations also need to strengthen their cybersecurity posture across all levels. Every layer of access down to the seemingly unnecessary layer should be tightened as a way to discourage attackers.

In another related remark, there is a need for conducting regular analysis so as to determine the level of exposure and strengths. Cyber-attacks as it stands is dynamic and companies stand a risk of being vulnerable either accidentally or deliberately through its people, processes or the type of technology adopted.

Thursday 03 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

27

28

Thursday 03 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 03 September 2020

BUSINESS DAY

29

News BUSINESSDAY JOBS & GROWTH SERIES

Economy, jobs in peril as Nigeria flirts...

Continued from page 1

forward for Africa’s most

populous nation. In July, Nigeria was included among 27 countries that were on the frontline of impending COVID-19-driven food crises— in a joint report by the UN’s Food and Agriculture Organisation (FAO) and World Food Programme (WFP).

The report, which identified countries where the pandemic’s ‘knock-on effects aggravate pre-existing drivers of hunger,’ had Nigeria sharing the unenviable list with countries such as Afghanistan, Haiti, Venezuela, Iraq, Lebanon, Sudan, Syria, Burkina Faso, Cameroon, Liberia, Mali, Niger, and Zimbabwe, to mention a few.

The joint analysis by both organisations warned that these ‘hotspot countries’ were at high risk of - and in some cases were already seeing - significant food security deteriorations in the coming months, including rising numbers of people pushed into acute hunger.

The situation at present is even direr as 86.4 million people in Nigeria face moderate or severe food insecurity according to this year’s State of Food Security and Nutrition in the World, an annual flagship report jointly prepared by FAO, IFAD, UNICEF and WFP. It also states that 36.8 percent of children under the age of five are experiencing stunted growth and 49.8 percent of women of reproductive age have anaemia.

In cost and affordability of nutrient adequate diet, this represents 34 percent of expenditure and cannot be afforded by 72.7 percent of the population. In cost and affordability of healthy diet, this constitutes 64.1 percent of expenditure and 91.1 percent of the population cannot afford it. As at 2019, the country had 24.6 million undernourished people while 17.8 million were severely food insecure.

“Nigeria must empower its citizens to enable them have enough money to buy healthy diets. This begins with improving the economy by tackling inflation, poor infrastructure, and providing firms with incentives to employ people,” Ifeanyi Okeleke, CEO of Kenfrancis Farms, based in South-East of Nigeria, states.

In the 2019 Global Hunger Index, Nigeria ranked 93rd out of 11 countries, with a score of 27.9 points, higher than Ghana (14 points), South Africa (14 points), Egypt (14.6), and Senegal (17.9).

Hunger has serious economic consequences. The FOA says it significantly lowers physical ability, cognitive development and learning achievement, resulting in lower productivity.

“It not only blights the lives of individuals and families but also reduces the return on investment in social and economic progress,” FOA further notes in a report.

Most of the countries mentioned in the FOA-WFP report have low levels of growth, high level of unemployment and low investment in agriculture.

In the State of Food Security and Nutrition in the World 2019 (SOFI 2019), WFP said hunger was increasing in countries facing slow or declining economic growth.

“Economic downturns or slowdowns often lead to a rise in unemployment and a decline in wages limit access to food for vulnerable people,” WFP further said.

Countries with high number of poor people have a large population of people without access to food. Their productivity and purchasing power are low, leading to low margins by firms. This reduces economic growth and the capacity of firms to create jobs. And Nigeria with almost 44 percent of extremely poor people falls into this class.

The population of those who are food insecure in Nigeria would only worsen if

Dollar falls to N430 as BDCs fund account...

Continued from page 2

sumption of dollar sales to BDCs, purchase of foreign exchange by BDCs would be on Mondays and Wednesdays in the first instance. The BDCs are to ensure that their accounts with the banks are duly funded with the equivalent naira proceeds on Fridays and Tuesdays, accordingly.

Ahead of the dollar sales resumption, the BDCs are ready to fund their account on Friday. The BDCs in the South East have agreed to start funding their account on Thursday in anticipation of dollar sales on Monday by the apex bank.

The CBN chose a gradual

foreign exchange supply of $10,000 twice a week to BDCs to edge out speculation in the market.

Akintunde Olusegun, financial market analyst at Polaris Bank Limited, said the reduction in the size or quantum of sales might not be unconnected with the apex bank’s plan to manage the current FX pressure in the economy.

While the resumption of sales is expected to result in immediate appreciation of the naira regardless of the quantum of sale to BDC, analysts say it will not be enough to meet the FX needs of end users given the amount of backlog that exists. Moreover, some www.businessday.ng

L-R: Yakubu Oseni, chairman, Senate Committee on ICT and Cyber Crime; Mahmood Yakubu, INEC chairman, and Hassan Hadija, member of the committee, during members of the committee’s visit to INEC headquarters in Abuja.

there is an emergency and the country is unable to deploy food from its reserves.

Worsening the indices, Nigeria has only about 30,000 metric tons of grains in the strategic grains reserve, out of a capacity of 1.3 million metric tons, the country is grossly unprepared for any national emergency.

“How do we restock the food reserve and putting back more than what was there before?” asks Kabir Ibrahim, president, All Farmers Association of Nigeria (AFAN) in a phone interview.

“Thatisverygermane,becauseif wegobywhatishappeningnow with the insecurity in the North West and parts of the North East, where food is produced, there might be some shortage,” he says.

If Nigeria is able to stock to full capacity, Ibrahim avers “it will be able to feed the country even if there are two consecutive seasons of no production.”

However, putting just a few thousand like the 70,000 that should have been distributed recently is according to him, “like a drop in the ocean.”

This is not the first time in NigeriathattheFederalGovernment had to draw down its grain reserves. Earlier, 30,000MT was

disbursed in response to food crisis at the various Internally Displaced Persons (IDP) camps across the country, noted a PwC report in June on ‘Responding to the impact of COVID-19 on food security and agriculture in Nigeria.

The report noted in 2009 a total of 78,000MT was distributed out the available 85,000MT. In 2011, purchases were ordered to replenish the stock while the remainder was distributed that year, leaving no grains in storage.

“We have the privatised silos that are not storing any grains as of today,” remarks Ayodeji Balogun, CEO of AFEX in a Skype interview, saying, “They have not been efficiently used almost going to two years since the privatisation has been concluded, worse than even when the ministry (of agriculture) used it.”

According to Balogun, the food reserves are used by other countries as a buffer for deficits, and to also mop up when there are excesses so as to stabilise the markets. In Nigeria today, this is currently lacking.

“It is essential that this next planting season works. I don’t have words for my concern if we don’t get the inputs in

time into the hands of the farmers, dealing with rain-fed agricultural crops,” noted Andrew Nevin, chief economist at PWC West Africa during a webinar session last month.

“There is nothing worse for this country than if we have a food crisis or famine after the next harvest,” he said.

Samuel Ogallah, senior climate specialist for Africa, Solidaridad, had suggested, “There is an urgent need for institutional review of policies and realignment.” According to Ogallah, in the wake of Covid-19, it has exposed how Nigeria’s policies are not aligned at the federal down to the local government level.

“Some of the policies are made at the federal level, but where are the farmers based?

The farmers are based in the grassroots at the local government level, so the trickling down of those policies has become a challenge. There is urgent need, in the wake of Covid-19, for policy realignment,” he said.

Also making food security challenging is availability of water for food production, as farmers largely rely on rain-fed cultivation. However, according to the Ministry of Water Resources, Nigeria has about

264 dams with a combined storage capacity of 33 BCM of water for multipurpose use that includes Water Supply, Irrigation, Hydropower, fisheries, eco-tourism, etc, out of which 210 are owned by the Federal Government, 34 by States and 20 by private organisations.

These dams have about 350,000 hectares of irrigable land around the vicinities ready for development.

Although not all of the dams were designed strictly for agriculture, as some have hydroelectric purposes, these facilities remain grossly underutilised, despite Nigeria’s need to muster all available resources for agricultural development.

“What is the ministry of water’s plan for the reservoirs and the dams?” remarked Sani Dangote, vice president, Dangote Group, “The ministry of agriculture is completely disconnected from the ministry of water resources.”

With over 230 dams in the country, how many of them are utilised for agricultural purpose, he wondered, further saying even the few in use for irrigation most farmers still have to draw their own water lines because the supply is not fully organised.

manufacturers and SMEs have resorted to the parallel market in meeting their FX needs.

“The reduction will have little effect in curbing the country’s FX pressure as demand for FX persists across all segments of our economy,” Olusegun said.

Analysts at Zedcrest Capital Limited expect the parallel market rates to continue to converge towards the official markets as speculative supply continues to hit the streets.

“However, we anticipate these lower rates to be shortlived as the market continues to show doubts of the size of the CBN’s war-chest to meet up the long-outstanding demand for the greenback,” the analysts said.

CBN not shifting grounds on decision ...

mittance fell to 40 percent of market invoices. The DisCos opposed the plan, saying it was tantamount to an attempt at nationalising or expropriating their business.

The Federal Government jettisoned the move then and instead injected N701 billion as payment assurance for invoices of power generation companies and this boosted the sector for a while.

But the liquidity challenges in the sector have worsened. Therefore, analysts expect that the new tariff plan as well as the new financing expected for metering will help inject fresh capital into the beleaguered power sector.

Continued from page 2

invoice to value chain.

A reconciliation of the monthly invoices and payments between the Nigerian Bulk Electricity Trader (NBET) and operators shows that the 11 DisCos owe a combined sum of N622.4 billion, and interest accrued on this debt has risen to N308.2 billion bringing their cumulative debt to N930.6 billion.

To improve liquidity in the power sector, the sector regulator, the Nigerian Electricity Regulatory Commission (NERC), has approved a service-reflective tariff plan, which ef-

https://www.facebook.com/businessdayng

fects on average at least 50 percent increase on electricity tariffs for customers who get more hours of power supply of between 12 and 20 hours daily.

“This will only solve a part of the problem but not all,” said Ayodele Oni, energy lawyer and partner at Bloomfield Law Firm.

While the CBN’s objective is to reduce market indiscipline but it does not solve the problem of collections and technical losses, as these are important to determine how much is even available, Oni said.

Three years ago, NERC had threatened to escrow DisCos account when re@Businessdayng

30

Thursday 03 September 2020

BUSINESS DAY

POLITICS & POLICY Lagos East poll: Senatorial aspirants withdraw from race, endorse Abiru

Iniobong Iwok

A

ll aspirants seeking senatorial nomination in Lagos East on the platform of All Progressives Congress (APC) have withdrawn from the race in support of Tokunbo Abiru, former group managing director, Polaris Bank Limited.

The aspirants that withdrew from the senatorial contest include Kaoli Olusanya, vice chairman, Lagos APC; Segun Ogunlewe, a former Lagos State Head of Service, and Rotimi Ogunleye, a former commissioner for Physical Planning & Urban Development.

Others who withdrew are Lekan Ogunbanwo, a former general manager/permanent secretary, Lagos Television; Hon. Olanrewaju Odesanya, a former member of the State House of Assembly, and Olusegun Abiru, chairman, Ikorodu-Oga Development Association.

The aspirants withdrew from their aspirations ahead of the direct primary election scheduled to hold on Thursday across Lagos East in compliance with the requirements of the Independent National Electoral Commission (INEC).

In their separate accounts yesterday, the aspirants agreed to support Abiru’s senatorial aspiration due to what they ascribed to the need for the APC to conduct a direct primary election free of acrimony and ensure harmony among all the aspirants that indicated interest in the senatorial seat.

Olusanya explained that his decision to withdraw his senatorial aspiration was in the overall interest of Lagos APC and to allow a candidate emerge from the primary election without internal conflict, which he said, could polarise Lagos APC.

L-R: Olusegun Olulade, director-general, Tokunbo Abiru Campaign Team (TACT); Tokunbo Abiru, aspirant for the Lagos East senatorial election and immediate past group managing director/ chief executive officer; Mariam Osinowo, widow of the late Senator Adebayo Osinowo, and Ms Noimot Osinowo, daughter of the late senator, during a condolence visit to the family of the late senator in Ogudu GRA, Lagos… Tuesday.

”I have to step back and allow someone else to take on the task of representing our senatorial district at this time, for some reasons that seriously have to do with the larger interest of our dear state and our great party,” he said.

With their decision to withdraw from the race, Abiru, who formally retired from Polaris Bank on August 31, will emerge the party’s consensus candidate after all registered party members in Lagos East ratify his candidature through the direct primary election scheduled to hold on Thursday.

Apart from the aspirants that supported his senatorial nomination, Abiru has secured

Edo 2020: Command your boys to ceasefire, Oba of Benin tells candidates Idris Umar Momoh & Churchill Okoro, Benin

W

orried by the political violence ahead of the September 19 governorship election in Edo State, the Benin monarch, Oba Ewuare ll, on Wednesday called on political actors to prevail on their foot-soldiers and supporters to stop heating up the polity.

The Benin monarch made the call during a peace meeting with the chieftains of the All Progressives Congress (APC), the People’s Democratic Party (PDP) and their governorship candidates in his palace.

“Please let the shooting stop. There is a way you can communicate through your footsoldiers and they will listen to you,” he said.

The Monarch, who threatened to discipline whoever disobeyed the order, noted that peace cannot be substituted for violence.

He urged the politicians to use the September 19 governorship election to place the state in the good books to be emulated by other states.

While enjoining the political actors to take a cue from former President Goodluck Jonathan, who conceded defeat, picked his telephone to congratulate the incumbent President, Muhammadu Buhari, said that the cooperation from the candidates will go a long way to dousing the political tension and avert any planned violence prior and during

the election.

Oba Ewuare II, who also urged the political actors to shelve plans of violence, asked them to commit themselves to a peaceful poll through a statement of assurance, in order to restore sanity to the state and shame naysayers that want the election to turnout bloody.

“The purpose of this meeting is to strongly appeal to politicians to control the youths and thugs that are against one another. I am not concerned about the sides they are but they are all one family.

“Family can quarrel but there must be resolution and that is what I want us to achieve today. I look at you all as family, as part of the palace family and I cannot have all of you fighting against one another. I have been harbouring a whole lot of unhappiness and the state has been in the news for some time for the wrong reasons,” he said.

“I want to ask the political actors in Edo State, why are you all doing this? The office is four years, why do you want lives to be lost?

Why are you arming thugs? At the end of the day the thugs keep those guns with them,” he queried.

“We must show to develop countries that Edo State can surprise them. Please let the shooting stop. There is a way you communicate through your foot-soldiers and they will listen to you. Warning them that any one that go ahead will be disciplined. Let there be peace in Edo State,” he added.

www.businessday.ng

the support of Governance Advisory Council (GAC), the party’s most powerful structure in the state, ahead of the direct primary election.

Among others, the Council comprises the APC National Leader, Senator Bola Tinubu; the state governor, Babajide Sanwo-Olu; Chairman, Lagos APC, Babatunde Balogun; his Deputy, Sunny Ajose, all previous governors of the state, all serving vice chairmen of the party.

Also, all members of Lagos State House of Assembly have thrown their weights behind Abiru. All members of the National Assembly from Lagos State have equally endorsed Abiru’s senatorial nomination ahead of the

direct primary election.

At a consultation meeting with the lawmakers on Tuesday, Speaker of the State House of Assembly, Hon. Mudashiru Obasa assured Abiru that all members of the assembly would deploy their campaign structure to canvass votes for the senatorial aspirant.

Obasa commended the former bank chief for coming in person “to solicit the support of the lawmakers. It is the responsibility of all of us in this assembly and not those from Lagos East alone to support your senatorial aspiration.”

He further said that all members of the assembly “will support your aspiration physically, morally, and in any other way to make sure you emerge victorious on the day of the election. Let us put the primary election behind us.

“Let us focus on the election proper. It is not just your election, but also our election. It is our election because whatever the outcome, it will have implications on all of us, our party in Lagos and what will happens in 2023 general elections. For us, we have no other choice than to support your aspiration.”

Obasa attested to the integrity of Abiru, who served in various capacities in the banking sector for 29 years out of his 32-year private sector career.

The speaker recalled his encounter with Abiru while he was the Commissioner for Finance in Lagos State, noting that he served the state in honesty and integrity for a period of three years.

He said: “Between 2011 and 2013, I worked with Abiru closely as the Commissioner for Finance in Lagos State. Then, I was the Chairman of the House Committee on Appropriation. For the period he occupied the office, Abiru really demonstrated high-level of integrity.

Ogun APC chairmanship aspirant pledges massive investment in agriculture ...Engages Abeokuta tailors to produce 20,000 face masks RAZAQ AYINLA, Abeokuta

A

head of next year local government polls in Ogun state, Lanre OyegbolaSodipo, an All Progressives Congress (APC), aspirant for Abeokuta North Local Government, has pledged to initiate a dedicated programme that revisits agriculture and agribusiness as part of effort to generate employment and create wealth within the local council.

Oyegbola-Sodipo, an APC aspirant, who is of Oke-Ona extraction of Egba-Abeokuta on Saturday, kick-started his political mission to liberate and empower many people at the local area, especially the women and jobless youths with various vocations and engagements, saying: “it is time to get back to agriculture and agribusiness as 90percent of our population in Abeokuta North that covers Oke-Ona, Gbagura, Owu and Oke-Ogun are farmers, we must empower them appropriately.”

While launching #Mask4All Campaign as a prelude to the main political campaign in Abeokuta, Oyegbola-Sodipo also known as LOS, presented 20,000 free homemade face masks to many residents of the local government area as complementary to the Governor Dapo Abiodun administration’s efforts aimed at curtailing the communal spread of Covid-19 and empowering the women and youths at the handover ceremony held in Abeokuta on Saturday.

https://www.facebook.com/businessdayng

“We moved the project (#Mask4All) to Abeokuta North Local Government in order to empower 80 local tailors, who were commissioned and fully paid to deliver 20,000 face masks. Today, we are here to begin the distribution of the face masks among the 16 wards of the local government”, he said.

The focus of this initiative is multi - dimensional; the first is to bring succour to the vulnerable who cannot afford the face masks.

The second is to empower our women and youths; tailors were trained and employed to sew the masks so as to earn an income, thereby creating jobs and the third, is to help prevent the spread of the Corona virus.

While handing over the face masks to each representative of the 16 wards, the chairmanship aspirant assured the people of deploying more home grown, innovative solutions that will create wealth, engender development and address the challenges facing the people by prioritising feasible economic expansion, agriculture, industrialisation, job creation and welfare across all parts of the local government, if elected.

Speaking at the presentation ceremony, Prince Adeniyi Edun, an APC leader lauded Oyegbola-Sodipo for the laudable initiative and his agenda which prioritises the vulnerable in the society, just as he urged all the attendees to join in the fight against coronavirus and ensure that the most vulnerable takes a centre stage in every action or plan.

@Businessdayng

Thursday 03 September 2020

BUSINESS DAY

31

News Banks lure MSMEs into commercial...

Continued from page 2

BUSINESSDAY JOBS & GROWTH SERIES

Nigeria’s retail boom will only happen...

Continued from page 1

tors to troop in.

Its foreign direct investment (FDI) stock was $161 billion in 2019, with 581 foreign firms operating in the country, according to Nguyen Bich Dat, head of the foreign-investment department at the Ministry of Planning and Investment, Vietnam.

With FDIs, consumer spending rose, kick starting an evolution in the retail market. Growth surged, with the country reporting almost 7 percent GDP growth per annum between 2000 and 2002, and 8.4 percent in 2005.

Growth came with gradual poverty reduction and improved consumer spending.

A 2019 Mckinsey report estimated the Vietnam’s retail market at $108 billion in annual revenues, and is forecast to increase at a 7.3-percent CAGR over the four five years.

“Vietnam’s private consumption rate of 68 percent of GDP is the second highest in the Asian region,” the report stated.

In 2013, McKinsey estimated $40 billion growth opportunity in food and consumer goods in Nigeria, noting, “We expect that the next chapter of emerging middle-class growth will be in the retail sector.”

But this is looking like a missed opportunity with poverty nearly 50 percent in Nigeria. The middle class is in retreat, starving the economy of a vital spark for sustainable growth.

Damilola Adewale, a Lagos-based economic analyst, recommends providing gainful employment opportunities and mobilising efforts towards reducing inflation, especially food inflation, as ways to boost consumer spending in the economy.

“A stable currency is also important because if the naira continues to depreciate, food and core inflation

will rise, thereby reducing consumer purchasing power,” Adewale says.

The middle class is the largest portion of the population comprising individuals and households who fall between the working class and the upper class within a societal hierarchy.

Due to its large size, it has the ability to drive consumption growth, but is easily vulnerable to falling below the poverty line.

According to the United Nations’ classification, the middle class lives on $10 – $100 a day while the African Development Bank (AfDB) sees the middle class as those who live on $2 – $20 a day.

A typical middle-class family tends to own a home, one or two cars, have children who attend private school and have enough disposable savings to afford certain luxuries like dining out and vacations.

“Before 2017, most of the middle-class families in Nigeria were working in the financial and public service. So, the standard of living was relatively better,” Ayorinde Akinloye, a consumer analyst at CSL Stockbrokers, states.

Before Nigeria’s economy slipped into recession in 2016 due to low oil prices, the middle class was expanding along with consumer spend as retailers and manufacturers saw big business opportunities.

The distribution chain and the organisation of outlets continued to reflect those of a rapidly evolving economy as standards of living improved.

According to a 2014 BusinessDay Retail report, Nigeria’s population grew from 150 million in 2006 to an estimated population of 171 million people by 2013.

And in the midst of this, the middle class expanded then even as 51 percent of the country’s population lived in cities. www.businessday.ng

But despite the county’s exit from recession in the second quarter of 2017, its purchasing power still remains weak as the economy is yet to recover fully from the recession, with negative per capita income growth.

The economy, which expanded by 2.27 percent in 2019, still underperformed population growth rate estimated at some 3 percent.

Foreign retailers like Mr Price and Shoprite have announced plans to leave Nigeria as a result of low sales caused by the shrinking middle-class and low consumer spending.

Cheng Fuller, a retail expert, says that most businesses that targeted the middle of the pyramid are experiencing significant shrinkage in their revenues.

Data from the National Bureau of Statistics (NBS) on Gross Domestic Product (GDP) by Income and Expenditure approach show that consumption expenditure of households has been declining at varying pace since it rose by 1.5 percent in 2015.

Worse still, the per capita income in Nigeria has declined to $2,049 in 2018 from $3,268 in 2014, according to the International Monetary Fund (IMF).

Two years ago, Nigeria overtook India as the country with the largest number of people living in extreme poverty, thereby becoming the world’s poverty capital, according to the Brookings Institute.

This year, the number has risen to 91.6 million from 87 million in June 2018. Every minute, six Nigerians enter the group of extremely poor people, according to the World Poverty Clock.

With the present negative growth recorded in the second quarter of 2020, the economy is in dire straits as it is confronted with three critical macroeconomic issues: soaring unemployment, rising consumer prices and economic downturn, which could further shrink consumer spending.

According to the NBS, headline inflation, which serves as a measure of consumer prices, rose at a faster pace for 11 consecutive months, reaching a 27-month high of 12.8 percent in July, while Nigeria’s unemployment rate came to 27 percent in Q2 2020, as more and more were rendered jobless from the impact of the Covid-19 pandemic.

Ayodele Shittu, lecturer, Department of Economics, University of Lagos, notes that there is a need to look into the agriculture chain, invest in it and that could properly give birth to more manufacturing plants, which feeds into the retail chains thereby making more people employed.

There have been strategies by the government to improve the standard of living of people such as the minimum wage increment to N30,000 in 2019 from N18,000 in 2011, job creation programmes like N-power and the planned launch of a Special Public Works Programme (SPWP), to employ 1,000 people in each local government, summing up to 774,000 jobs.

“Countries that get their national strategies right first think about creating liquidity. Because once you have liquidity, it creates employment. It does not matter how many government policies you announce, because without liquidity, existing jobs will be destroyed,” Ayo Teriba, CEO of Economic Associates, states.

A Labour Market report

by Chapel Hill Denham suggests expanding Nigeria’s economic growth frontier beyond services, to industry and agriculture, through ease of doing business reforms and economic liberalisation policies.

“Deepening investment in infrastructure, education and healthcare will create a major boost for economic productivity, and enhance the global competitiveness of Nigeria’s private sector,” the report notes.

https://www.facebook.com/businessdayng

year, noting the disbursement resulted in creation of 3,192 jobs in the financial year ended December 2019. It said 52 percent of loans disbursed in 2019 were to youths and women owned businesses.

BoI said the total amount it disbursed to the MSMEs segment in the country in 2019 rose by 56.3 percent to N53 billion year-on-year from N33.9 billion disbursed in 2018. BoI has disbursed a total of N234 billion to 10,145 enterprises, thereby facilitating the creation of an estimated one million direct and indirect jobs.

The AfDB said it disbursed a total of $345.685 million to seven African countries to assist in their interventions against the Covid-19 pandemic crises stripping African economies bare.

The Board of Directors of AfDB had approved a $288.5 million loan to help Nigeria tackle the COVID-19 pandemic and mitigate its impact on people and businesses. The loan is meant to bolster the Nigerian government’s plans to improve surveillance and response to COVID-19 emergencies, ease the impact on workers and businesses and strengthen the social protection system.

Uche Uwaleke, a professor of capital market at Nasarawa State University Keffi, told BusinessDay, “What is required is public awareness campaign targeting MSMEs regarding availability of these concessional facilities either through the DMBs or Development Finance Institutions.”

He however said, “The reality is that our Development Finance Institutions (DFIs) such as BoI are under-capitalised and their scope and size of interventions/lending are limited. So, they face outreach

constraints due to low capital base since they don’t mobilise deposits from the public.

“Besides, their model of lending, especially that of BoI, does not necessarily involve cash and may not suit many borrowers. If banks are luring borrowers to themselves, it can also be understood since DMBs are required by the CBN to maintain a minimum of 65 percent Loan to Deposit ratio. Besides, DMBs are participating financial institutions even with regard to the CBNs interventions.”

“It is not that bankers don’t know these on-lending funds exit for customers to access but it is simply not attractive to them because of the pressure to make more money from interests paid by the customers,” another banking industry source told BusinessDay. Our source however expressed worries that some bankers prefer the short-term gains of the loan facilities to their institutions than considering the longer-term benefits to the entire economy.

For BoI, it recognises that MSMEs are the target players in fast tracking development of the Nigerian economy, particularly as they constitute over 90 percent of enterprises in the country.

The DBN does not give out loans directly to the public, rather its loan can only be accessed through all Participating Financial Institutions (PFI). These PFIs include development finance banks, commercial banks and microfinance banks.

The CBN had granted three months moratorium on all principal and interest repayments for intervention facilities as Covid-19 pandemic ravaged many small and medium enterprises (SMEs).

Winners, losers of interest rate cut on...

Continued from page 2

however expected to benefit the least from the new directive.

The banking index, which tracks the share price movement of publicly listed banks in Nigeria, was up 1.25 percent, with the big banks gaining the most in three months, according to data from the Nigerian Stock Exchange (NSE).

Ecobank gained the most with a 6.4 percent gain Tuesday, the biggest jump in three months.

UnitedBankforAfrica(UBA) was also up 4.8 percent Tuesday while Access Bank climbed 3.23 percent. First Bank was up 3.06 percent while Stanbic IBTC gained 1.25 percent.

Zenith Bank and GTBank rose 0.6 percent and 0.39 percent, respectively, on the day.

Given that savings deposits account for around 20 percent of the deposit liabilities of commercial banks, the new directive should be positive for banks in terms of a slight reduction in @Businessdayng

their overall cost of funds.

“All else being equal, our back of the envelope calculations indicate that on average, the costof funds for our universe of banks could potentially decline by around c.50bps in Q4,” the FBN Quest analysts note.

“In terms of earnings impact, we estimate an average increase of around 8 percent in the 2020 Profit Before Tax (PBT) for our banks universe.”

They however add a caveat that the stringent rules around interest on savings make it doubtful that the impact will be that material.

Economy If the lower rates translate to a reduction in lending rates and serves as an overall boost to lending to the real sector, then perhaps the policy is not so bad for the economy. After all, savers were already contending with negative real interest rate before the directive.

If it does not translate to increased lending, then it is hardly a win for the economy.

32

Thursday 03 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

32

Thursday 03 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 03 September 2020

BUSINESS DAY

NEWS

Marketers to sell petrol N161.78 per litre for September

P

etrol will sell for just below a hundred and sixtytwo naira a litre at the station for the month of September according to BusinessDay investigations.

This is the price agreed by the marketers after a crucial meeting held earlier Wednesday between the regulator, PPMC and marketers and it came after PPMC set its ex-depot price at N147.67 a litre.

To arrive at the pump price, the marketers and dealers will add the following margins approved by the regulator PPPRA – N3.89 for national transportation allowance; N4.03 as whole sellers margin and N6.19 retailers margin.

The ex-depot price for petrol was announced in a statement issued earlier Wednesday by the PPMC, which said the new price would take effect from Wednesday, September 2, 2020. The PPPRA position is contained in a memo released by the Pipelines and Product Marketing Company (PPMC) and

signed by D.O Abalaka.

The memo read, “Please be informed that a new product price adjustment has been effected on our payment platform. To this end, the price of premium motor spirit (PMS) is now one hundred and fifty-one naira, fiftysix kobo (N151.56) per litre.’’

The Nigerian government had in March said it would no longer subsidise petrol and that the pump price of petrol would be determined by market forces, stating that how much Nigerians would pay would be largely determined by the international prices of crude oil.

Meanwhile, the Independent Petroleum Marketers Association of Nigeria (IPMAN) has directed its members in the Southwest region of the country to begin sales of petrol at N162 per litre.

The Southwest zonal chairman of IPMAN, ‘Dele Tajudeen in a telephone interview with journalists in Abeokuta, the Ogun State capital, said his members would be left with no other option than to dispense the

product at a price of N162.

The directive followed the increase in the depot loading price of the product by the Federal Government, which placed a new price regime of the product at N151.

56k, Tajudeen said.

Since the government has decided and puts the price of the product at N151.

56k, IPMAN has no option than to sell at N162 to be able to meet up with the overhead cost, he said.

The chairman said IPMAN members would have to make provision for the cost of diesel to run generator that would power the dispensing machines; pay the cost of transporting the fuel from the depot to their respective filling stations and also settle their statutory levies with the appropriate regulatory agencies.

That by the time they finish paying all these levies, the cost of discharging fuel at the petroleum filling stations would have shored up to N160, hence dispensing the product at N162 will enable IPMAN members to be able to pay the staff bills and the stations’ gains.

Data, tech to drive inclusive growth for SDGs attainment BUNMI BAILEY

T

he utilisation of data for informed public decision making coupled with the adoption of new technologies are key towards achieving the Sustainable Development Goals (SDGs) by 2030, development experts have said.

The experts spoke on Wednesday at the sustainability part three series webinar of Lafarge Africa, a leading Sub-Saharan Africa building materials company, with the theme “corporate social investments, shared value and national development - which way forward?”

The webinar in its third series brought together diverse national and international stakeholders to discuss and create a national blueprint towards accelerating the achievement of the SDGs in Nigeria.

At the event, Maryam Uwais, special advisor to President Muhammadu Buhari on social investments, noted that technology was a critical sector that must be focussed on, especially in the achievement of inclusive growth “The government has realised that it needs to partner with the private sector in the tech space and technology can do a lot in areas like education. We have seen a number of E-learning platforms coming in and a lot of young pole developing apps,” Uwais said.

She further added that certain parts in the society like the urban and semi-urban do not have inclusive growth. “They don’t have the infrastructure, so the disparity continues to grow and this is a structural problem.”

The SDGs, a collection of 17 global were adopted by all the United Nations (UN) member states in 2015 as a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity by 2030.

But the Covid-19 pandemic may halt the progress so far, to achieve the SDGs by the set time. According to a report by the UN Department of Economic and Social Affairs, the pandemic has unleashed an unprecedented crisis, causing further disruption to SDG progress, with the world’s poorest and most vulnerable affected the most.

Muhammed Yahya, resident representative, United Nations Development Programme, said that data plays an important role in guiding policy makers to facilitate social investments and mitigate the negative impacts of the Covid-19 pandemic.

“It allows the government to make informed evidencebased solutions in terms of what to invest. The most update data and the largest people that have access to it are the private enterprises; that is why collaboration is very important,” Yahya said.

He further said, “And in the post pandemic era,

where we will have scare resources, more people in poverty and hunger, using data and having evident based solutions will make a huge difference in solving these.”

According to the 2019 Sustainable Development Report, Nigeria ranked 159 out of the 162 countries on the SDG index.

At the second part of the series held last week, experts talked about how trust and mutuality can help drive impactful partnership for SDGs attainment.

Earlier in 2020, Lafarge Africa was ranked the fourth-best in corporate social responsibility (CSR) and Sustainability Company in Nigeria for the year 2019.

“I strongly believe that sustainable development in the big picture needs to move from being a passion to being a value because passion changes with the dynamics of the markets,” Khaled El Dokani, CEO, Lafarge Africa said.

He further said that companies should see CSR as a sustainable initiative that is driven by the organisations and carried from one generation to the other, management and one leadership to the other.

The fourth and last series themed “roadmaps to progressing the SDGs: opportunities in circular economy and science technology engineering and mathematics” is expected to hold on September 9, 2020.

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

33

34

Thursday 03 September 2020

BUSINESS DAY

NEWS

Lagos raises alarm as 31 tank Marine Beach Bridge: FG explains delay in repair work farms operate illegally GBEMI FAMINU

…as truck drivers defy PTT, take over Ijora-Apapa Bridge CHUKA UROKO

T

he Federal Government has given reasons for the delay in completion of on-going repair work on the Apapa-bound section of the Marine Beach Bridge in Lagos. It, however, said that the repair work was progressing according to schedule.

The government pleaded with motorists to be patient with Buildwell Construction Company, the contractor handling the repair of the bridge, saying that the repair work has 18 months’ timeline that is expected to end in April next year.

“What looks like delay is not delay in the real sense of it, considering the nature of work the contractor is doing there. It is purely technical and takes a lot of planning and careful execution. What we are fixing there are broken joints involving replacing old, worn out bearings and connecting joints,” Kayode Popoola, Federal Controller of Works, in Lagos told Busi-

nessDay on Wednesday.

The controller explained further that why only two or three workers are seen on top of the bridge was because much of the repair work was being done under the bridge.

“If you see them sitting down and not doing anything, it may be that they are waiting for spare parts, or for crane to help them to adjust beams from under the bridge; they are not idle as people think they are,” Popoola said.

Kayode Opeifa, the executive vice chairman of the Presidential Task Team (PTT), had blamed the delay in completing the repair work, which has worsened traffic situation in Apapa, on the multiple maintenance work being undertaken by the Federal Government.

Marine Beach Bridge is one of the three bridges in Lagos that the Federal Government is repairing.

The other two are the Alaka section of Eko Bridge and the Third Mainland Bridge which has six whole months completion timeline.

www.businessday.ng

L

agos State government has raised concerns over illegal operation of 31 petroleum tank farms, saying out of 41 such facilities scattered across the state, only eight have valid planning permit to business.

Consequently, the state government has directed the illegal operators to file application for planning permit and commence the process of regularising their facilities within one week, warning that failure to comply would attract severe sanctions.

The state commissioner for physical planning and urban development, Idris Salako at a stakeholders meeting held with tank farms operators at Alausa, Ikeja on Tuesday, decried that most of the tank farms in the state had been operating illegally as only eight out of the 41 tank farms existing in the state had planning permits authorising their establishments which was an offence punishable by law He stated that the illegal operation was at variance with Section 27 of the Lagos State Physical Planning Per-

mit Authority (LASPPPA) and Lagos State Building Control Agency (LASBCA) regulations 2019 which stipulates that anyone who built in Lagos State without planning permit commits an offence liable to enforcement, imposition of penal fees or removal of structure.

“Considering the importance of the activities of the tank farms to the economy of the country, it is pertinent that they embrace best practices and operate in the friendliest manner to the host communities” Salako explained.

He added that the operations of the tank farms had thrown up many challenges for the state, including pipeline vandalism, environmental degradation, fire outbreak, traffic congestion and destruction of public infrastructure among others.

As a recommendation to the challenges, the commissioner said that it was paramount for the tank farms operators to provide complementary facilities and services such as holding bays, traffic personnel as well as the maintenance of buffer zone of 250m to 500m between the tank farms and the community.

https://www.facebook.com/businessdayng

Enforcement pays off as Pension Recovery Agents pull N16.37bn from defaulting employers MODESTUS ANAESORONYE

E

nforcement has proven to be the best approach to recovering unremitted pensions as Recovery Agents engaged by the National Pension Commission (PenCom) have recovered N16.37 billion from defaulting employees to date.

According to PenCom, the total recoveries comprise principal contributions of N8.37 billion and penalty of N8 billion, and these have since been credited to the respective Retirement Savings Accounts (RSAs) of the employees.

In the Commission’s report for third quarter 2019 available on its website, PenCom maintained the services of Recovery Agents (RAs) for the recovery of outstanding pension contributions and penalty from defaulting employers.

The RAs were mandated to review the pension records of the employers assigned by the Commission and recover outstanding pension contributions with penalty.

The Commission stated that during the quarter, demand notices were issued

@Businessdayng

to 18 defaulting employers whose pension liabilities had been established by the RAs. This resulted in the remittance of outstanding pension contributions of N364.68 million, representing principal contributions of N146.95 million and penalty of N217.73 million during the third quarter period of last year, the Commission said.

PenCom said it had sustained its effort at collaborating with social partners to drive compliance with the provisions of the PRA 2014 by the Organised Private Sector (OPS).

The Commission in collaboration with the Nigeria Employers’ Consultative Association (NECA) organised interactive sessions with the OPS on the “Current Developments and Challenges” in the implementation of the CPS. The interactive sessions held September 2019 in Lagos, Port Harcourt, Abuja and Kano provided a platform for the Commission to interact with the OPS on the implementation of the CPS. The sessions also provided an opportunity to update stakeholders on re-

35

Thursday 03 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 03 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

36

Thursday 03 September 2020

BUSINESS DAY

25

BUSINESS TRAVEL Why FG must implement reciprocity policy on international flights IFEOMA OKEKE

A

This is the beginning of the end of the stigmatisation of Nigeria and everything Nigerian. God bless you always. From my sincere heart, I have come to appreciate your nationalistic tendencies.”

The Air Peace boss also said the minister by his conduct and commitment, has ensured that the aviation industry is unencumbered, noting that Sirika facilitated the customs duty waiver on aircraft and spares and is currently working on the unification of charges paid by domestic airlines.

Olumide Ohunayo, an aviation analyst said the country is battling with a pandemic and it is the citizens that pandemic affects, so the emphasis should be more on citizens of the country.

He said the policy is supported by industry players, adding that he supports the government in reciprocating whatever is provided by any country.

“If we have countries that are stopping Nigerians based on the pandemic then we also have to do the same at this point in time and that is the only way to show that there is a government that is interested in its people and protection of the citizens; which is number one priority for every government,”Ohunayo said.

Implications of the policy for the sector Experts have said if the government can be that bold to go the whole hog to actually reciprocate in accordance to BASA provisions, then the aviation sector will not only grow but the local carriers will be protected.

Seyi Adewale, the chief executive officer of Mainstream Cargo Limited told BusinessDay that he strongly believes it’s time for Nigeria to also flex its own strength in the community of Nations.

Adewale recalled that Nigeria ranked the 3rd at one time of POS Sales at Heathrow Duty Free Airwww.businessday.ng

port Stores in the UK and only after China and Russia, adding that this means Nigeria which boosts UK’s economy and Duty Free stores will ‘feel’ the impact of Nigerians not allowed into their Airports or country.

“This also happens in many other countries. In addition, the recent Fareed Zacharia CNN study report on the significant impact and contributions of Nigerians to the US economy only amplifies this fact a little further by paying more taxes than most races therein.

“So, whether the world likes it or not, Nigeria, the most populous and largest GDP (approx. $414.912Billion) in Africa are needed in a world system craving for stability, fluidity in trade and commerce, hardworking, energetic and highly creative people. I fully support the FG stance on this reciprocity choice. We have

‘

The problem of our relationship with foreign airlines when it comes to operations is after the agreement; they come back, use government officials to negotiate other commercial agreements that are not in the initial bilateral agreement

‘

s countries across the world gradually open their air spaces for international flight operations, governments of various states are implementing policies that could help in resuscitating airlines which have been negatively impacted by COVID-19.

While some countries, especially African countries may not have the financial muscles to provide financial palliatives for airlines’ survival, there are however deliberate policies that could help in sustaining the airlines.

One of such policies is the governments of countries ensuring that the few flights that operate as air spaces gradually re-open is reciprocated accordingly in a bid to protect local carriers.

While carriers from other countries leverage Bilateral Air Service Agreement (BASA) to obtain landing permits and operate multiple frequencies in Nigeria, Nigerian carriers have continued to be denied landing permits to fly into other countries.

It was therefore commendable when Hadi Sirika, the minister of aviation announced a few weeks ago that only countries that allow Nigeria airlines to fly to their countries will be granted permits for their airlines to operate into Nigeria.

The minister had appealed to the countries banning Nigerians from going to their countries to be conscious of the level-playing field in reciprocity as the country will also apply the same measure.

“The principle of reciprocity would be applied. I bet you the conditions you give Nigerians who travel to your country – we will apply the same thing. If you ban us from coming to your country, the same will apply the other way; we just hope for a level-playing field on the issue of reciprocity,’’ Sirika had stated.

Stakeholders commend minister’s decision Stakeholders in the aviation sector who commended Sirika’s decision said the decision would elevate the image of Nigeria in the comity of nations and send a signal to international airlines that it is no more business as usual.

In a letter written to the minister, Allen Onyema, Air Peace chairman commended him on the laudable decision of the federal government, he said, “You are causing a positive revolution in the aviation world.

You have, by this action, brought so much respect to our people and our nation. Nigerians all over the world are walking tall with enormous pride since the last few hours when the news broke out.

https://www.facebook.com/businessdayng

our very strong strengths and potentials and we cannot be easily ignored,” he stated.

Experts suggest models to adopt in implementing reciprocity Experts have said the policy on reciprocity of flights should not be short lived rather the federal government should review the country’s BASAs. Olumide Ohunayo hinted that while Nigeria may not be able to stop airlines from coming into the country based on the BASAs that are already in place, this period can be used to correct errors that were made in the past, especially the multiple entries and multiple designations.

“The government has only approved Lagos and Abuja for international operations and have also limited the number of flights into these two cities. As flights increase, I expect the government to use this opportunity to begin to streamline and watch the effects on the improvement of local airlines.

“The problem of our relationship with foreign airlines when it comes to operations is after the agreement; they come back, use government officials to negotiate other commercial agreements that are not in the initial bilateral agreement.

“These are the kind of agreements that take foreign airlines to other cities, increase frequencies and the capacity of aircraft that is being used. We wonder why they push for these agreements when we do not have an airline that is responding and if we have to push, can we find a way around it by involving Nigerian carriers?,” Ohunayo said.

Seyi Adewale recommended that the federal government sets up a very high powered team led

by Minister of Foreign affairs to Chair a newly set up committee, adding that the minister could be supported by Head of Nigeria @Businessdayng

Diaspora (to review from native biases), representative from ministry of trade and commerce (to supply inputs from trade and investments between Nigeria and target countries), representative from Ministry of Aviation (to submit potential impact on local airlines per decision/ country specific), representative from Intelligence (to submit/ analyze alternative options) etc.

This committee Adewale said will work to champion the ultimate interest, liaise or negotiate with these needing countries, advise on alternative course of actions, articulate and communicate course of action to Nigerians and review from course of action, timely and periodically.

He also suggested that the government could force foreign airlines needing more routes and frequency to interline or partner with a local carrier in order to have favourable opportunities within our space.

The chief executive officer of Mainstream Cargo Limited also advised that the country should not always be in a hurry to sign BASA but should allow inputs from relevant government agencies and departments and also enable to review the proposed document.

Air Peace builds capacity Same stakeholders had earlier argued that Nigerian carriers do not have the capacity to reciprocate flights into other countries but this argument has been debunked by operators and some stakeholders especially after Nigeria’s largest carrier, Air Peace acquired and registered its Boeing 777 aircraft in the country.

Three of the four wide-body aircraft it acquired for its longhaul operations to Dubai, Sharjah, Johannesburg, London, Houston, Guangzhou and Mumbai had so far been delivered.

The airline had in 2019 commenced the Dubai route but was awaiting landing permits from other international countries before the compulsory lockdown, making it impossible for airlines to continue scheduled international operations.

Since the lockdown, Air Peace has been operating a series of ‘special flights’ to and from different countries, including China, Turkey, India, Israel and South Africa. Therefore, the airline has demonstrated its vibrancy and capacity to fly to any destination across the globe.

Conclusion For airlines to survive this pandemic, deliberate policies must be put in place. If the government can keep to its promise to reciprocate, do tit-for-tat for those countries that have been hostile to local airlines lately, as international flights resume, this will be a start in the right direction.

38

Thursday 03 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 03 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

39

industry Insight

BUSINESS DAY Thursday 03 September 2020 www.businessday.ng

Industrialisation: Lessons from India’s model ODINAKA ANUDU

N

igeria must begin to mimic worthy examples to exit high poverty rate and become an industrialised nation.

One of the many countries that have challenged Nigeria’s industrial model is India.

Shortly after colonial rule, the Indian government followed a non-industrial model where it believed that the economic activities of what and how to produce should be determined by the state.

The East Asian economy, between 1947 and 1964, under the leadership of Jawaharlal Nehru, the then prime minister, practised a bureaucratic centralised government that made licensing requirements stringent, accompanied by a gamut of procedures that required private investments to go through tight clearance by several disparate and uncoordinated ministries.

With the claim of supporting local production of goods and services, the Indian government at that the time subjected almost all trade and capital imports to quantitative restrictions in the form of import licenses. This unhealthy policy was supplemented by tariffs at rates that were among the highest in the developing world.

Apart from high tariffs and unnecessary import restrictions, the government also subsidised produce from the nationalised firms, directed investment funds to them, and also controlled both land use and prices.

This over-restrictive and often self-defeating nature of the regulatory framework became evident by the late 1960s and early 1970s. Comprehensive planning was increasingly criticised as planned targets were not met and many plans were not even implemented. The lack of success in some dimensions led to a new and more restrictive set of regulations. One example is the attempt to reserve sectors for small industries and to restrict the growth of large firms.

The effect of these policies was liquidity squeeze, high unemployment, multinational poverty and weak economic growth. Not too long after, the country had the most number of poor living, with over 321 million of its populace living below the poverty trap in 1974, according to World Bank data.

Beginning in the early 1980s, a mild trend towards deregulation started. Economic reforms were introduced and it started to liberalise trade, industrial and financial policies. Subsidies, tax concessions, and the depreciation of the currency improved four of 13 export in-

centives. These measures helped GDP growth to accelerate to over five percent per year during the 1980s, compared to 3.5 per cent during the 1970s. This reduced poverty more rapidly.

However, India’s most fundamental structural problems were only partially addressed. Tariffs continued to be among the highest in the world, and quantitative restrictions remained pervasive.

Moreover, a significant government influence continued in the allocation of credit to firms and discouragement of foreign investment. Relatively inefficient public enterprises, controlling nearly 20 percent of GDP, remained a challenge to economic growth and employment generation.

The government expanded anti-poverty schemes, especially rural employment schemes, but only a small fraction of the rising subsidies reached the poor. Competition between political parties drove subsidies up at every election. The resulting fiscal deficits (8.4 percent of GDP in 1985) contributed to a rising current account deficit. India’s foreign exchange reserves were virtually exhausted by mid-1991 when a new government headed by Narasimha Rao came to power.

In 1991, the government flagged off economic policy reforms in the business, manu-

facturing and financial services industries, targeted at boosting economic growth.

The reform was encapsulated in a model referred to as Liberalisation, Privatisation and Globalisation (LPG). The major aim of the LPG model was to slacken government regulations hurting the growth of investment in the country, transferring of stateowned assets and position the country for consolidation among various economies of the world.

By July 1991, market-based reforms expanded the role of the private sector and investment.

The government committed itself to promoting a competitive economy that would be open to trade and foreign investment.

Measures were introduced to reduce the government’s influence on corporate investment decisions. Much of the industriallicensing system was dismantled, and areas once closed to the private sector were opened up.

These included electricity generation, areas of the oil industry, heavy industry, air transport, roads and some telecommunications. Foreign investment was suddenly welcomed.

Greater global integration was encouraged with a significant reduction in the use of import licenses and tariffs (down to 150 per cent from 400 per cent), elimination of subsidies for ex-

‘‘

With market-based reforms, the Indian economy grew the overall amount of overseas investment to $5.3 billion from a microscopic $132 million in four years

ports, and the introduction of a foreign exchange market.

Since April 1992, there has been no need to obtain any license or permit to carry out import-export trade. As of April 1, 1993, trade was completely free, barring only a small list of imports and exports that were either regulated or banned.

The World Trade Organisation (WTO) estimated an average import tariff of 71 per cent in 1993, which has been reduced to 40 percent in 1995.

With successive additional monetary reforms, the rupee, since 1995, can nearly be considered a fully convertible currency at market rates. India now has a much more open economy.

With these reforms, the Indian economy grew the overall amount of overseas investment to $5.3 billion from a microscopic $132 million in four years and today, the country is ranked the second-highest destination for investment in the world, according to data from the United Nation Continental Trade and Development (UNCTAD).

While there are few similarities and relationships between India and Nigeria, in terms of development, the two countries are far apart.

India earned $37.4 billion from export of textiles and cotton in 2017. Textile and clothing exports between April and September 2019 stood at $18.56 billion.

In 2000, the India government came up with the National Textile Policy (NTP), targeted at manufacturing textiles for global export.

The policy was also aimed at injecting competition through the liberalisation of stringent controls and encouragement of Foreign Direct Investment in the sector.

The Ministry of Agriculture and the Ministry of Textiles were given responsibilities to ensure that cotton and textiles exported reached global standards.

Multiple taxes were removed and incentives were given to

investors. Less than two decades after the policy, the industry has made a lot of impacts already on the economy.

The country’s textiles industry is estimated at $108 billion, contributing five per cent to Gross Domestic Product (GDP) and 14 per cent to overall Index of Industrial Production (IIP), according to India Brand Equity Foundation.

Nigeria ranks 116 with 48.3 points on the Global Competitiveness Index and 131st on the World Bank’s 2020 Doing Business Index. Although this is an upward shift by 15 places from its previous position of 146, it is yet to match up with India which ranks 68th with 61.4 points on World Economic Forum(WEF)’s Global Manufacturing Index.

In the World Bank’s 2020 Doing Business Index report, the country moved up 14 places to the 63rd position from the 77th position it held the previous year.

On the WEF’S manufacturing index report, India was ranked 25th in growing innovation capacity.

The Indian government launched the ‘Make in India’ initiative in 2014 to encourage companies to manufacture their products in India and it was strictly adhered to.

In addition to this, the government provided an enabling business environment attractive to local and foreign investors in a bid to convert India into a global manufacturing hub India’s economy is thriving on a single-digit rate of 6.75 percent which improves loan accessibility for manufacturers and business owners, while Nigeria operates a double-digit monetary policy rate of 13.5 percent.

Report from India Brand Equity Foundation (IBEF) states that the manufacturing sector of India has the potential to reach $1 trillion by 2025 and India is expected to rank amongst the top three growth economies and manufacturing destinations of the world by the year 2020.

Poverty has not ended in India completely, but it has been able to lift 37 million people out of poverty hole.

After 1991, however, the licensing of India’s pharmaceutical industries was abolished and movement of international capital was liberalised, according to Shikha Chauhan and Indra Giri of Project Guru.

Following liberalisation and support in the form of incentives, 70 percent of India’s demand for bulk medicines was fulfilled

by Indian pharmaceutical companies.

Due to an adoption of new technologies and modern scientific approach, the Indian pharmaceutical sector was ranked 3rd rank in the world in terms of volume and 14th in terms of value.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08033225506. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.