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ECONOMICS

Structural, policy challenges constraining Nigeria’s growth – IMF ... says risks remain tilted to downside ENDURANCE OKAFOR

ersisting structural and policy challenges continue to constrain Nigerian growth to levels below those needed to reduce vulnerabilities, lessen poverty and improve weak human development outcomes, such as in health and education, the International Monetary Fund (IMF) said. A large infrastructure gap, low revenue mobilisation, governance and institutional weaknesses, continued foreign exchange restrictions, and banking sector vulnerabilities are dampening long-term foreign and domestic investment and keeping the economy reliant on volatile oil prices and production, the IMF said in its latest Article IV report for Nigeria. Under Article IV of the IMF’s Articles of Agreement, the IMF Continues on page 38

Inside Crown Refinery signs MoU with Ondo over $500m modular refinery P. 2

L-R: Joe Orji, managing partner, Brookstone; Nnamdi Agbim, MD/CEO, Interkel; Andrew Nevin, partner and chief economist, PwC/keynote speaker; Titi Odunfa Adeoye, CEO, Sankore Investments; Eseosa Ekhaguere, CEO, Property Development Limited, and Abayomi Onasanya, founder/CEO, Student Accomod8, at the Real Wealth Strategies to Optimise Your Real Estate Portfolio conference organised by Sankore Investments in Lagos, yesterday. Pic by Olawale Amoo

Nigerian banks rediscover retail clients in bid to grow loan books M LOLADE AKINMURELE

artins Adegoke was surprised when his bank sent him an email offering a

loan product. “They even had an official come to my office to convince me to take the loan,” Adegoke, a 40 year-old branch manager of

a Fast Moving Consumer Goods company, told BusinessDay. “That’s new, but some of friends say they got similar offers from their banks.” Nigerian banks are beginning to rediscover retail customers after a bruising recession which led to a spike in loan defaults made them risk-averse. The biggest lenders plan to increase their focus on retail

lending, from personal loans to car financing and mortgage, this year in efforts to grow their loan books. Segun Agbaje, chief executive officer, Guaranty Trust Bank (GTB), said the tier-one lender will make a big push to grow its retail loan book this year and reduce the dominance in upstream oil and gas institutional lending.

“Our retail customer base went up from 11.9 million in 2017 to 14 million in 2018 and we will to continue to grow our retail loan book in an orderly manner without picking up Non-Performing Loans,” Agbaje said in a call with analysts and investors. According to Agbaje, GTB will push more consumer products Continues on page 38

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Crown Refinery signs MoU with Ondo over $500m modular refinery MICHAEL ANI

rown Refinery and Petrochemical Limited’s—a privately owned company whose core business is into refining of crude oil into premium petroleum products, has entered into a Memorandum of Understanding(MOU) with the Ondo state government to build a refining facility in the state. The refinery which will be designed to process both imported paraffinic and Nigerian crude into finished petroleum products, oils and lubricants has been estimated to worth $500 million. The proposed project will have an initial capacity to refine about 30,000 BPSD but is expected to be scaled to 60,000 BPSD within the next five years, according to a statement by

Kazeem Adeleke, Chairman of the company. The project is expected to be completed within 36 months. “We are going into the business of refining crude oil”, Adeleke said. “The Government of Ondo State would provide the enabling environment and incentives to support us as we actualize this vital investment” The project will be situated in the states free trade zone, in Eruna Ogboti village under Ilaje local government area. Apart from the project having the capacity to refine crude oil, it will also be producing 120,000 tons of base oil and 25,000 tons’ lubrication oil on a yearly basis. On the benefit that the project will have on the states, Kazeem explained that the company will be providing

Continues on page 38

MARKETS

Why 9 out of 10 Nigerians don’t have insurance ENDURANCE OKAFOR

here is a cliché that almost anything can be sold in Nigeria. This, though, may not be the case for insurance products as they are one of the hardest to sell in the Nigerian market place. Among other reasons why the product is difficult to sell, disposable income on account of the sluggish economic growth ranks top on the list of why most Nigerians don’t like to patronise insurance companies. Out of the about 100 million adult population in Nigeria, a 2018 survey by the Chartered Insurance Institute of Nigeria (CIIN) revealed that about 86.6 million Nigerians do not have any form of insurance cover. “More Nigerians won’t and don’t intend to take up any form of insurance cover if given the choice,” CIIN noted. At the end of H1 2018, the World Poverty Clock, a model created to track progress against poverty in real time by the Brookings Institution, revealed that Nigeria eclipsed India as the poverty capital of the world. It said six Nigerians enter into extreme poverty every minute. Explaining why many Nigerians don’t consider an insurance cover as a priority, Jim Ovia, founder/chairman, Zenith Bank Plc, said in a statement that the major problem “we see in the Nigerian market is that per capita income of the people is very low and people tend not to take insurance as a priority against other things related to them”. Nigeria exited its worst recession in Q2 2017 which resulted from declining oil prices and the reduction in the volume of oil production. The effect of the five quarters of contraction has left an almost permanent scar on many Nigerians, as after almost two years of slow but positive economic growth, not much has changed about their eroded purchasing power. On how this may have impacted on them, Ngozi Amandi, a manager at a company in the Victoria Island axis of Lagos, said, “I only now have the compulsory insurance products, but when everything was better, I had series of insurance products.” She explained that since she hadn’t renewed her insurance products, she and her family “have been

safe and that money has been channelled into more pressing needs”. Industry stakeholders see the outcome of the 2018 survey by CIIN as worrisome as it shows that the nation’s insurance sub-sector is not growing as a result of diminishing patronage. This is despite the sector being one of the oldest in the country, having been in existence for almost a century. A recent survey by NOIPolls further underscored the situation, saying that nine out of 10 Nigerians do not have any form of insurance. Lack of trust on the insurance companies to pay claims and on time is one of the reasons why some Nigerians are not encouraged to take on insurance products. “The issue of trust in the industry has to be addressed because insurance is a business of trust,” Ada Ufomadu, a senior financial institutions analyst at Agusto & Co Limited, said. However, the motor insurance and group life insurance (which has now been made compulsory by the government) are expected to support growth. Data from Agusto & Co, as analysed by BusinessDay, revealed that motor and general accidents insurance have been the most profitable business lines with underwriting profit margins of 34.2 percent and 31.8 percent, respectively, in 2017. Lack of information technology and standardisation of insurance data (including lack of local expertise in the field of insurance IT solutions), meaning manual operations is still prevalent in the industry, is another issue traced by industry experts to be stalling higher insurance penetration in Nigeria. Adekunle Ayo, a young graduate who was unemployed for two years after completing the compulsory National Youth Service Corp (NYSC), was happy when he got a job as a direct sales agent with one of the country’s insurance firms, but he said “waking up to go on the field in search for prospective insurers is almost like a nightmare”. “Not many Nigerians are interested in insurance. At the mention of the sector I operate, people get turned off and show the ‘not interested’ body language,” Ayo said.

•Continues online at www.businessday.ng

L-R: Joke Alli, head, human resource, Fidson Healthcare plc; Olugbenga Olayeye, sales and marketing director; Oscar Onyema, chief executive officer, Nigerian Stock Exchange (NSE); Fidelis Ayebae, MD/CEO, Fidson Healthcare plc; Segun Adebanji, chairman, and Imokha Aybae, head, finance & account, at the Closing Gong ceremony at the presentation of Facts Behind the Offer of Fidson Healthcare plc at the NSE in Lagos, yesterday. Pic by Pius Okeosisi

At last, Wike wins with 886,264 votes in Rivers’ long-drawn guber election ... Atiku greets, extols re-elected governor’s virtues IGNATIUS CHUKWU, Port Harcourt, & INNOCENT ODOH, Abuja

overnor Nyesom Wike was on Wednesday declared as the winner of the Rivers’ State gubernatorial election held on March 9, 2019. According to the by the Independent National Electoral Commission (INEC), Governor Wike polled a total of 886,264 votes to defeat Biokpomabo Awara of the African Action Congress (AAC),

who garnered 173,859 votes. By the results, the re-elected governor and candidate of the People’s Democratic Party (PDP) won by a margin of 712,405 By the end of Tuesday, when INEC had announced results from 15 local government areas, Wike had polled 426,369 votes against 129,855 votes secured by Awara. The lead was extended when the commission announced four more results Wednesday. In Degema Local Government, Wike polled 12,133 votes

to Awara’s 5,071 votes. In the 12 wards of Asari-Toru LGA, he had 32,172 votes to Awara’s 18,945; while in the 12 wards of Ogo/Bolo LGA, he polled 11,855 votes to Awara’s 814. The surprise of the day was in the 17 wards of Obio/Akpor LGA, where he polled an astounding 281,164 votes to Awara’s 7,495. These results brought Wike’s total as of Wednesday afternoon to 763,603 votes while Awara had 162,180.

Continues on page 38

Buyers shun Nigerian cashew on Apapa gridlock ... as local prices fall 150%, lowest in 3 years JOSEPHINE OKOJIE

uyers are now shunning Nigerian cashew nuts at the international market on the back of the worsening state of Apapa and Tin Can roads as well as a slow clearing process at the ports which has continued to delay contractual agreements. The situation has resulted in a 150 percent drop in price from an average of N500, 000 per ton in the 2018 season to N200, 000 per metric ton in 2019 cashew season, its lowest since 2016. As a result, a major source of non-oil exports for the country’s is under threat at a time Nigeria is focused on growing its foreign exchange earnings away from crude oil. “The situation has been bad for cashew exporters as buyers are refusing to renew contract agreements because of the port congestion and delay in clearing for export,” Zacheaus Egbewusi, chief executive officer, AgriCommodities Inspection Limited said in a telephone response to questions. “It takes an average of 30 days for cashew to be cleared and shipped out of the ports currently. This has crashed the price of cashew to as low as N200, 000

per metric ton from N500, 000 per ton of 2018 prices. This is the lowest we have sold since 2016,” Egbewusi said. Besides cocoa, cashew is another major cash crop in Nigeria that has huge export potentials. It has become a top-notch cash crop in Nigeria and also serves as industrial raw materials in firms producing chemicals, paints, varnishes, insecticides and fungicides, electrical conductress, and several types of oil. Nigeria is currently the sixth largest producer of the crop globally with production put at 160,000MT, data from the Nigeria Agricultural Ministry shows. It is exported to the United States, India, Spain and many parts of Europe. “We cannot meet up with our contractual agreements because of the situation at the ports and this is leading to cancelation,” said Tola Faseru, president of the National Cashew Association of Nigeria. “The problem at the port is giving rise to huge corruption,” Faseru said. He stressed that transaction cycles for export are taking longer than necessary and foreign buyers are beginning to question the integrity of contracts they enter into with Nigerians. The national president stated

that priority should be given to exportable commodities in line with the Federal Government economic diversification agenda. Nigeria currently exports 95percent of its raw cashew nuts, leaving only 5 percent for domestic processing and consumption. This is because there are very few factories that process the crop in the country. Experts say the current situation of the ports would have been less impactful if the country is processing its cashew nuts. “The problem emanated from last season but became serious this year and this is because we do not process our cashew nuts. This would have saved us from the situation we are in now,” Victor Iyama, national president, Federation of Agricultural Commodity Association of Nigeria (FACAN) said. “With value addition we would have been able to preserve out cashew from a situation like this,” Iyama added. Since the government renewed focus on agriculture, the crop has emerged one of the top five exported commodities. Nigeria’s cashew is usually harvested between FebruaryJune, though farmers stock the crop and export it all year round.

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Nigeria’s manufacturing sector sustains growth in Q1 as economy recovers GBEMI FAMINU

igeria’s manufacturing sector has been able to sustain growth despite the slow economic recovery from the 2016 recession as well as the political uncertainties that hovered around the country in the first quarter. Also, regardless of the infrastructural challenges that engulfed the sector, it recorded an overall average of 57.66 in Q1 2019, which is the highest in five years. After the recession of 2016, Nigeria’s economic growth has been snail paced, moving from 1.81 percent in the third quarter of 2018 to 2.4 percent in the fourth quarter of 2018, according to the National Bureau of Statistics (NBS). The growth recorded rises majorly from the abundance of small micro, and medium scale enterprises, which make up 90 percent of businesses in the manufac-

turing sector. Furthermore, according to a survey conducted by the Manufacturers Association of Nigeria (MAN), which shows that in the first six months of 2018, manufacturing investment stood at N305.56 billion despite borrowing at a double-digit interest rate. The Manufacturing Purchasing Managers Index (PMI), released by the Central Bank of Nigeria (CBN), is an indicator of how the sector fares in a month. It is computed based on survey responses from sector leaders, indicating changes in the level of business activities in a month. Assessment of the PMI in Q1 2019 stood at 57.7 percent, which signifies a 1.6 percent increase from the previous quarter. In all, despite the economic contraction and political uncertainties, the Q1 2019 PMI reached the highest in 5 years, which signifies continued growth over the

years. In comparison with South Africa, the PMI average for Q1 2019 stood at 47.0 percent, which is a decline from the 49.2 percent recorded in the corresponding period for 2018. South Africa’s is ranked the 82nd position on the ease of doing business scale from the World Bank while its GDP was worth $349.42 billion in 2017. Nigeria ranked 146 on the ease of doing business scale while the GDP as of 2017 was valued at $375.77 billion. Doyin Salami, CEO of Kainos Edge Consulting, asserts that Nigeria is capital deficient and whatever development it needs, is centred on effective infrastructure. He advises government to give adequate attention to fast-growing sectors of the economy, especially manufacturing, which holds brighter prospects for the country’s economic development

FG commits to local content as NPA moves to save FX from foreign training AMAKA ANAGOR-EWUZIE

inister of transportation, Rotimi Chibuike Ameachi, has commended the management of the Nigerian Ports Authority (NPA) for establishing an Ultra-Modern Marine and Harbour Simulation Centre at Dockyard Apapa, Lagos. At the commissioning of the Centre, Amaechi said the centre would save the Federal Government foreign exchange that would had been used in training personnel abroad. This, he said, shows that government is desirous of encouraging local content development towards growing the economy. “It is a testament that we are attaining the status of

the desired Maritime destination of choice. This facility would attract professionals from within and outside the country,” he said. The minister also commended the inter agency collaboration within the maritime sector and called for continuity for greater dividend. Earlier, Hadiza Bala Usman, managing director, NPA, said the commissioning of the Centre signalled the Federal Government’s preparedness and Nigeria’s firm resolve at competing most favourably in the global maritime space. According to Usman, the Marine and Harbours UltraModern Simulation Centre is expected to engender greater operational efficiency in the activities of the NPA, following the expectant patronage from

within Africa and globally. She stated that the investment would build the capacity among NPA’s operations personnel such as pilots, marine officers, tug masters, radio signal operators and prepare them to respond appropriately to the challenges of their various schedules. The Centre will enable Nigerian ports benefit through the increase in volumes and receipt of bigger vessels with economy of scale, she said, saying, “The Authority pays high premium on the capacity of its personnel to be the best at their schedules and various duties in order to respond to greater operational challenges. Therefore, we would be glad at seeing that the facility is put into good use by all at all time.”

‘How global economies point way for Nigeria economic diversification’ SEYI JOHN SALAU

n line with the forecast of the April 2018 World Economic Outlook (WEO), which projects global growth to reach 3.0 percent between 2018 and 2019, the rate of expansion appears to have peaked in some major economies, while growth has become less synchronised pointing the way for Nigeria economic diversification, especially government revenues. In the United States, near-term momentum in the economy is expected to strengthen temporarily in line with the April WEO forecast, with growth projected at 2.9 percent in 2018 and 2.7

percent in 2019. Imports are set to pick up with stronger domestic demand, increasing the US current account deficit and widening excess global imbalances. Although growth projections was revised downward for Argentina, Brazil, and India in early 2018, however, India’s GDP growth rate was later expected to rise to 7.3 percent in 2018-2019, making it the world’s fastestgrowing economy. “Emerging market and developing economies have experienced powerful crosswinds in recent months: rising oil prices, higher yields in the US, dollar appreciation, trade tensions, and geopolitical

conflict. The outlook for regions and individual economies thus varies depending on how these global forces interact with domestic idiosyncratic factors,” Kola Abdul, MD, Brent Mortgage Bank Lilited, said. Abdul, who is the immediate past branch chairman, Chartered Institute of Bankers of Nigeria (CIBN), Lagos State branch, stated this at the 2018 annual general meeting (AGM)/election of new executive committee members of the institute. Peter Ashade, chairman, CIBN Lagos State branch, said adoption of high-level technology would drive the branch operations and programmes going forward.

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Exodus of international airlines shocks Port Harcourt Airport as insecurity bites IGNATIUS CHUKWU & DAVID EJIOHUO

nsecurity has administered a huge bite in the oil region with the exit of almost all but one international airline after the sudden exit of Air France last week. Investigations revealed that insecurity that caused the exodus of companies and their workers that formed the customer base of the international airlines might be at the root of the departures to Lagos and other air cities. Port Harcourt International Airport, the third busiest airport in Nigeria, has thus come under severe scarcity of international airlines. The scarcity of the international airlines came to be following the departure of one of the pioneer airlines in the airport, Air France, at the end of March 2019. According to our correspondent at the Port Har-

court International Airport, Omagwa, the departure of the Air France can cripple the economic and normal business activities at the airport if urgent measures are not taken to bring the situation under control. As at last month, three international airlines took off from the airport; the Air France operates from Port Harcourt to Charles De Gaulle International Airport in Paris, while a private airline, Cronus Airline, shuttles the West African and Central African coasts. Unfortunately, the decision of Air France to suspend operations from the Port Harcourt last month may put the airport in a tight corner because only Lufthansa Airline would be left to operate the international route. The management of the French airline had on several occasions given notice of their intention to suspend their operations in Port Harcourt and relocate to Lagos, and so their

sudden departure is no longer a secret. According to our sources from the airport, the departure of the airline will surely affect directly or indirectly the economic and personal fortunes of the state and the Niger Delta region in general. As at the time of filling this report, several reasons were given for the negative turn of events at the only international airport in the oil and gas rich region in Nigeria. One of the reasons, also confirmed by the out-going regional manager at the airport, Ojo Afolabi, is the negative dwindling economic fortunes in the Niger Delta region. The region for some years now had witnessed unrestrained violence occasioned by activities of the Niger Delta militants, agitators and politicians. Our sources reveal that these violent activities have put pressure on the oil explo-

ration companies operating in the region and have caused the departure of several of them to other safer places in the country. According to Afolabi, what happened in the region was an exodus of oil companies and other corporate organisations and most of them left with both their foreign and local staff, and which in turn affected the fortunes of the airlines. Other sources from the airport say the unhealthy business atmosphere at the Port Harcourt International Airport was equally responsible for the misfortunes of the airport. This factor, our sources explain, is highly regrettable and deplorable because most of them were man-made factors. Port Harcourt International Airport, apart from the several factors enumerated, lacks enough banks and banking facilities like Automatic Teller Machines (ATMS) and recreational facilities.

L-R: Tonia Smart, ambassador, Chartered Insurance Institute; Keith Richard, managing director of Engagement/CEO, Personal Finance Society, Chartered Insurance Institute; Eddie Efekoha, president/chairman of council, Chartered Insurance Institute of Nigeria; Jeremy Mullen, accreditation manager, Chartered Insurance Institute, and Richard Borokini, director general, Chartered Insurance Institute of Nigeria, during the 2019 CII/CIIN work study programme in London.

We have deepened peace in Niger Delta - PAP SAMUEL ESE, Yenagoa

he Presidential Amnesty Programme (PAP) says the programme has taken proactive steps towards deepening peace in the Niger Delta region since the inception of the leadership of Charles Dokubo, coordinator of the programme. Murphy Ganagana, special assistant to Dokubo, told journalists in Yenagoa at the weekend that it was achieving the feat through the training and empowerment of ex-militants in the region. Ganagana disclosed that over 1,165 ex-militants who enrolled in the programme from March 2018 till date had been trained and empowered

while 11,297 others were captured in vocational training. He also disclosed that PAP had engaged five Greek firms to train about 2,500 amnesty beneficiaries and that out of the number, 2,000 of them would be employed at the end of the training. The special assistant also stated that 103 students were currently studying various courses in foreign institutions in the world and that, for the first time, the programme had empowered residents of communities impacted during the Niger Delta crisis. In his words, “1,230 beneficiaries were offered scholarship and deployed in 11 partnering institutions in Nigeria in January 2019 while 54 beneficiaries are

set to be deployed on scholarship offshore this year. “As I’m talking, the National Board for Technical Incubation (NBTI) has allocated 23 technology incubation centres for cluster manufactured by beneficiaries of the Amnesty Programme for which NAFDAC had granted approval. “Though none of the vocational training centres built by the Amnesty Programme from inception was completed as at March 13, 2018 when Professor Dokubo came in, but as at today, the Oil and Gas Vocational Training Centre in Agadagba, Ondo State, has been completed, fully equipped and commissioned.

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Accident Investigation Bureau to review its regulations IFEOMA OKEKE

ccident Investigation Bureau (AIB) Nigeria will be hosting a two-day stakeholders’ forum to review its proposed Civil Aviation Regulations of 2019, April 4 – 5, 2019, in Lagos. The aim of the Forum is to engage stakeholders on the proposed amendments to the Civil Aviation (Investigation of Air Accidents and Incidents) Regulations, 2016, and discuss the promotion of aviation safety. This Forum will attract stakeholders from different segments of the aviation sector to deliberate on the Bureau’s amended regulations, which will guide the agency in carrying out its statutory functions and activities. Akin Olateru, commissioner/CEO of AIB, says in a statement, “We are amending our regulations to meet global standards, and the stakeholders input are of great importance. This is in conformance with international best practices.” Olateru says the Forum is to enable the Bureau review its legal backing as to its duties and processes. The twoday meeting will also feature stakeholders’ conference where the participants will deliberate upon safety and other critical issues. Among the dignitaries and speakers expected are Hadi Sirika, minister of state (Aviation), Babatunde Irukera, director-general, Consumer Protection Council (CPC), Ado Sanusi, managing director, Aero Contractor, and Tokunbo Fagbemi, group managing director NAHCO Aviance, among others.

Thursday 04 April 2019

Immunisation: Edo reads riot act against exploitative health workers

do State government has issued a warning against unscrupulous health workers who extort monies from residents in exchange for immunisation in government hospitals, maintaining that immunisation is free. In a statement, the state government warned health workers involved in the act to desist forthwith and urged members of the public who encounter such workers to report them to the appropriate quarters for necessary action. The government decried the condemnable practice, which deprives many across the state the opportunity to benefit from the free immunisation campaign. The statement read in part: “The Edo State Government has noticed that some unscrupulous health workers charge residents and indigenes of the state money for immunisation, thereby depriving many across the state the opportunity to benefit from this service which is free of charge. “The government restated that “immunisation for newly born and older children are free and at no cost to beneficiaries.” The state called on all citizens to promptly report anyone who demands money in exchange for immunisation across the state, to any representative of government nearest to them, including the local government chairman, Permanent Secretary, Ministry of Health or the State Commissioner for Health.

How absence of off-takers under CBN-Anchor Borrowers Programme lands Delta farmers into huge losses MERCY ENOCH, Asaba

assava and fish farmers who got involved in the pioneer project of the Central Bank of Nigeria-Anchor Borrowers’ Programme (CBN-ABP) in Delta State ran into huge losses because there were no off-takers after the products had been produced. This situation is said to have landed the farmers into huge losses and thus discouraging them from continuing with the programme. “Those cassava farmers who got involved in the project ran into hitch because there was no off-taker for the

product after the cassava was matured. There was glut and the price of cassava dropped to a very drastic level that all participating farmers lost”, Anthony Umunna, director of Empowerment and coordinator Farmers Projects of the Buhari Campaign Organisation nationwide, said in Asaba, the Delta State capital. He said the cassava and fish farmers who keyed into the programme at inception, including him, suffered losses due to market glut after producing. Recounting their ordeals, he said, “Before the glut, we were selling a bag of 50kg cassava for N3,500, but later sold a bag for N1,250

and it was at this point that the farmers got discouraged. So, I lost N2.8 million the first year and the second year I lost N3 million due to glut. “We have a Project Management Team (PMT) made up of representatives of the farmers, insurance, participating financial institutions, CBN representatives and the anchor person. This value chain involves the off-taker and the anchor, processors and the final consumer.” According to Umunna, there were hiccups in the profiling of the farmers, which made it difficult for input suppliers who ventured into the programme to recover their funds on time.

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36.8m financial access holes may hamper micro pension’s 80m informal sector target MODESTUS ANAESORONYE

igeria’s pension industry will need to create the needed awareness and education to bring in an estimated 36.8 million currently excluded from any form of financial services, to realise its 80 million informal sector access target. This has become important because the informal sector will need to understand the benefits of financial services and key into it, to be able to align with micro pension contributions for retirement.

According to Efina financial inclusion report for 2018, of the total adult population that is 18 years and above put at 1.7 million, 36.8 percent, are financially excluded. The report also notes that significant gains have been made at the end of 2018 in formal inclusion, as excluded population declined by 4.8 percent from 40.1 million to 36.6 million. Experts at Efina also note that out of the 40 percent financial inclusion target for pension industry in 2020, 8 percent has been achieved, showing huge potential that needs more education and

enlightenment. President Muhammadu Buhari at the launch of the Micro Pension Scheme in Abuja recently said, “The scheme targets the significant majority of Nigeria’s working population who, incidentally, operates in the informal sector.” With an estimated 80 million people working in the informal sector of the economy, the Micro Pension Plan would take care of participants from various informal sector workers - market women, members of the National Union of Road Transport Workers, and members of textile, garment and tailoring associations, among

others. Aisha Dahir-Umar, acting director-general, National Pension Commission (PenCom), said with the formal launch and subsequent successful implementation, the micro pension plan was expected to significantly expand pension coverage to greater number of Nigerians and further generate additional longterm funds for Nigeria’s economic development. She said, “The Commission would collaborate with relevant stakeholders to sensitise and enlighten the target participants and members of the public on the features and

benefits of the micro pension plan. “The Commission had extensively engaged all relevant stakeholders and obtained their inputs before the product was developed to suit their requirements. The product is flexible with respect to contribution amount and the channel of remittance of contributions to the respective pension accounts. Access to accumulated contributions is also flexible, seamless and facilitated by technology through varied payment system platforms.” According to Misbahu Yola, managing director/CEO, FCMB Pensions, in an exclu-

sive interview with BusinessDay, micro pension itself is a totally different sector because it is going to be dealing with small savers, the self-employed and the informal sector - like the artisans, that is, people that are not in the organised private sector or public sector. “I feel everything depends on regulation, and PenCom has released a framework on how that is going to be done and there is lots of work that remains outstanding. Part of what we are working on is on how we can identify people because you need identity to be able to operate effectively in that space,” Yola said.

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The wages of seeing is tax

Zeal Akaraiwe

f you’ve watched the great movie “The Prestige”, you should recollect this quote: “Every magic trick consists of 3 parts or acts. The first parties called the pledge where the magician (in our case politician) shows you something ordinary (like poorly paid workers ). The second act is called the turn where the magician takes something ordinary and makes it into something extraordinary (like increasing minimum wage). You’re now looking for a secret (how wages will be funded) but you don’t really want to know. The third act, the hardest part is called “the prestige” For us here, the wages of seeing the magician, sorry, politician’s trickery and foolery is…yes, you guessed right…tax. As Winston Churchill famously said:“We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.” After much suffering and hardship, the Labour Union finally saw the light and made urgent demands for an increase to the minimum wage from $110 to $80 (yes dollarizing it is intentional) and the FG really had no choice but

to agree to what some may argue is a rather decent “increase” The labour union pushed through what some think is a decent increase in the minimum wage and the FG really had no choice but to concede as the timing was strategic; the application, surgical; the outcome, certain. With elections on the horizon, the FG had little choice but to agree to a demand that, in reality, should never have been a negotiation in the first place. If government truly served the cause of the people and If government had an iota of human empathy, the review of wages should have been voluntary across the nation and should have been concluded once the NBS released the alarming inflation rates, obscene un/ underemployment figures and extreme poverty numbers. But remember I said IF....a very bold, gigantic IF! Instead, FG, once elections were over, produced the ace up their sleeves; “We will increase you minimum wage and you will NOT be VATted more to fund it!” Yes, increase in VAT has been denied but after Feyi Fawehinmi’s column last month, we know the FG has to rob Peter to pay Paul. We can reasonably expect that some government revenue source, which depletes the livelihood of and increases to cost of living of the average citizens, will be increased While talking about digging a hole to cover a hole, let me point out that as per my personal observation, the classic psychology behind the thinking of many in government is: ““we are doing you all a favour by being here, so don’t expect us to consider your plight”!” In my opinion, both the NLC and

the FG acted selfishly. I call it, “enlightened self interest,” though I struggle to find the enlightenment in either’s actions because they are really not interested in alleviating the plight of those who have entrusted them with the burden of governance. While Success - the girl who became a social media sensation when she got kicked out of school because of her parent’s inability to pay the fees - is still fresh on our minds, perhaps we can force a rethink and ask our various governments why the UBE Act 2004 where education is legislated as, “free” is not being implemented??? So on this premise of minimum wage increase and free education, let’s run it as numbers: Since we are robbing Peter to pay Paul, let me introduce you to Peter, a hard worker with three children aged 7-11yrs, a trader wife, mother and an in-law who are all dependents. He earns N55,000 per month which comes to N660,000 per annum and has to pay: • rent of N180,000 per annum • School fees termly of N25,000 x 3 children =N225,000 per annum • School bus monthly of N5,000 x 12 months = N60,000 per annum This leaves him with N195,000, or N16,250 monthly, from which he has to survive. He sends N5,000 to his mother and gives his wife N8,000 for food. Needless to say, they fight constantly about the feeding allowance! Peter has N3,250 left for transport to work and to take care of any contingencies that may arise. Please do not forget his approximately N5-7,000 per month PAYE which is deducted at source Peter, before the increase, earned 200% above the N18,000 minimum

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We can reasonably expect that some government revenue source, which depletes the livelihood of and increases to cost of living of the average citizens, will be increased

wage, but in reality exists below the extreme poverty line. Let’s say his salary is increased by the same ratio as the proposed new minimum wage and he starts earning an additional N35,000 to total N90,000 monthly though I strongly suspect that if Peter demands this from his employer, he will rather suddenly join NBS database as “unemployed”! But let’s, for his sake, imagine he gets the increase and let’s even pretend there’s no increased PAYE burden. It means he can, instead of waking all the way, start taking a bus half way to work at the monthly cost of N8,000. He can give his wife N7,000 extra to cater for the feeding of the kids and other needs in the home and he will now be able to live a little better than prison inmates and instead of starving, buy a daily meal of N300, which comes to N6,000 a month. Peter will now be left with N14,000 for contingencies like healthcare, electricity bills, school books etc After painting Peter’s reality picture with what the NLC and FG believe is best for him, lets look at an alternate reality in which the government actually takes responsibility and does what they have legislated: • Peter on his N55,000 monthly salary should not be paying school fees and should be assured that the education his children receive from government schools meet a minimum standard that gives them a foundation to build on. Peter would save N18,750 a month Note: The rest of this article continues in the online edition of Business Day @ https://businessday.ng/ Akaraiwe is an experienced treasury and financial advisory executive with a demonstrated history of working in the banking industry.

New scramble for Africa and how Africans can win

OSA VICTOR OBAYAGBONA

s a child, my mother use to say, “My son, a hungry man is better than an over fed man.” I never quite understood what she meant. But growing up has thrown too many things at me, most I cannot explain but in parts I can now tell what mother meant. A hungry man, most often, thinks better and is able to arrive at a logical conclusion. Whereas, an overfed man thinks less rightly due to debauchery, as the brain is full of excesses that make it slow in thought. Most importantly, I have realised that when the purpose of a thing is not defined abuse becomes inevitable. This is what I see with most African Heads of State – not having a personal term of reference to rule when they get to that political office they struggled for. I remember in 1993, a Presidential candidate, when asked his plans for Nigeria if he wins, said, “We will know what to do when we get there.” This shows clearly there was no specific blueprint to govern, the only thing was ‘just get the power first; every other thing will fall into place.’ This is why priorities are sacrificed on the altar of mediocrity. Even when there are helps, counterpart funding are not released, leading to the death of many legacy projects in Africa, and Nigeria in particular. Let’s get to the business of the day. I recently

watched a short documentary from The Economist with the above title, and I believe is worth reiterating. Below are sub-subject matters, and it runs thus: The first scramble for Africa was when the European colonial power saw a continent that was vast, rich in mineral and land but was poorly defended and rushed in to carve it up and steal the land. The second was during the Cold War when East and West were locked in a struggle for global dominance. That was when the Soviet Union backed the Marxist despots all over Africa and America backed any leader who said he was in favour of capitalism. The third that is happening now is much more benign, it is much more about the voluntary exchange, is much more about trade, and about the spread of technology, it is a new kind of scramble for Africa, which if handled well, Africans can win. What do foreigners hope to gain? The old stereotypes of foreigners in Africa were those who were interested in their minerals and not the African people. This is still sometimes true, as there are still some illegal mineral deals happening in Africa; the more important now is the African people. There will be much more African people than the Chinese people by 2025. It is a huge market and since they are now leaving in independent countries, they are in a better position to negotiate deals than they were in the past to negotiate better deals with the outside world. And this has been great for Africans; greater openness to trade and investment with the outside world is one of the reasons why Africans are two feet richer than they were in the 2000s. Of course, the fact that there are fewer wars and better macro-economic policies has also helped. Is it all good for Africans? There is still a big problem with corruption.

Unaccountable leaders in the less-transparent African countries have signed deals with the outside world that benefit them personally but perhaps not their countries; so much the things that Russia is doing in Central African Republic where you have private firms protecting diamond mines while the President of that war-torn country… are too many people reminiscing of what happened in the 19 Century at the height of imperialism. Which foreigners are moving in? The scale of foreign interest is unprecedented. Between 2010 and 2016, 320 new embassies were opened in Africa, probably the largest embassy-building boom anywhere ever. Turkey alone opened 26. India last year announced it was going to open 18. Military links are spreading too. China alone has ties with at least 45 African countries. America and France are hoping to defeat terrorists in the Sahel. Oilrich Arab nations are setting up a military base in the gulf. Russia has military deals with 19 African countries. How can Africa come out on top? African voters and watchdogs need to insist on transparency on the way these deals are done. The kind of work that Kenyan journalists have done to expose scandals connected to a Chinese railway project is very encouraging. Secondly, African leaders have to think more strategically. China is one country. Africa is 54. It is going to be much harder to drive the right kind of bargain if they allow China to negotiate with them individually behind closed doors. Even if African unity is a bit of a far-off dream at the moment, at least you can see more regional unity, which is important in negotiating infrastructure project. Is this a threat to democracy? Finally, African should take what their new friends tell them with a pinch of salt. The Chinese government is very keen to tell Africans that democracy is a Western idea and this

development needs a strong idea. This may be music in the ears of strongmen in the continent, but African voters should not be fooled by it. There is a lot of research out there suggesting that African countries that are more democratic, tend to grow faster and prosper better. As the population gets more educated and moves into the city more, we are seeing that they are more critical of the government and giving the ruling party a lower share of the vote. As African politics grows more competitive, voters will have more clout and will be able to insist on the right kind of globalisation that works for Africans and foreigners alike. No matter how critical the narrator is about African romance with China, some basic facts are clear with some serious African nations with recent relationship with China. In 2011, when Prime Minister Hailemariam Desalegn was a Deputy prime minister, the Ethiopian Light-Rail system was inaugurated December of that year. When he became the Prime Minister in 2012, he logically followed the project through, and in November 2015 service began on the rail tracks. With a final cost of $475 million to build, and construction taking three years, the Ethiopian light-rail has 39 stations with four vehicles carrying 15,000 passengers every hour across the length and breadth of Addis Ababa. In this case I think Africa has won, as the narrator rightly said that Africa can win if it is careful about every negotiation. But sadly, this happened the same time Lagos started its light-rail project, which conclusion date and final cost are yet unknown. I think Nigeria should learn from more smaller and serious minded African nations on the way forward. Osa Victor Obayagbona is assistant News Editor, BusinessDay

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comment is free comment The job is for Asiwaju Bola Ahmed Tinubu

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Positive Growth with Babs

Babs OlugbemI

mmediately President Buhari was declared the winner of the 2019 presidential election; my default thought was to write him suggesting five focus areas for his attention if he is to end his regime on a good note. He had been given a rare second opportunity, and his focus should be on institutionalising INEC, security of Nigerians, economy and capacity development, power and infrastructure, the rule of law and constitutional integrity, and the bridging of the age gap between the government and the governed. I intend to suggest he set each of these agendas as key performance strategy and legacy indicators (KPSLIs) with a high monitoring framework if he is to be known and remembered as a leader with an enduring legacy. In doing this, he will need someone not less than a minister or the vice president to anchor and be held accountable for the KPSLIs. In my thought, bridging the age gap between the electorates and the elected leaders is for someone with a track record of transformational attitude and impacts. A news report described Nigeria as ‘a young country for old men’ in an attempt at explaining the differences between the age grouping of the population and the leaders. Over 92% of the assumed 191million Nigerians are under 54years old, over half of the

register the voters are within the age bracket of 35years to 40years old. The two major contenders for the presidency in the last election are 76 and 72years. President Buhari is into his 77th years on earth, which is not unusual for African leaders given the age of Biya, Bouteflika and Mugabe who was 93years old before his 37years regime was forced to an end. The age difference between the people and the leaders is a concern given the nature of African politicians with dictatorial tendencies. Most often these old leaders are not cerebral with transformational leadership instinct and drive. It is a case of someone at the exit lobby of life representing people of younger minds, ideas and philosophy. It is a case of an old generation leading the younger generation in the direction of the past. The world is changing given the age of the leaders like Jacinda Ardern (New Zealand), Emmanuel Macron (France), and Alain Berset of Switzerland. I want to believe the President will want to create a legacy given the cadre of people he is fortunate to have in his party and political sphere. It is, therefore, necessary for him to bridge the leadership age gap. One of the ways to do this is through the Generational Leadership Transition Scheme (GLTS) which gives opportunities to non-partisan people to be attached to selected political offices in recognition of their achievement in private or public space. The presence of these new and fresh minds who are eager to serve even as volunteers will be an added thinking faculty for the ministers or other federal officers who must be appointed for their political clout as practised in our democracy. Who’s the leader with the track records of breeding other leaders that could help in bridging the leadership

age gap? It is no one different from the National leader of the APC, Asiwaju Bola Ahmed Tinubu who turned 67 last week but with a genius mind and achievement in breeding and positioning leaders. Under the GTLS, Asiwaju is not doing what is new but what he had been doing since 1992. Without a doubt, his leadership selection process that produced high performing, pace and record-setting public officers like Fashola, Aregbesola, Ambode and notable others need to be studied and emulated. However, I believe he should extend his ‘leaders net’ to cover people with no political affiliations who have shown gut and with a quality idea in the last election just as he was suggesting that the ‘tax net’ be extended instead of any hike in VAT. Nigeria needs leaders with vigour, fresh ideas and a new mindset in all areas of our public lifepolicy, strategy and implementation. People like Babatunde Gbadamosi, Fela Durotoye, and Gboyega Nasir Isiaka, to mention a few with contents and good performance at the last election campaigns should be given the opportunity to serve irrespective of their political affiliations. Nigeria needs the idea of these people even in lower offices than the one they contested for. Young aspiring leaders without a family link to the existing politicians and with records of credibility should under the GLTS be sent to the various ministries to volunteer their perceived capacity by giving different perspectives to problems and ensure change areas are identified, considered and presented for implementation. If you are looking for a person to drive leadership development in the country, look no further than Asiwaju whose records of sustainable performance in Lagos state and Nigeria in the

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In my thought, bridging the age gap between the electorates and the elected leaders is for someone with a track record of transformational attitude and impacts

area of building public office leaders is incomparable. I don’t know anyone who was a senator or governor at the same time with Baba Asiwaju that has shown relevance and influence in developing other leaders like him. From being an Alliance for Democracy’s governor, Asiwaju BAT had made Lagos state a state envied for leadership succession, party structure and supremacy, and top rank in the achievement of the sustainable development goals and the drive to be a leading 21st-century city. He had moved from a regional political strategist to a nationalist through Action Congress and APC. He has proved to be a transformational leader in the like of Harry Lee Kuan Yew, Nelson Mandela, Roosevelt Franklin and Mahatma Gandhi The opposite of courage is conformity. The opposite of responsibility is a liability. Asiwaju is courageous enough not to conform to some ex-governors’ views of making the Senate their dumping ground in the search for immunity. He never attempts to return to the Senate in search for relevance but took the risk to capture the South West for his party and after that the centre. He is a man of ideology and has not defected to other parties for personal and political gains. His desire to be responsible had made him not to be a liability like those who defect from one party to another in search for relevance and greener pastures. Note: The rest of this article continues in the online edition of Business Day @ https://businessday.ng/ 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.

Is taxation a fund raising instrument?

Emeka Okolo

niversally, taxes are recognized as veritable means of generating revenue from individuals and corporate bodies for growth and developmental purposes. It is more or less like signing a memorandum of understanding in which the identified entities pay what are levied on them while the government that imposes the taxes judiciously utilizes the proceeds for the wellbeing of the payers. It is never meant to be a zero sum game. In Nigeria, various taxes exist. In fact, at the last count, no less than sixty three of such are in the statute books, ranging from the ones levied by the Federal and State governments to those of the Local governments! However, the popular ones in Nigeria appear to be the company tax, personal income tax, value added tax (VAT), consumption tax, withholding tax, land use charge, excise and import duties. The aggressive nature of raising revenue via taxation in recent times by all the different levels of government in Nigeria has put to question the whole concept of taxation. Not a few are wont to ask whether the country is redefining and rewriting the whole concept. Yes, citizens and corporate bodies must discharge their basic obligations to the state but within which context and circum-

stances? Nigeria recently exited a major recession in a quarter of a century and most businesses and individuals are still struggling to find their feet but they are daily being assailed by all manners of taxes and levies or the threat of them. In a bid, obviously, to fund the 2019 budget and be in good shape to pay the proposed new national minimum wage of thirty thousand naira per worker per month, the Federal Government has just come up with the idea of hiking the value added tax (VAT) from its present rate of 5%. The reason? VAT in Nigeria is the lowest in the world. Really? What of consumption tax? Is it being discounted in the mix and argument? There is little doubt that the tax system in Nigeria today is bedeviled with a lot of inconsistencies, arbitrariness and lack of cohesion and harmonization. In a typical Federal System of Government which Nigeria professes or is pretending to practice, there is certainly no room for the chaotic situation the country is experiencing in respect of its tax system. Certain issues need to be interrogated at this point: • What is the place of consumption tax visa-vis value added tax (VAT) in the country’s tax system today? • Who should be the beneficiary of the VAT collected in any location? • Should those that ‘abhor’ the products and services on which VAT are collected turn round to partake in the benefits? Looking deeply at the posers raised, it is clearly evident that the present tax system and structure need some tinkering for equity and efficiency. For example, the argument that VAT in Nigeria is the lowest in the whole wide world obviously falls flat when consumption tax is considered. VAT and consumption tax are two sides of the same coin. There is no denying the fact that having the two

taxes in place amounts to double taxation. Is it fair and equitable that all share from the proceeds of VAT which is akin to sharing a cake when some did not contribute in its baking? If some feel that the products and services on which VAT are levied are not ‘pure’ and offend their sensibilities, why reward them with the revenue accruing thereof? Taking the argument a notch further, should there be arbitrariness in the manner taxes are fashioned out in the country? Different levels of government in Nigeria have as varying taxes as anyone can count, albeit of the same nature and complexion, and some are contemplating coming out with more or tinker with the existing ways in their domains as I write this piece and all targeted at the same payers. Obviously those in the latter group are waiting to see how far the Federal Government will go with the proposed hike in VAT. Meetings, conferences, workshops, summits and seminars (Nigeria is never in short supply of them!) have been held by stakeholders all aimed at harmonizing and ensuring cohesion in the manner taxes are levied but with practically nothing to show. Organized private sector and workers whose taxes are deducted at source are still groaning. The Federal Government that should show good example of how taxes should be conceived and implemented for the good of the economy is unfortunately using taxation as a fund raiser of some sort and a knee jerk approach to an otherwise serious matter. Taxation to all intents and purposes, should be for the twin objectives of promoting growth and development in an economy, not to stifle them. When citizens are suffocated with unconscionable taxes/levies and their continuous hikes, their capacity to spend is obviously curtailed and growth ultimately will be the first casualty.

Whilst calling for circumspection in the way taxes are churned out by all levels of government in Nigeria, especially the state and local governments and before the proposed hike in VAT is given any bite by the federal government, the following should be considered by all the levels of government: • Have governments across board in Nigeria given a thought to optimizing their revenues through taxation? Have they tried to bring everybody eligible to pay tax into the proverbial tax nets/brackets? • How accountable are different agencies and institutions saddled with tax collections? • What mechanisms do governments have in place in ensuring that all taxes collected are remitted? How often have they been modified (that is, if in place already) to enhance more efficiency and accountability? • Is it out of place for governments to tie specific tax to specific project(s) and project same to the tax payers to enhance accountability? • Those that are paying taxes, do they pay the correct figures commensurate to their earnings and lifestyles? In other words, how fair and equitable are the current taxes, especially as they relate to personal income taxes? Is it fair for those whose taxes are deducted at source to always hold the short end of the stick? • Instead of needlessly churning out new taxes and hiking the rates in the existing ones, how many governments across board have carried out introspection and serious audits of wastages currently choking the entire system to free more funds for growth and development? Any serious exercise by any government on reducing the cost of governance? Dr. Okolo is a chartered stockbroker and management consultant based in Lagos.

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Brain Drain 3.0: The exodus that’s not being televised

growing number of young, educated and employed Nigerians plan to leave the country; are in the process of migrating or are either researching their options (Canada is favourite destination) or saving money towards it. Ask any young Nigerian doctor these days who among her colleagues is still in the country and she’ll most likely say she’s leaving next week. In a recent survey almost half of the Nigerian adults (45 percent) interviewed said they planned to move to another country within the next five years, according to Pew Research Centre, a polling and research organisation based in the US. Not only were Nigerians the highest among nationals of 12 countries from over four continents, the proportion of Nigerians planning to relocate has increased by 7% since the last survey in 2017. Most plan to move to the United States. And the three most popular reasons for moving are “to find better educational

opportunities”, “to find better job opportunities” and “to escape violence”. Education, jobs and security are three interrelated challenges facing Nigeria. A bulging uneducated and unemployed youth population is a dangerous concoction and one of the major reasons for unrest across the country. Bright young Nigerians in search of better education, jobs, and peace, because they don’t see any immediate nor remote s olution to these problems are checking out. Call it Brain Drain or Exodus 3.0. No advert, reality T V show or viral video will broadcast this trend. To rephrase the song of Gil Scott-Heron, the American poet, musician and author: This exodus will not be televised; it’s live and happening every day. No TV commercial like the Andrew Don’t Check Out in the 1980s can stop this exodus. Even if government attempted a campaign blitz to discourage migration it can neither outspend nor drown out the multiple sources of information about greener

pastures awaiting intending migrants. Stories like that of Tanitoluwa Adewunmi, the eight year-old chess prodigy, will probably see more wives pestering their husbands to quit their wellpaid job with a multinational company in Nigeria in order to give their children a similar opportunity. Even if they have to sacrifice the middle-class lifestyle they enjoyed in Nigeria. Each passing day people are finding more reasons to leave the country. Both the available human and financial capital required to turn the tide of migration are impatient amid the slow and uncertain pace of the economy. The present state of the economy and doubts about whether the next four years will be any different from the last is quenching the hopes of many and discouraging new investments. Without a clear signal on the economy’s direction, companies and individuals don’t have the time to wait-and-see anymore. As a result, the incurably aspirational Nigerian has concluded to take his dreams elsewhere –wheth-

er legally or illegally. Once intrepid and optimistic investors are either reducing their stakes in the country or have shutdown. Three quick things can be done to dampen the increasing eagerness to migrate. Accelerating the transition of the economy to a pro-growth phase will jump-start economic growth. Ending the multiple foreign exchange regimes will signal willingness for reform and attract more patient capital to revamp power, transport and other infrastructure. And finally, a committed plan to phase out the petrol subsidy that has cost Nigeria 7 trillion naira in the past four years will gradually free funds sorely needed for human capital development : education and health. Economic growth matters but it must be broad, even and consistent. In the survey Pew Research Centre conducted in 2017, more Ghanaians than Nigerians wanted to leave their country for greener pastures even though Ghana was one the fastest-growing economies that year.

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May & Baker sees 47% dip in finance costs Pg. 14

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

HOSPITALITY

A Tale of Two Hotels ISRAEL ODUBOLA

he 2018 financial scorecard of two Nigerian listed hotels, Ikeja Hotel Plc and Capital Hotel Plc, showed mixed fortunes for both. The two are the only hotels to have filed their financial statement on the Nigerian Stock Exchange (NSE). While Ikeja Hotel grew profit margin by 335 basis points in 2018, that of Capital Hotel contracted by some 1000 basis points in the same period. This indicates that Ikeja Hotel was able to retain N83 as profit from every thousand naira realized as revenue in FY 2018, compared with N49 reported in the previous year. However, the reverse is the case for Capital Hotels, as the firm kept N64 from every thousand naira earned as revenue, a 10.27 percent decline from N166 earned in FY 2017. Ikeja Hotel grew its profit-before tax to N1.29 billion in the review pe-

riod from N733 billion in the preceding period, and nearly doubled aftertax profit to N1.11 billion, on the back of lowered operational expenses. Sales & marketing expenses as well as administrative expenses were down by 54 percent and 14 percent to N236.6 mil-

lion and N1.73 billion respectively in the review period. The company posted better revenue across segments as gross earnings edged up to N13.3 billion in FY 2018, 9.45 percent higher than N12.1 billion in the year before, with proceeds

from rooms accounting for 60 percent share. Total assets of the company was up 5.8 percent to N37.8 billion in the review period as against N35.7 billion reported a year before, buoyed by a big increase in cash & cash equivalents.

For Capital Hotels, revenue expanded at single-digit to N5.97 billion in full year 2018, compared with N5.62 billion the year before, with 54 percent coming from proceeds from room. Profitability of the Abuja-headquartered hotel weakened in FY

2018 as profit before and after taxation plunged 35 percent and 55 percent to N507.7 million and N379.9 million respectively, triggered by elevated income tax expense and reduced operating income. Despite the doubledigit decline in profit, the company approved a final dividend of 5kobo per 50 kobo ordinary share, payable to shareholders whose names appear on the Registers of Members as at April 23, 2019. While Ikeja Hotel grew earnings per share (EPS) from 29 kobo to 53 kobo in the review period, Capital Hotels saw EPS dropping by 45 kobo on the back of weaker profitability. Ikeja Plc advanced 9.71 percent to N2.26 per share after Tuesday’s trading on the Lagos bourse, bringing its yearto-date and one-year return to 47 percent. The business lines of both companies revolve around hotel management, restaurants and housekeeping.

CONSUMER GOODS

Dangote Sugar shares gain 6% as investors look beyond unimpressive 2018 earnings SEGUN ADAMS

hares of Dangote Sugar gained 5.63 percent to close at N15 per share on Tuesday as the largest sugar producer in Nigeria announced a decline in profit for 2018. Revenue fell for the first time in five years as smuggling of cheap sugar constrained sales. Dangote Sugar however closed the day as one of the best performing stocks, after gaining 6 percent, thereby outperforming the All Share Index which dropped 1 percent. The financials released the same day showed a double-digit decline in profit to N21.98 billion

compared to N39.78 billion made in 2017, halting the steady profit rise Dangote Sugar had consistently recorded since 2014. “Although performance dropped in 2018, Dangote Sugar beat the consensus analyst expectation,’’ Fola Abimbola, equity analyst at FBNQuest told BusinessDay. Ayodeji Ebo, Managing Director of Afrinvest Securities Limited considers Dangote Sugar’s backward integration as a plus investors might be looking at. During the 2018 financial year, Nasarawa Sugar Company Limited, Dangote Taraba Sugar Limited, Dangote Adamawa Sugar Limited and Dangote Niger Sugar Limited,

all of which form part of the Backward Integration Project (BIP) were incorporated and consolidated in the Group’s financial statement. A move the group says is indicative of the progress being made in BIP. Meanwhile, for the market which has remained bearish as companies submit full-year results, “lack of policy stimulus” and direction would see the weak sentiments continue until the new administration announces its plans to drive the private sector, Ebo explained. President Muhammadu Buhari won the February 23 general elections and would be sworn into office for the second term on Wednes-

day, May 29. Revenue of Dangote Sugar fell year on year by 26 percent to N150.37 billion on the heels of reduced sales volume and the reduction in the net selling price per unit of sugar although the Group’s sugar production also dipped 14 percent in the year. Debola Falade, Chief Finance Officer of the Sugar Refinery, said that Apapa traffic gridlock, the influx of cheap sugar and insecurities in certain parts of the country were the primary cause of the drop in momentum. Notably, a 2-month closure of operations in the 2nd quarter of 2017 and communal clashes with

the Fulani herdsmen in the first quarter of 2018 resulted in low cane yields and had an adverse effect on the performance of Savannah Sugar Company Limited, one of Dangote Sugar subsidiaries. Dangote Sugar was, however, able to shrug off the effect of lower turnover to manage its costs and improve gross margin by 142 basis point to 26.39 percent in spite of net average selling price per 50kg bag falling year on year to N12,429 in 2018. Operating profit dropped by double digits in 2017, masking a 14 percent reduction in selling and distribution expenses and N201 million impairment gains.

The decrease notwithstanding, operating margin saw a slight improvement as it increased to 21.74 percent compared to 21.47 percent in 2017. A negative change in the fair value of Dangote Cement’s biological asset, comprising of sugar cane, had a negative impact on the Profit Before Tax (PBT), contributing to the decline in PBT and Profit After Tax in 2018. Dangote Sugar recommended for shareholders’ approval, a final dividend of N13.25 billion translating to N1.10 per share for the 2018 full year period. The dividend is a 15 kobo difference from the amount for 2017.

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

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Thursday 04 April 2019

Business Event

PHARMACEUTICALS

May & Baker sees 47% dip in finance costs IFEANYI JOHN

ay & Baker Nigeria Plc, Nigeria’s first pharmaceutical company, released it 2018 full year financial statement detailing the company’s performance in the last 12 months. Income generated from core business activities was in line with analyst projections as gross earnings grew by 6.15 percent while an 11.29 percent decline in cost of goods helped improve company efficiency. Revenues from the sales of pharmaceuticals and beverages in 2018 increased by 6.15 percent from the restated 2017 figure of N8.05 billion to N8.55 billion in 2018. Cost of production on the other hand declined by 11.29 percent dropping from N6.07 billion in 2017 to N5.39 billion in 2018, leading to a gross profit margin of 36.99 percent from 35.04 percent in 2017. Earnings before interest and taxes declined by 1.89 percent from N1.23 billion in 2017 to N1.21 billion in 2018. This was

due to an 18 percent reduction in distribution, sale and marketing expenses which brought earnings before interest and taxation N23.85 million lower than what was recorded in 2017. After a 46.51 percent decline in finance cost, the profit before tax of the company grew by 35.05 percent from N605.62 million in 2017 to N817.91 million in 2018 and profits after taxes were paid reduced by 7.60 percent from N370 million in 2017 to N342million in 2018. The discontinued profit of N242.51 million brought the total profits of the year to N585.20 million. The Directors announced the plans to dispose of the Group’s food business in 2017 and a statement in the financials reiterated that “the disposal is consistent with the Group’s longterm policy to focus its activities only on Pharmaceutical and Beverage business. The sale was concluded on 30 April 2018, no further losses are expected on the disposed asset.” Year to date the company’s stock performance has underperformed the broad equities

market losing 5.7 percent of its market capitalization as against the 1.24 decline on the local bourse. Analysts opine that this performance is expected as the bulk of consumer goods company are facing a tough economic environment which has trickled down to the bottom line of the companies. The stock has declined by 6.1 percent since last Wednesday, declining from N2.45 per share to N2.3 per share during trading sessions in the past week. May & Baker Nigeria Plc manufactures, sells, and distributes human pharmaceuticals, human vaccines, and consumer products in Nigeria. The company operates through Foods, Pharmaceuticals, and Beverage segments. The company offers pharmaceuticals, including anti-diabetics; anti-hypersensitive pharmaceuticals; anti-infectives; anti-malaria; analgesic; cough and cold; multivitamin; and anxiolytics. It also provides beverage drinks, including bottled water; and package foods, such as noodles.

L-R: Mufutua Dada Olaide, Chartered Institute of Bankers (CIBN) Lagos chapter’s financial secretary; Bayo Olugbemi, MD/CEO, First Registrars & Investor Services; Peter Ashade, chairman, Chartered Institute of Bankers (CIBN) Lagos Chapter; Kola Abdul, immediate past chairman, Chartered Institute of Bankers (CIBN) Lagos Chapter, and Deji P. Olanrewaju, at the inauguration of Peter Ashade as Chairman, Chartered Institute of Bankers (CIBN) Lagos Chapter, at the CIBN Lagos Chapter Office in Yaba.

CSR

UBA unveils 30 students as 2019 campus ambassadors SEGUN ADAMS

an-African financial institution, United Bank for Africa (UBA) plc, at weekend unveiled 30 students as UBA Brand Ambassadors for 2019 in the third edition of its Campus Ambassador Programme. The 30 students, made up of 17 malesand13femaleschosenfrom various tertiary institutions across Nigeria, were selected based on a number of carefully-defined criteria including clear leadership and creative skills as well as the keen ability to promote the UBA brand as campus ambassadors. At the unveiling ceremony held at the bank’s head office in Lagos, Anant Rao, group head, digital and consumer banking, UBA plc, explained that the UBA CampusAmbassadorprogramme offered a unique opportunity to

students of tertiary institutions in Nigeria to be part of a dynamic andforward-thinkingpan-African bank by representing the brand both within and outside the campus. “We believe that the youths are the future of every country, so we selected the best from the universities to collaborate with them to build their leadership skills and creative skills so that they can be better leaders in the future, whether they choose to operate in the public sector or the private sector,” Rao said. He noted that the programme is designed to be a win-win for both the students and the bank as it presents a learning experience and a highly rewarding pursuit for selected students, while providing them with a platform to display their leadership capabilities and showcase their diverse talents

which will in turn drive further growth to the bank. UBA’s Campus Ambassador Programme is the bank’s initiative toidentifyyoungemergingleaders fromtertiaryinstitutionsacrossthe country and give them a unique and highly rewarding learning experience while also grooming themtobeeffectualleadersintheir societies and country at large. The programme is also an opportunity forthebanktogivebacktostudents who remain a core component of its legacy. Tomiwa Sotiloye, UBA’s head of retail liabilities, explained that the students will undergo necessary training and will be expected to execute specific projects meant to add value to the environments. This, he added, will help the students to understand intently all that is expected of them as brand ambassadors of the bank.

COMPANY RELEASE

Digital banking platform providing support for SMEs debuts in Nigeria IFEOMA OKEKE

ubies, a digital banking platform of Highstreet Microfinance Bank offering 100% digital, zero-fee banking and support for professionals, artisans and Small and Medium Enterprises has debuted in Nigeria. The digital platform which enables customers perform all their banking needs on the go without hidden charges also allows them gain access to over 1000 ATMs across the country. Speaking during the launch of Rubies in Lagos, Yinka Daramola, chief executive officer of QuCoon, the parent company to Rubies and a FinTech company creating a full-fledged digital bank said Rubies is creating value, adding that it is not competing with any bank but complementing what

banks are doing. “We want to create wealth. We are particularly interested in how the customers bank with us, how they make money and how we creatively drive CBN financial inclusion project. We have a loan market, on this market, we have excess cash. Rather than earn small interest on your cash, you can bring it to Rubies and make it available to whoever needs to borrow the money. “We provide a platform where we provide all the details to you. For instance, if you put N20,000 out for loan, people who need the loan can come on the platform and request for the loan. We provide the details of these people. Here, people make money. We make it easy for people to access loans,” Daramola said. He disclosed that Rubies does not have the financial muscles to compete with the banks, so the

platform offers new creative products where individuals can give out loans and make regular income. “Before now, banks were the only supplier of loans but with Rubies we are making it possible for individuals with cash to be suppliers of loans. We have independent bankers in Rubies which is completely new. As an independent banker, all you do is to acquire customers and bring them on the platform; you are responsible for ensuring they use the app because the more they bank in Rubies, the more money you make. “You earn 20percent of the income Rubies makes from customers you bring in. There are a lot of processes we are bringing into this to make banking easy by taking future banking to people, driving central bank financial inclusion project and creating value for people,” the CEO explained.

L-R: Olukunle Iyanda, president/chairman of council, Nigerian Institute of Management (Chartered) (NIM); Muritala Awodun, executive chairman, Kwara State Internal Revenue Services; Abdullahi Muraina, national treasurer, NIM, and Tony Fadaka, registrar/chief executive, at the 2019 NIM corporate members’ forum in Lagos. Pic by Olawale Amoo.

L-R: Obajimi Rilwan, desk officer, ministry of education, District 4 Sabo Yaba; Opunimi Akinkugbe, independent non-executive director, Standard Chartered Bank Nigeria Ltd (SCBN); Sola Adepetun, chairman, board of directors, SCBN; Bola Adesola, chief executive officer, SCBN; Adeoti Islamiat, laptop recipient from Surulere Junior Secondary School; Iwalola Akin-Jimoh, executive secretary, Youth Empowerment Foundation, and Kyari Abba Bukar, independent non-executive director, SCBN, at the laptop presentation ceremony for girls under the Bank’s Girl empowerment, GOAL, at the Standard Chartered Bank Nigeria Head Office recently in Lagos.

L-R: Oluwaferanmi Muraina, brand manager, Pepsodent; pupils of LEA Primary School and LEA Junior Secondary School, Gwarimpa; Evelyn Eshikena, president, Nigerian Dental Association, NDA; Toluwaleke Salu, category manager (Oral Care), Unilever Nigeria, and Bola Alonge, head dentistry division, Federal Ministry of Health, during the launch of Pepsodent Brush Day and Night School Programme in Abuja.

BUSINESS DAY

Thursday 04 April 2019

CITYFile NCDC to establish treatment centres in 36 states, Abuja

L-R: Fabia Ogunmekan, executive secretary, Women in Successful Careers (WISCAR); Adekanla Adegoke, head, Oando Foundation; Nkiru Olumide-Ojo, executive head, regional marketing communication, Standard Group,South Africa; Amina Oyegbola, founder, WISCAR; Habiba Balogun, principal consultant, Habiba Balogun Consulting; Aderonke Onadeko, principal consultant, DRNL Consult Ltd, and Toki Mabogunje, board advisory member, WISCAR, at the meet-a-WISCAR series held last week in Lagos.

Residents lament as fire guts homes, shops in Calabar MIKE ABANG, Calabar

ome residents of Eyo Edem in Calabar South local government area of Cross River State have been thrown into agony following the destruction of their homes by an early morning fire on Tuesday, April 1. The fire, which cause was not ascertained at the time of his report, occurred at about 2:30am. A caretaker of one of the buildings affected, Mbo Bassey, confirmed that six houses and four shops were razed down. He said the fire

could have been caused by an electrical fault from one of the shops affected by the fire. According to Bassey, “although there was no power supply when the shops were closing, but I want to strongly believe that one of the tailoring or barbing shops had left an electrical appliance(s) on and went home, which ignited the fire when the power was later restored in the early hours of the day. One of the victims of the fire, Moses Enobong, said: “We contacted the state fire service, and they responded quickly but nothing much was done due to epileptic equipment they were using.”

He called on the government to equip the state fire service with functional firefighting tools to enable it deliver better services in future occurrences. No casualties were recorded in the inferno but properties estimated at millions of naira were destroyed, as the occupants could not retrieve anything from the burnt buildings. When contacted, public relations officer, of Cross River State Fire Service, Cletus Makpere, confirmed the tragic incident, noting that the fire service responded swiftly to put out the fire before it could spread further to other buildings in the area.

COWLSO donates birthing suites, incubators to hospitals JOSHUA BASSEY

ommittee of Wives of Lagos State Officials (COWLSO), has donated 32 neo-natal incubators to 13 government hospitals, and six birthing suites to Lagos Island Maternity, Amuwo Maternal and Child Centre (MCC), as well as Epe General Hospital. Chairman of COWLSO and wife of the governor of Lagos State, Bolanle Ambode accompanied by wife of the Lagos State governor-elect, Ibijoke Sanwo-Olu, led the committee’s project team on inspection and handing-over of the items. Ambode said that their vision for pregnant women in the state was for them to have access to world-class delivery facilities in public hospitals. According to her, an ideal child birth was that which ensured the best outcome for the mother and baby, in a safe environment that guaranteed quick recovery from birthing process, and allowed early and optimum bonding of the baby with

its mother. “My vision and that of COWLSO, is that in Lagos State, any pregnant woman, regardless of origin, economic status and location, will have access to quality and safe child delivery experience that is in line with international best practice, in any of our public hospitals, at a minimal cost’. “Childbirth has always been one of the life-changing experiences that women go through. Different women go into labour having different emotions and expectations about the process and outcome. There is hardly a woman who had been in labour that would not remember that experience, many years after”. Ambode stressed that the committee envisioned that the model would be replicated in other government health facilities in future. Birthing suites are stand-alone delivery units, where all three stages of a woman’s labour and delivery take place. They have their own private conveniences for patient privacy and fitted with automated birthing beds, ultra-modern

vital signs monitors for mother and baby; as well as specialized machines for monitoring the heartbeat of mother and baby and post-delivery care. The incubators would regulate the body temperature of preterm babies and avail them the right environment to be nurtured, till they are fit to go home, thereby reducing infant mortality in the State. The medical director of Lagos Island Maternity Hospital, Ademuyiwa Eniayewun, on behalf of the benefitting hospitals, expressed appreciation for yet another enviable intervention and laudable achievement of COWLSO. He thanked the committee for their consistent support and effort at reducing infant and child mortality in the state, and for donating the ultra-modern facility where babies could be delivered and nurtured till they are sound in health to go home. He assured the committee that the hospitals would put the facilities to good use, hoping that the gesture would be replicated in other government hospitals.

he Nigeria Centre for Disease Control (NCDC) says it is working towards establishing treatment centres in the 36 states of the federation and the Federal Capital Territory (FCT), to ensure quick response to infectious diseases. Director-general of the centre, Chikwe Ihekweazu, said an interview in Abuja. Ihekweazu explained that the treatment and isolation centres would be established in collaboration with state governments by the end of next year where such facilities were lacking. “There are confirmed cases of Lassa fever in 22 states; some of them have one or two sporadic cases but our goal is to have a treatment centre in every state capital. “They won’t all be at the same level and the same capacity but our hope by the end of next year is to have treatment and isolation centre as well as an Emergency Operation Centre (EOC) in every state capital in Nigeria. “This will help to coordinate the response to infectious diseases from our Incidence Coordination Centre (ICC) at the headquarters with all the EOCs in the various state capitals. “We already have EOCs in 12 states and they were established within the last two years, but gradually we keep increasing. “So, step by step, we are covering the entire country with our emergency operation centres as well as treatment and isolation centres for infectious diseases,” Ihekweazu said. According to him, plans have been intensified for the inauguration of Plateau, Anambra and Rivers EOCs in April. This, Ihekweazu said would bring the total number of EOCs in the country to 15. He noted that NCDC often collaborates with the state ministries of health in establishing the centres. The NCDC DG said “The state provides the building, while NCDC goes in to equip it with all the communication equipment needed.

Centre donates relief materials to Kajuru IDPs ABDULWAHEED ADUBI, Kaduna

entre for Leadership and Strategy Development has donated relief materials worth over N10 million to the victims of Kajuru crisis. Items donated include matrasses, sanitary pads, bags of detergent, toothbrushes, and tooth pastes. Others are mosquito nets, soaps and clothes. Presenting the materials at the Kajuru IDP camp on Tuesday, programme coordinator of the centre, Uche Arisuku said the NGO was working under a project with the mandate to ensure peaceful coexistence among the diverse groups in the affected communities and in Kaduna state at large. Arisuku, who communicated with the victims through the help of an interpreter, called for the judicious use of the materials. According to him, the aim is to relief the victims of their worries. Speaking to newsmen shortly after the presentation, the chairman, Adara community, Mumini Boka Madugu said there were seven IDP camps in the area. He listed these to include LGEA Maraban Kajuru, GDSS Kufana, Idon, Makyali, Ibue, Maraban Kajuru (Collap) and Makurdi K/ Magani camps. He explained that victims in the seven camps were drawn from Ungwar Barde, Karamai, Dogon Noma and Ungwar Gora communities affected by the series of attacks by gunmen.

BUSINESS DAY

Thursday 04 April 2019

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

Market capitalisation

NSE Premium Index

The NSE-Main Board

NSE ASeM Index

2,241.37

1,456.29

801.09

Week open 22 – 03–19)

31,924.51 31,139.35

N11.721 trillion

11.612 trillion

2,200.40

1,430.08

807.22

Week close (29 – 03–19)

31,041.42

11.672trillion

2,203.76

1,420.06

807.22

Year Open

Percentage change (WoW)

-0.31

Percentage change (YTD)

-1.24

0.15 0.40

-0.70

0.00

-1.37

1.69

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

291.84

2,272.45

1,254.54

1,212.79

703.73

280.54

2,244.77

1,270.51

1,201.54

711.29

290.52

2,267.64

1,239.73

1,188.02

NSE Banking Index

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

1,438.19

426.64

130.95

1,398.78 1,392.65

415.77

128.50

403.96

125.98

NSE 30 Index

-0.44 -1.73

-2.84 1.26

-1.96 -0.40

723.46

1.07 -5.01

3.56 -3.87

1.02 1.51

-2.42 0.15

-1.13 -1.61

Stock market starts Q2 on a poor note …Etranzact, GSK, UACN, others worse off Iheanyi Nwachukwu

he Nigerian stock market kicked-off this secondquarter (Q2) on a negative footing, amid huge loss of approximately N158billion recorded in March –the last month in first-quarter (Q1) of 2019. As at Monday April 1, the stock market’s year-to-date (ytd) return stood in the negative region of -2.86percent. Except for NSE Banking (0.83percent), other sectors have aided the record pull-back seen at the stock market. Most of them are: NSE Consumer Good (-9.69percent); NSE Oil & Gas (-5.20percent); NSE 30 (-3.40percent) and NSE Industrial G o o d s ( - 2 . 8 6 p e rc e n t ) . A l s o looking further into the sectoral performances it showed NSE Insurance (-0.93percent); and NSE Pension (-3.10percent). Big losers year-to-date (ytd) Price list of stocks as at April 1 revealed notable names that were hardly. They include Ecobank Transnational Incorporated (ETI) Plc which was down by 8.9percent year-to-date (ytd); others are Dangote Sugar Refiner y Plc (-6.9percent); Cement Company of Northern Nigeria (-7.5percent); Beta Glass (-5.1percent); Access Bank Plc (-4.4percent); eTranzact International Plc (-33.2percent); and Fidelity Bank Plc (-6.4percent). Others are Flour Mills (-22.1percent); Forte Oil Plc (-3.5percent); GlaxoSmithKline Consumer Nigeria Plc (-30percent); Guinness Nigeria Plc (-13.3percent); Honeywell Flourmills

( - 6 . 3 p e rc e nt ) ; Int e r nat i o na l Breweries Plc (-14.8percent); May & Baker Plc (-6.1percent); Medview Airlines (-12.2percent); Mobil Oil Plc (-4percent); MRS Plc (-18.9percent); and Nahco Plc (-6.8percent). Other big losers are Nigerian Breweries Plc (-26.3percent); NEM Insurance Plc (-17.8percent); Nestle Plc (-2.4percent); Northern Nigeria Flourmills (-10.4percent); NPF Microfinance Bank Plc (-9.7percent); Presco Plc (-2percent); PZ Cussons (-19percent); Seplat (-7.8percent); and Stanbic IBTC Holdings Plc (-4percent). Also, Total Nigeria Plc has lost 3.4percent of its value this year; Transcorp Hotels Plc (-11.5percent);

Transcorp Plc (-8.3percent); UAC of Nigeria Plc (-21percent); UAC Properties Plc (-13.1percent); Unity Bank Plc (-18.7percent); University Press Plc (-16.5percent); Vitafoam Plc (-10.2percent); Lafarge Africa Plc (-2percent); Wapic Insurance Plc (-4.8percent); and Zenith Bank Plc (-5percent). Analysts’ comments “Uncertainty about the 2019 election outcomes, policy implementation slowdown and sell-offs by foreign investors in 2018 are expected to slow growth in the stock market in first-half (H1) 2019 amidst monetary tightening by members of the frontier markets,” said Andrew S. Nevin, Advisory Partner and Chief Economist at PwC. Overall, he expects key drivers

for the market from first-half 2019 to include: commodity prices, exchange rate movement and stability; and inflation rate. “This week, we expect to see profit taking activities in earlier trading sessions in response to last Friday’s market performance partly driven by release of impressive earnings reports. Hence, we maintain a bearish outlook for the overall weekly performance”, Afrinvest Research said in their April 1 note. Vetiva Research analysts said in their Tuesday April 2 note that with portfolio reallocations and rebalancing, possibly responsible for the sharp sell-offs at the start of the quarter, they foresee further, but milder, declines with the

expectation of lower activity levels on the exchange. In their investment views, analysts at United Capital think the market is due for a recovery, saying it remains attractively priced on a fundamental and technical basis. “Nevertheless, sentiments could likely remain choppy in the absence of any event that could galvanize investors”, United Capital research analysts added. Weekly Index movement/ market review The stock market All Share Index (ASI) which opened the month of March at 31,721.76 points and market capitalization of N11.830 trillion, closed the review month with ASI at 31,041.42 points and market capitalization of N11.672trillion. The Nigerian Monetary Policy Committee (MPC) had recently taken a cue from advance d economies as it surprisingly announced its decision to cut its Monetary Policy Rate (MPR) by 50basis points (bps) to 13.5percent, halting its 2-year long policy of keeping the rate constant at 14percent. In the trading week to March 29, the NSE All-Share Index (ASI) depreciated by 0.31percent while Market Capitalisation appreciated by 0.51percent to close the week at 31,041.42 and N11.672 trillion respectively. All other indices finished lower with the exception of the NSE Premium, NSE Consumer Goods, NSE Oil/Gas and NSE Lotus II indices which appreciated by 0.15percent, 1.07percent, 3.56percent and 1.02percent respectively while NSE ASeM closed flat.

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Thursday 04 April 2019

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United Capital Investment View

Equities tumble 2.1% in March

t was yet another bearish week to March 29 for the Nigerian equity market amid a sector-wide selloff that sent stock prices sharply lower by -0.3percent week-on-week (w/w), and 2.1percent in the month of March to settle at 30,833.5 points. Consequently, investors wealth suffered a further loss over the week as market cap i t a l i s at i o n d e c l i n e d by N18.4billion to settle at N11.6trillion while year-to-date (YtD) return closed the week at -1.2percent. Being the final week for companies to file their earnings with the Nigerian Stock Exchange (NSE), we saw a spree of releases from FCMB, FIDELITY, OANDO, TOTAL, FO and OKOMU, among many others. The Agricultural sector (-2.8percent) bore the brunt of the selling amid a sectorwide bearish trend; Banking ( - 2 p e rc e n t ) , I n d u s t r i a l Goods (-2percent), Oil & Gas

(-1.4percent), Consumer Goods (-1.3percent), and Industrial Goods (-1.4percent). Some of the top laggards for the week include; PRESCO (-7.7percent), FIDELITYBK (-13.1percent), ACCESS (-5.8percent), GUARANTY (-3.9percent), FCMB (-5.6percent), UBA (-1.3percent), ZENITHBANK (-1.1percent), DANGFLOUR (-12.1percent), PZ (-6.7percent), FLOURMILL (-5percent), NB (-4percent), GUINNESS (-2.4percent), WAPCO (-5.8percent), CCNN (-4.8percent), OAND O (-2.6percent). Market breadth - a proxy for investors’ sentiment - was underwhelming at 0.6x; 19 stocks advanced over the week against 36 decliners. This week, the scheme of merger between

DIAMOND and ACCESS is expected activated from April 1, 2019. In addition, we think the market is due for a recovery as the market remains attractively priced on a fundamental and technical basis. Nevertheless, sentiments could likely remain choppy in the absence of any event that could galvanize investors. Money Market: No activity in the primary market amid MPC’s surprise rate cut Overall market sentiment in the week to 29th March was dominated by the surprise outcome of the Monetary Policy Committee (MPC) meeting, early in the week. Overall liquidity level was constrained as the CBN floated wholesale FX auction on Monday and retail FX auction on Friday while holding off additional OMO auctions during the week, to ease the overall pressure on liquidity level. The major inflows into the system were OMO maturity worth N61.0bn, rental payment on FGN’s

2024 Sukuk bond (N8.24bn), DANGCEM’s commercial paper II redemption (N38.0bn) and retail FX refund on Thursday. C o n s e q u e n t l y , av e r a g e interbank funding rates (Open Buy Back and Overnight rates) declined to 10.3percent from 14.5percent in the week before. In the secondary market, average treasury bills yield declined w/w by 11bps to close at 13.6percent. We believed this was as buoyed by CBN’s refusal to float an OMO auction during the week while market participants try to digest the surprise rate cut by the MPC. This week, we expect the CBN to resume its OMO mop-up activities as Feb-19’s FAAC is anticipated to hit the system, in addition to the scheduled inflow from OMO maturity.

Also, the FG is scheduled to roll over its total maturing NTB obligations, worth N95.7billion at its bi-weekly primary market auction. Accordingly, we expect the tempo of these events to guide trading sentiments in the money market space. Bond Market: Bond bulls return on MPR reduction In the Bonds space, the Debt Management Office (DMO) conducted its Mar-19 bond auction during the week, offering N100.0bn – shared between 5-year (N40.0bn), 7-year (N40.0bn), and 10-year (N20bn) bonds. The fiscal authority’s stance was dictated by MPC’s action as stop rates across all tenors offered were adjusted to the new MPR of 13.5percent. Though total bid to cover ratio at the competitive auction came in at 1.5x, most of the demand was for the liquid 10-year note (Bid to cover ratio: 5.0x) while demand for the 5-year and 7-year were mostly from the non-competitive bidders. Thus, the DMO allotted the just 29.4percent of the total offered amount via competitive bid while satisfying the rest of its financing need via the non-competitive bids. Elsewhere, daily secondary market performance was largely tepid early in the week as players positioned for the primary bond market auction and priced-in the auction result, later in the week. On a w/w basis, the bulls outweighed the bears as average bond yields eased 24bps to settle at 13.9percent. In the secondary Eurobond market, we saw renewed selloffs on FGN’s Eurobond as prospects for weaker growth in the global space continued to fuel apathy for Emerging Market asset to safe-haven bonds. Accordingly, average FGN Eurobonds increased by 8bps to 7percent while the average yield for Corporate Eurobond trended lower by 29bps to 8.1percent amid renewed interest in soon to mature ZENITHBA and DIAMOND. This week, we believe players will remain cautious as they look to the stop rates at a possible OMO auction for clearer forward guidance. Meanwhile, we expect bond yields to trend slightly upward due to recent profit-taking sentiments in the market.

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

FSDH Research Insight

Investment opportunities in FGN Savings Bond

ave you ever considered how much money you could create from that your little N5,000? And most times, a lot of people blow it off, by spending it on frivolities. An adage says ‘a little drop of water makes a mighty ocean’. The Federal Government of Nigeria Savings Bond (FGNSB), just like a mutual fund, is an instrument the FGN uses to mobilize savings from low income earners for developmental purposes. In return for investing money in the FGNSB, the FGN, through the Debt Management Office (DMO), pays interest (coupon) to the investor every 3 months. In our previous report entitled ‘Policies to Increase National Disposable Income’, we noted that there is low savings in Nigeria compared with some other countries. The culture of low savings is one of the reasons why the interest rate on loans is high in Nigeria. In order to increase national savings, more people need to be encouraged to save their money in addition to providing an enabling environment to create jobs so that more people can earn income from which they can save and invest. Before the FGN introduced the Savings Bond in March 2017, the government had two major securities to borrow money

from the Nigerian public: FGN Bonds and Nigerian Treasury Bills (NTBs). The minimum amount required to invest in these two securities is now significantly higher than what most low-income earners can afford. However, with the introduction of the FGNSB, which requires a minimum investment of N5,000, more people are able to invest part of their income and earn returns from it. Although the FGNSB is listed on The Nigerian Stock Exchange (NSE), allowing investors who need money before maturity to sell and receive cash, it is not actively traded on the NSE. Therefore, mutual funds might be more attractive because investors may turn their investments into cash more easily than the FGNSB. The DMO, on behalf of the FGN, issues the FGNSB on the first week of every month and it is open for 5 working days. In order to buy the FGNSB, the investor must approach a DMOlicensed Stockbroker to act on his or her behalf. The Savings Bond has the full support of the FGN and, as a result, returns are always paid regardless of the state of the economy. Due to this, the FGNSB is one of the few types of financial investments in Nigeria that has minimal risk. This further shows that the FGNSB is a very good investment opportunity for

low-income earners who do not want to expose their investment to excessive risk. In addition, the FGNSB is also exempted from payment of all forms of taxes. There are two different kinds of FGNSB: the one that takes 2 years before the principal is paid back to investors (known as the 2-year FGNSB) and the one that takes 3 years before the principal is paid back to investors (known as the 3-year FGNSB). Fixed interests are paid once every 3 months (quarterly). Thus, for a 2-year FGNSB, interest is paid 8 times while interest is paid 12 times for a 3-year FGNSB. The average interest rates (coupon rates) on the 2-year and 3-year FGNSB are 11.20percent and 12.20percent respectively since inception, which are both higher than the savings account interest rate which is 4.13percent. Investment in FGNSB is another way to make your money work for you 24 hours a day non-stop, just the same way your investment in a mutual fund, which is managed by a professional fund manager, works for you 24 hours a day non-stop. Our illustration shows t h a t a n i nv e s t m e n t o f N100,000 in the FGNSB could grow to N1,582,382.48 in 25 years. This is possible if the interest earned and the maturing principal are reinvested at an interest rate of 11.20percent annually payable every quarter.

Thursday 04 April 2019

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Stanbic tops as 10 firms trade equities worth N290.14bn in 3 months Iheanyi Nwachukwu

recently released b ro k e r p e r f o rmance report of the Nigerian Stock Exchange (NSE) for a three month trading period (January 2 to March 29) shows that Stanbic IBTC Stockbrokers Limited led other stockbroking firms in the volume and value of transactions they executed. The report which showcases the top-ten (10) stockbroking in value and volume shows that only ten firms exchanged stock value at N290.14billion in the three months under review, which represents about 69.45percent of the total value of stock exchanged on the Nigerian Bourse in the same period. In volume terms, the top 10 stockbroking firms traded 23,658,473,607 units of listed stocks, representing 57.13percent of the entire stocks exchanged on the Bourse same period. Stocks worth N74.424billion were traded by Stanbic IBTC Stockbrokers Limited which

represents 17.81percent of the entire value exchange on the NSE. Rencap Securities (Nig) Limited followed with a record stocks trade value at N54.65billion or 13.08percent of the total value of equities exchanged on the NSE same period. EFCP Limited accounted for N40.378billion or 9.67percent; CSL Stockbrokers Limited (N33.620billion or 8.05percent); while equities valued at N20.149billion were exchanged through EFG Hermes Nigeria , which represents 4.82percent of the total value of stocks exchanged on the NSE in three months. FBN Quest Securities Limited (N17.19billion or 4.12percent); Chapel Hill Denham Securities Limited (N16.584billion or 3.97percent); Cardinalstone Securities Limited (N13.65billion or 3.27percent); Meristem Stockbrokers Limited (N9.894billion or 2.37percent); and A.R.M Securities Limited which accounted for stocks trade valued at N9.58billion or 2.29percent.

In terms of volume of transactions executed in same review period, Stanbic IBTC Stockbrokers Limited accounted for 4.227billion units, which represents 10.21percent of the total volume of shares traded on the Nigerian Bourse in the three months period. It was followed by Greenwich Trust Limited (3.801billion units or 9.18percent); CSL Stockbrokers Limited (2.778billion or 6.71percent); and Rencap Securities (Nig) Limited (2.554billion units or 6.17percent). In the same vein, Chapel Hill Denham Securities Limited exchanged 2.474billion units or 5.98percent of the total number of stocks exchanged same period; Cardinalstone Securities Limited (1.822billion units or 4.40percent); Morgan Capital Securities Limited (1.579billion units or 3.82percent); Fbn Quest Securities Limited (1.565billion units or 3.78percent); Meristem Stockbrokers Limited (1.487billion units or 3.59percent); and EFCP Limited (1.365billion units or 3.30percent).

Meristem Insight

Why you may spend more in retirement

ong before retirement, it is usually easier for people to live up to the standard they want, as much as their earnings support. However, as the years pass by, needs arise which necessitate expansion. Family expands, taste increases, and so do the bills. Earnings also increase as well; thus, depleted savings can be replaced. Activities such as vacations, entertainment and outings which take off large chunks from financial savings are limited to certain periods of the year due to work engagement. During retirement however, there is no more regular 9 to 5 (or perhaps 10) to while away time, no business meetings,

early morning flights, weekend work to meet up with client’s demand etc., and definitely no big salary at the end of the month. But there are still lots of energy and time! There is an additional five (previously working, now free) days ex weekend, virtually all the time in the world, to do more of what you did less while employed, thus creating avenue to be more engaged in activities that require spending. People usually tend to increase their standard of living as they advance in employment and, having enjoyed that for quite a number of years; it is believed that retirement should even be better.

This is usually not the case especially for someone who has not made adequate financial plans for retirement. This is because retirement benefits may not be high enough to match late employment lifestyle. The net effect on both investments and retirement savings during this period is therefore depletion. Fu r t h e r d i m i n i s h i n g retirement savings and benefits is the cost of healthcare. As people get older, the chances of spending more on healthcare are almost certain. Unexpectedly, some ailments developed require constant management, more frequent hospital visits, medical tourism etc.

FMDQ Learning

Introduction to Repurchase Agreements (Repos)

he February 2019 edition of the FMDQ Spotlight provided an overview of Infrastructure Bonds and its different elements - characteristics of infrastructure bonds, benefits of infrastructure bonds, amongst others. This month’s edition of FMDQ Spotlight is the first of a two-part series on Repurchase Agreements (Repos), and this edition will focus on the definition of repo, terminologies used in repo market, uses of repo, types of repo in the financial markets and the risks associated with repos. What is Repo? Repurchase Agreements, also known as repos, are defined as an agreement in which one party sells securities or other assets to a counterparty, and simultaneously commits to repurchase the same securities or assets from the counterparty, at an agreed future date or on demand. They are classified as money-market instruments and are usually used to raise short-term funds. The party that buys the securities acts as a lender while the seller acts as a borrower, using the securities involved as collateral for a secured cash loan at a fixed rate of interest. In some scenarios, the repurchase price will be greater than the original sale price, the difference effectively representing interest and sometimes called the repo rate. A repo is almost equivalent to a spot sale combined with a forward contract. The spot sale results in transfer of money to the borrower in exchange for legal transfer of the security to the lender, while the forward contract ensures repayment of the loan to the lender and return of the collateral of the borrower. The difference between the forward price and spot price is effectively the interest on the loan. The settlement date of the forward contract is the maturity date of the loan. The seller (borrower) gets to use the cash proceeds from the sale of the securities, whilst the buyer (lender) gets legal title to the securities received in exchange for the cash paid. The buyer holds the securities in the first instance as collateral. If the seller defaults on the repurchase, the buyer can liquidate the securities to recover the cash. For the party selling the security and agreeing to repurchase in the future, it is a repo, while for the party on the other end of the transaction, buying the security and agreeing to sell in the future, it is a reverse repo. Repo Terminology Term Definition Seller Collateral-provider, cash-taker (borrower) Buyer Collateral-taker, cash-

provider (lender) Purchase Purchase of asset at the start of a repo Repurchase Repurchase of asset at the end of a repo transaction Purchase Date Value date; the date on which cash and assets are exchanged Repurchase Date Maturity date; the date on which cash and assets are returned to their original owners Purchase Price Cash value paid by the buyer to the seller on the purchase date Repurchase Price Cash value paid by the seller to the buyer on the repurchase date; equal to the purchase price plus a return on the use of the cash over the term of the repo Collateral Security/asset sold in a repo on the purchase date Equivalent Collateral Security/asset repurchased in a repo by the seller on the repurchase date Repo Rate Percentage per annum rate of return paid by the seller for the use of the cash over the term of a repurchase agreement and included in the repurchase price Uses of Repo For buyers (lenders): A repo is an opportunity to invest cash for a period of time to receive collateral in exchange. It is a relatively safe and secure investment since the investor receives collateral, which has the effect of reducing credit risk. The attraction of the repo market for lenders is enhanced by the fact that the reduced credit risk on lending through repo means that their loans are subject to lower regulatory capital requirements, which improves the return on their cash. For sellers (borrowers): A repo is used to finance long positions, obtain access to cheaper funding costs of other investments, and cover short positions in securities. Types of Repos •Sell/buy-back– This is the spot sale and a forward repurchase of a security; two (2) distinct outright cash market trades. Sell/buy-backs are generally similar to a classic repo; however, a formal agreement is not put into place when executing a sell/buy-back transaction • Reverse repo - This is simply the same repo from the buyer’s viewpoint. Hence, the seller executing the transaction would describe it as a “repo”, while the buyer in the same transaction would describe it a “reverse repo” •Tri-party repo – In a triparty repo, a custodian bank or international clearing organisation, usually called a tri-party agent, acts as an intermediary between the two (2) parties to the repo.

The agent is responsible for the administration of the transaction including collateral allocation, mark-to-market and substitution of collateral •Securities lending – Securities lending is another type of repo. The purpose of this is to temporarily obtain a security for other purposes such as covering short positions. Securities are generally lent out for a fee, and securities lending trades are governed by different types of legal agreements than repos • Due bill/hold in-custody repo – This has grown less common in the repo market. The collateral pledged by the borrower is not actually delivered to the cash lender but is placed in an internal account held in custody by the borrower for the lender throughout the duration of the trade. Due to the high risk to the cash lender, these are generally only transacted with large, financially stable institutions • Whole loan repo – A form of repo where the transaction is collateralised by a loan or other form of debt obligation instead of a financial security. For example, they might use a mortgage loan instead of bonds Risk Considerations While repos are generally credit-risk mitigated i n s t r u m e nt s, t h e re a re residual credit risks. Despite the fact that it is essentially a collateralised transaction, the seller may fail to repurchase the securities sold, at the maturity date. In other words, the repo seller defaults on their obligation. Consequently, the buyer would keep the security and liquidate to recover the cash lent. The security, however, may have lost value since the outset of the transaction, as the security is subject to market movements. To mitigate this risk, repos are often over-collateralised as well as being subject to daily mark-to-market margining (i.e., if the collateral falls in value, a margin call can be triggered asking the borrower to post extra securities). The repo market has a significant role to play in the Nigerian financial markets. It is pivotal to the efficient working of financial markets by p rov i d i ng l i q u i d i t y , marketability and offering opportunities for the mitigation of credit risk. Its importance reflects the wide range and fundamental nature of its functions which include, provision of efficient source of short-term funding; provision of a secure and flexible choice of liquid investment; financing leveraged investors and covering short investors, amongst others.

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Monday 04 April 2019

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As Emefiele redefines the stakes SEGUN ADAMS

former Chair of the US Federal Reserve Bank, Alan Greenspan (from 1987 to 2006), discusses in his compelling book, “The Age of Turbulence: Adventures in a New World,” economics, capitalism and other economic systems, current issues in the global economy and future issues that may face the global economy. Greenspan, who held the second-longest tenure in that position behind William McChesney Martin, came to the Federal Reserve Bank from a consulting career. Although he was subdued in his public appearances, not unlike the Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, saturation media coverage raised his profile to a point that several observers curiously likened him to a “rock star”. Rather conversely, the Nigerian media has certainly not extended comparable favour to the selfeffacing CBN boss Emefiele. He is not a ‘rock star’ but significantly neither craves that quirky status in a third-world milieu that hungers after economic redemption, through proactive and circumspect regulatory governance that promotes monetary stability and a sound operating financial environment. As the apex monetary authority established by the CBN Act of 1958 which commenced operations on July 1, 1959, the major regulatory aims of the Bank includes to maintain the external reserves of the country, promote monetary stability and a sound financial environment and to act as a banker of last resort. In this strategic turf of central banking, the establishment must adroitly read and proactively react to a laundry list of fluid scenarios which include geopolitical and trade tensions that unquestionably impact the global trade dynamics. These strains often spawn threats to macro-economic stability and even the monetary policy footing of the nation. For instance, a combination of factors including financial market volatilities, trade war between the US and key allies, continuing monetary policy normalisation by the US, BREXIT, the termination of the European Central Bank’s (ECB) asset purchase program in December 2018 and the slowdown in the Chinese economy, further heighten uncertainties for the global economy in 2019. Consequently, global growth has been downgraded by the IMF to 3.5 per cent in 2019, from 3.7 per cent in 2018. To manage this seismic environment requires a bold, well-informed and experienced administrator on duty. Toss in the circumspect engagement with aggravations seeded by rising tendencies and incidences

of protectionism, new nationalism and anti-globalisation - especially in the western hemisphere - then it’s clear that greenhorns have no business in the apex bank’s command room. It is to this complex, fluid turf of central banking that Emefiele, brings over three decades of both theoretical and practical experience from top-flight academic and hands-on banking turfs to. In a change regime, Emefiele has admirably deployed governance skills groomed in the stern, high-octane, financial industry, to effectively drive CBN’s command room, these past five years. It’s then little wonder why a finance industry icon, Jim Ovia, the founder of Zenith Bank Plc, proclaimed recently that Emefiele is the best CBN Governor the country has ever had. His words: “As the present governor of the Central Bank of Nigeria, Godwin Emefiele’s performance and current results arguably puts him as the best central bank governor in the history of Nigeria.” Ovia made this statement while accepting honorary degree of doctor of business administration at the 47th convocation of the University of Nigeria (UNN). Ovia and Emefiele are alumni of the UNN. To critical industry stakeholders, this unassuming banking sage certainly deserves kudos for keeping the faith and demonstrating uncommon commitment and professionalism in a particularly challenging period of the national journey. Emefiele’s track record of unambiguous performance at the nation’s apex bank stands him out as the horse to back in the highintensity apex finance sector. Logic and reason reinforce this position. As of June 2015 when Emefiele assumed office, Nigeria’s reserves had fallen from a peak of US$62 billion in 2008 to only US$37 billion. But following the sharp drop in crude oil prices, the nation experienced plummeting of the CBN’s monthly foreign earnings, from as high as US$3.2 billion to levels of as low as US$700 million monthly. To avoid further depletion in the reserves, the CBN took a number of countervailing actions including

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Godwin Emefiele, CBN governor

the prioritisation of the most critical needs for foreign exchange. In this regard, and in order of priority, it decided to provide the available but highly limited foreign exchange to meet important needs

Emefiele’s track record of unambiguous performance at the nation’s apex bank stands him out as the horse to back in the highintensity apex finance sector

such as Matured Letters of Credit from Commercial Banks, Importation of petroleum products, Importation of critical raw materials, plants, and equipment, Payments for School Fees, BTA, PTA, and related expenses. Emefiele’s actions rued many feathers and strident criticisms, both local and foreign on the grounds that it undermined the tenets of free market. But who can deny that Emefiele’s uncommon determination driven by patriotic zest and a stubborn refusal not to be distracted seems to have won the day? Even those who called for his ouster are quietly acknowledging his successes and achievements despite a tumultuous economic environment. Over the intervening period, it is heartening to note that these policies have yielded positive results. In particular, the CBN managed to stabilise the exchange rate around

February 2015, thereby creating certainty for both household and business decisions. It largely eliminated speculators and rentseekers from the foreign exchange market. Today, the country’s external reserves are still robust and able to cover more than six months of imports as against the international benchmark of three months. The domestic production of items prohibited from the foreign exchange market is picking up nationwide, thereby creating more jobs for many more Nigerians. The demand for foreign exchange by mostly domestic importers had risen significantly. For example, the last time the nation had oil prices at about US$50 per barrel for an extended period of time was in 2005. At that time, the average import bill was N148.3 billion per month. In stark contrast, Nigeria’s average import bill for 2015 was over N1 trillion monthly, though oil prices were now less than US$60 per barrel. The net effect of these combined forces unfortunately was the depletion of the na-

tion’s foreign exchange reserves. The foreign exchange reserves had declined to around US$25.4 billion. To avoid further depletion in the reserves, the CBN under the nimble guidance of Emefiele took a number of countervailing actions including the prioritisation of the most critical needs for foreign exchange. Findings showed that as part of its long-term strategy for strengthening the Nigerian economy, the Bank established specific initiatives to resolve the underlying factors goading challenges to longterm GDP growth, economic productivity, unemployment and poverty that had pervaded the economy over the past decades. Hence, the CBN took measures to increase credit allocations to pivotal productive sectors of the economy. This was with a view to stimulating increased output in these sectors, creating jobs on a mass scale and significantly reducing import bills. These targeted interventions have so far impacted such sectors as agriculture,

power, micro, small and mediumscale enterprises (MSMEs), workers’ salary/pensions assistance fund, infrastructural assistance for states, emergency fiscal spending, improving foreign exchange supply and financial inclusion. For instance, the CBN’s Anchor Borrowers’ Programme (APB), a financing model for small-holder farmers is part of efforts to boost the nation’s rice production, supply, distribution and consumption value chain. APB has empowered thousands of rice farmers in the country, while working handin-hand with the Rice Farmers Association of Nigeria (RIFAN) to reach the farmers. The CBN in January 2018, said it was determined to make Nigeria one of the largest rice producers and exporters in the world, making her less dependent on petroleum money. What’s more - the DirectorGeneral, Africa Rice Center, Benin Republic, Dr. Harold Roy-Macauley, recently disclosed that with a production of four million tonnes a year, Nigeria has overtaken Egypt as the largest rice producer in Africa. The latest development is a testament to the federal government and CBN’s efforts to vastly improve the production of rice in the country.According to RoyMacauley, Egypt was producing 4.3 tonnes annually but production has reduced by almost 40 percent this year, attributed to the Egyptian government decision to limit cultivation to preserve water resources. Recently, Emefiele, during a meeting with textile manufacturers and cotton farmers, announced the inclusion of textile products on the long list of items restricted from foreign exchange for import into the country. The restriction order, which took immediate effect, has brought the number of such items to 43. It would be recalled that earlier this year, cement and tomatoes paste were added to the list. His words: “Effective immediately, the CBN hereby places the access to FX for all forms of textile materials on the FX restriction list. Accordingly, all FX dealers in Nigeria are to desist from granting any importer of textile material access to FX in the Nigerian foreign exchange market. In addition, we shall adopt a range of other strategies that will make it difficult for recalcitrant smugglers to operate banking business in Nigeria.” He explained to his rapt audience why textile products had to be included on the forex restriction list. His words: “Today, Nigeria currently spends above $4 billion annually on imported textiles and ready-made clothing.” With a projected population of over 180 million Nigerians, clearly the needs of the domestic market are huge and varied, with immense prospects, not only for job creation, but also for growth of the domestic

textile industries. A quick example that highlights the potential of this local market is the need to support the provision of uniforms and clothing apparel for school students, military and paramilitary officers as well as workers in the industrial sector. It’s worth recalling that at the annual bankers’ dinner, last December, in Lagos, Emefiele succinctly illuminated the scope of the challenges and the concurrent measures deployed to rein in the nation’s economic drift in a highly volatile and often disruptive global environment. According to the CBN boss, a number of recent developments have noticeably impacted outcome and outlook especially in emerging market economies, including Nigeria. These include rising global interest rate due to sustained monetary policy tightening stance in the United States and other advanced economies. His words: “This has consequently heightened fragilities, imbalances and vulnerabilities in emerging markets. The Fed fund rate was raised steadily to 2.25 percent in September 2018 with a forward guidance for one more hike before the end of 2018 and three more in 2019. “Similarly, the Bank of England raised its policy rate in August 2018 for the first time since 2008. Some emerging markets economies, including India, Indonesia, Mexico and Turkey have also raised interest rates in response to that shock.” Clearly, as a consequence of these rate hikes under reference by Emefiele, Nigeria witnessed significant outflows of capital from emerging markets, which led to immense pressures on exchange rates, FX reserves, and sharp losses in the capital markets. Even

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Clearly, as a consequence of these rate hikes under reference by Emefiele, Nigeria witnessed significant outflows of capital from emerging markets, which led to immense pressures on exchange rates, FX reserves, and sharp losses in the capital markets

Argentina, Brazil, South Africa, Turkey and Russia have depreciated their currencies significantly due to this shock. More, there have also been uneven fluctuations in the international prices of commodities including crude oil, gold, cocoa, etc. Though crude oil prices are currently rebounding, the prices of gold and agricultural commodities are declining. A critical dimension shaping this tumult is that the global economy has experienced profound geopolitical and trade tensions. And this bears repeating. As a consequence of these developments, Nigeria’s macro economy experienced significant impulses over the last few years which triggered the country’s economy to nosedive into recession with inflation spiraling to nearly 19 percent. The Naira-Dollar exchange rate hit peaks never seen before. Both unemployment and poverty also deteriorated. These adverse outcomes also revealed the country’s most worrying structural

fault lines, namely, the persisting sole dependence on oil and the inordinate size of the nation’s imports. For dogged Emefiele who believes that hope is not a plan, a clear, studied action was needed to be taken by the central bank to deal with the two identified factors that accentuated the nation’s vulnerability to these global shocks. These included diminished total factor productivity in Nigeria due to a low and inadequate infrastructural base and Nigeria’s overdependence on imports for both capital goods and domestic consumption. The Emefiele-led CBN deployed seven well-thought-out measures to manage the negative, inescapable vagaries of being an evolving member/player in the global village square. These included tweaking the extant monetary policy, rejigging the external reserves management, stabilising the exchange rate management, introducing the naira-renminbi currency swap, given the growing importance of the Chinese currency in global markets, interventions in the development financing sector, credit allocation and heightened risk-based supervision. Informed analyses show that these CBN policies and initiatives are indeed yielding positives and are expected to continue until the underlying imbalances within the Nigerian economy have been fully resolved. As of March 25, the Foreign Exchange Reserves hit about $44 billion, for the first time in 2019. These interventions by the CBN flows from total commitment and passion of a disciplined turf-player who shares the vision of the administration he serves. Clearly, strengthening the economic recovery process in Nigeria is not a picnic. It is an imperative that the project be guided by a patriot who believes in Nigeria, who has unflinching faith in the ingenuity of Nigerians and who holds dear, the promise of the nation’s shared future. Godwin Emefiele, currently in the saddle, is such patriot.

BUSINESS DAY

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Thursday 04 April 2019

Spending Trends

COMPANIES

Consumer goods firms record worst results in 4 years BALA AUGIE

he fourth quarter performance of consumer goods firms is the worst since the recession period as a sluggish economy and decrepit infrastructure continues to hinder them from maximizing shareholders’ wealth. The disappointing results sent a predawn chill down the spine of investors who have invested their hard earn cash in these stocks. But analysts who have been paying attention to the industry in last five years will not be surprised that earnings are going up in flames because companies have been recording slow growth in sales since the start of 2018. Analysis of the fourth quarter financial statement of the largest companies listed on the floor of the bourse showed that aside receding sales, deteriorating margins, and rising debts, free cash flows are shrinking. For the year ended December 2018, Dangote Flour Mills Plc posted a loss of N1.15 billion, from a profit of N15.13 billion the previous year; the first loss since 2015 when businessman and Africa richest man Aliko Dangote repurchased the miller from South African food giant, Tiger Brands. Dangote Flour Mills’ gross

profit margin fell to 9.11 percent in December 2018 from 29.62 percent the previous year while gross profit fell by 65.43 percent to N10.24 billion as at December 2018. Similarly, operating profit margin otherwise known as Earnings before interest tax margin (EBIT) reduced to 0.35 percent in December 2018 from 13.21 percent as at December 2018 while operating income dipped by 97.58 percent to N398.34 million. There are more debts in the capital structure of the miller as debt to equity (D/E) ratio increased to 187.57 percent in December 2018 from 185.89 percent the previous year. The company operating income can no longer cover interest expense as times coverage ratio stood at 11 times operating income, lower than the 5.79 times recorded the previous year. Nigerian Breweries Plc’s net income dipped by 26.48 percent to N9.98 billion in December 2018 from N13.58 billion the previous year while revenues were down 5.79 percent to N324.38 billion as at December 2018. The largest brewer by market capitalization in Africa’s largest economy has locked horns with International Breweries and Guinness Nigeria in a beer war that stoked intense competition. Nigerian Breweries’ gross profit margin fell to 39.13

percent in the period under review from 41.67 percent the previous year while gross profit dipped by 11.56 percent to N126.90 billion as at December 2018. Operating profit margin or EBIT margin fell to 11.39 percent in December 2018 from 16.58 percent the previous year while operating profit fell by 35.31 percent to N36.95 billion as at December 2018. Dangote Sugar Refinery Plc’s net income was down by 44.75 percent to N21.97 billuion in the period under

review as against N39.78 billion the previous year while sales dipped by 26.44 percent to N150.37 billion as at December 2018. Smuggling and influx of cheap products have been hurting revenue, but the largest producer of the sweetener continues to intensify its Sugar Master Plan with a view to increasing its share of the market. As a result of receding sales, net profit margin fell to 14.65 percent in the period under review as against 19.46

percent the previous year. Nascon Allied Nigeria Plc’s net income dipped by 17.28 percent to N4.42 billion in December 2018 from N5.34 billion as at December 2017 while sales reduced by 4.78 percent to N25.76 billion as at December 2018. Nascon’s operating profit margin reduced to 23.23 percent in December 2018 from 28.18 percent the previous year while operating profit fell by 21.57 percent to N5.98 billion as at December 2018. Flour Mills of Nigeria Plc’s

net income reduced by 40.39 percent to N7.89 billion in December 2018 from N13.24 billion as at December 2017 while revenue dipped by 6.28 percent to N400.64 billion the previous year. Operating profit margin fell to 6.81 percent in the period under review from 10.33 percent the previous year while operating profit dipped by 38.24 percent to N27.29 billion the previous year. Analysts are of the view that consumer goods firms will continue to falter so long as there is no improvement in the living standard of Nigerians. Of course Nigerians are getting poorer and they are not motivated to open their purse springs due to high unemployment rate and hike in transportation fares. Nigeria’s unemployment rate increased from 18.8 per cent in the third quarter of 2017 to 23.1 per cent in in the third quarter of 2018, the National Bureau of Statistics (NBS). According to the World Bank, 87 million people are living below $1.98, which is why they cannot patronize consumer goods. A report by Steve Hanke, an economist from John Hopkins University in Baltimore, United States, has listed Nigeria, Venezuela, Iran, Brazil and others among the first 10 miserable countries in the world with Nigeria assuming the sixth position.

DEAL

Ahead of IPO listing, MasterCard to invest $56m in Jumia OLUFIKAYO OWOEYE

astercard has agreed to invest $56 million in a private placement ahead of Jumia’s planned initial public offering in New York. The U.S. credit card giant joins shareholders such as French drinks maker Pernod Ricard SA, which bought a 5.1 percent stake for 75 million euros in December, and largest investors MTN Group and Rocket Internet SE. The e-commerce platform leveraging the rapidly

growing internet penetration on the continent and improved activities in the financial technology space has set a price range of $13 to $16 per share ahead of an initial public offering (IPO) on the New York Stock Exchange The online retailer will offer 13.5 million American depository shares for purchase, according to an updated version of its IPO filing with US regulators, and could raise as much as $216 million, depending on investors’ appetite. If traded at the mid-point of that price range, for instance, Jumia’s valuation will be pegged around $1.1

billion. Th e t w o c o mp a n i e s first partnered in 2016 to launch Mastercard Payment Gateway Solutions and JumiaPay, the payment service of the Jumia platform. Under this new agreement, the two companies would look to push Mastercard’s brand and deepen its presence across the continent. Also, the companies agreed to accelerate the adoption of electronic payment platforms between merchants and consumers in Africa. Sacha Poignonnec, CoChief Executive Officer, Jumia, said the new partnership highlights the strategic

synergies between the two companies, as it seeks to develop the payment ecosystem and drive financial inclusion across Africa “We are delighted to strengthen our existing partnership with Mastercard and consolidate Jumia’s position as the leading ecommerce platform in Africa,” he said Elcin Yanik, Executive Vice-President, Market Development, Middle East and Africa at Mastercard, noted that the partnership with Jumia underpins Mastercard’s commitment to transforming Africa’s digital payments landscape. “In recent years, we have

invested heavily in technology, people and local markets, and have seen tremendous growth in online payments in particular. We look forward to working with Jumia to enhance the region’s digital infrastructure and ecosystem,” she said. A recent report by McKinsey Global Institute has projected that online shopping in Nigeria and other African countries could account for up to $75 billion in retail sales by 2025. The report revealed that e-commerce and Financial Technology (FinTech) represented two of Africa’s biggest growth opportuni-

ties, with the mobile technology market driving the two sectors. “More than half of urban African consumers already have Internet-capable devices and this number is increasing. Online shopping in Africa could account for up to $75 billion in retail sales by 2025,” the report said. The New York Stock Exchange (NYSE) has approved Jumia to list under its depository shares on the under the trading name “JMIA.” Morgan Stanley, Citigroup Inc, Berenberg and RBC Capital Markets are advising Jumia on the IPO deal.

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CONSUMER SPENDING

Shrinking consumer wallet forces Biscuits makers to peg price OLUFIKAYO OWOEYE

espite the challenging operating environment, the Nigerian consumer market remains an attractive space for investors. In recent times, there has been increased activity in the food and ready-to-eat segment of the consumer goods market. In this market segment, biscuits, a readyto-eat snack, which are widely eaten among young children and even adults, have continued to remain relevant. Nigeria is home to several local and international manufacturers of biscuits. Interestingly, the local manufacturers are holding their own in the struggle for market share, as they easily have command of over 50 percent. KPMG report puts the size of the Nigerian biscuit segment at US$617 million having grown at a Compound Annual Growth Rate (CAGR) of 16 percent in the past five years. Annual production is estimated at 152,490 tons, with an estimated annual consumption put at 500,000 tons. Operating margins in the

segment remain thin, given the volume-driven nature of the business. Price elasticity of demand is also high, owing to the wide availability of substitute products, and aggressive competition among market participants. Hence, biscuit manufacturers are unable to pass on significant increases in the cost of production to the final consumers. In spite of the various challenges and the shrinking wallet of consumers, the outlook for the Biscuit market is very positive, driven by product affordability, ease of purchase and Nigeria’s large and growing population. The increase in the number of retail stores and supermarkets around major cities has led to increased visibility of various biscuits brand. Mrs. Adaeze, a retailer, while giving the reason for the relatively low prices of biscuits, noted that makers of Biscuits have come to understand that biscuit is a convenient snack, which people take to the office, take with tea and pack in children’s snack packs and any attempt to increase price will see consumers switch loyalty to cheaper brands. She, however, noted that the introduction of Pure Bliss brand into the market has revived low and medium

income earners’ interest in biscuits. Confirming this assertion, a hawker at Ojota, Ibrahim, noted that Pure Bliss sells even faster than sausage rolls these days. “I used to hawk sausage roll inside traffic before now but people going to work or coming from work love this Pure Bliss Brand because it is very sweet,” he said. The market has also witnessed huge inflows of foreign investors into the

country ready to benefit from the huge potentials in the Nigerian market. The major local and international biscuit manufacturers in Nigeria include Beloxxi Industries Limited, Niger Biscuit Company Limited, Yale Foods Limited, Newbisco Limited, Major Biscuit Company, Global Beverages Nigeria Limited, Nasco Food Nigeria Limited, Ok Foods Limited, Julie’s Biscuit Nigeria, A&P Foods Limited and Deli

Foods Limited. The KPMG report ranked Sumal Foods Limited, makers of the Yale brand, with about 37% market share, trailed by Ok Foods-makers of Pure Bliss Biscuits with 20%, A&P Foods with 14%, Niger Biscuit Co Ltd with 5%, Deli Food and Beloxxi Industries, with 9% and 4% respectively. Sadly, Traditional brands such as the Okin brands are nowhere to be found. Harsh business environment, in-

tense competition from new entrants into the market, led to the eventual collapse of the Kwara-state based Okin Biscuit factory. Beloxxi, makers of the Cream Crackers brand, had in 2017 received an investment of about $80 million from a group of private equity investors led by rock star, Bob Geldof. Also, United Biscuits, one of the world’s largest biscuit market and makers of the Mcvities brand, purchased a stake in A&P Foods in 2014, one of the leading biscuit manufacturers in Nigeria. A&P Foods produces biscuits from Ikeja, Lagos and is owned by the Assudamal Group. The company owns the Haansbro biscuits brand, and also produces chewing gums, boiled sweets, and toffees. Olam also acquired Titanium Holding Company SA (owners of OK Foods) in 2012. While in 2010, the Tiger Brands, a South African company, acquired a majority stake in Deli Foods. Foreign manufacturers are also not left out in the acquisition race, Italian chocolate giant Ferrero announced plans to buy the biscuit and snack business-arm of American Kellogg Company for $1.3 billion.

company

Itel Mobile boost market, launches new P33, P33Plus mobile devices Gbemi Faminu & David

tel mobile, producers of leading smartphones has unveiled two new devices to boost its market target which are the Itel P33 and P33 Plus. Speaking at the product launch held recently, Oke Umurhohwo, Marketing Communications Manager at Itel mobile Nigeria said “with the newly unveiled Itel p33 and P33 plus, Itel mobile is reiterating its commitment to providing best

in class smartphones for everyone that offers more value with cutting edge technology, features and style, but at a very budget friendly price. The Itel P33 is extending the reputation of an exceptional value proposition and we are confident this device will not just raise the bar but will satisfy our consumer’s need of a longlasting battery to the fullest”. According to Tope Falana Itel Nigeria training director, he said Itel has created legacies from the P32 Itel mobile device which is being updated for more cus-

tomer satisfaction. Speaking on the newly launched devices, he said they are manufactured with long battery life and a pioneered artificial intelligence power master to help optimize battery life suitable for as long as 350 hours standby time. The devices also have improved camera for better image capture as both phones come with a front and rear 8.0MP dual camera and a flash. Furthermore it is the first Itel smartphone to debut with a 16GB ROM and supports an expandable microSD

card up to 32GB. It is also equipped with a multifunctional fingerprint sensor and face unlock system for easy and secure access to the phone. For variety options the devices come in the blue, black and champagne gold

Analyst: Bunmi Bailey Graphics: Fifen Eyemisanre Famous

colour. While the devices will be made available for sale from the 1st of April, the recommended retail price for the P33 and P33 plus are N24,000 and N26,300 respectively. Kevin Dang, manager Itel Mobile business West Africa

region 1, said the company is focused on providing quality and affordable products for consumers and in 10 years of its existence, Itel has been able to produce unique devices while growing its global presence in the device industry he continued that Itel Mobile will launch more products before the end of 2019 to increase consumer satisfaction. Itel Mobile is a reliable mobile phone brand aimed at providing budget friendly mobile communications technology to everyone.

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Thursday 04 April 2019

BUSINESSTRAVEL

Favourable legal framework, key to developing travel, tourism sector – Experts Stories by IFEOMA OKEKE

s Nigeria seek means to grow its economy beyond dependence on oil generating revenues, experts in the travel and tourism sector have identified lack of favourable legal framework as the missing link to drive the needed change in the industry and stimulate a competitive business environment. Bankole Bernard, the National President, National Association of Nigeria Travel Agency (NANTA), disclosed this at the 43rd Annual General Meeting (AGM), with a theme, “Developing Strategic Policies for the Sustainability and Growth of the Travel and Tourism Industry” held in Lagos recently. Bernard said that it is worthy to note that their bill has moved so fast to the point of consideration for a third reading at the National Assembly. “In the last one year, the emphasis has been mainly on advocacy and enactment of our legislative bill (NANTA ACT) at the lower chamber of Assembly and we hope it is concluded within the shortest possible

time.” However Bankole commended the Nigerian Civil Aviation Authority (NCAA) on the fight to reduce fake agencies in the business, adding that with the introduction of New Generation IATA Settlement System (NewGenISS), by the global body of travel agency, which gives flexibility in payment, has improved their efficiency. According to him, “We have closely worked with the regulatory body NCAA to eliminate counterfeit

travel agencies amongst our honourable members. This singular act has reduced the number of counterfeit travel agencies around but has not completely eliminated them. “This new system is the replacement of the old BSP (Billing Settlement Plan) which operated in Nigeria for 10 years. We must say at this point that the New Gen ISS is a huge step in ensuring a simpler and faster way of doing a travel agency business in Nigeria,” he noted. In a goodwill message, Folarin

Coker, the director-general, Nigerian Tourism Development Corporation (NTDC), said that tourism in Nigeria has only received lip service despite the huge potential it can offer in the diversification drive of the nation and lacks the legal framework to turn around the sector. “The new law will allow everybody to operate their business as it will be easier to work, without the right law no right tax. It will create an enabling environment for ease of doing business”

Obiano, NUATE hail Air Peace over 3rd Boeing 777 aircraft

nambra State Governor, Willie Obiano and the National Union of Air Transport Employees (NUATE) have congratulated Air Peace on the delivery of its third Boeing 777 aircraft. The aircraft, which landed at the Murtala Muhamed International Airport, Lagos on March 20, is part of the four Boeing 777s Air Peace recently acquired for its soon-to-start longhaul operations to Sharjah, Dubai, Johannesburg, London, Houston, Guangzhou and Mumbai. A statement signed by Don Adinuba, Anambra State Commissioner for Information and Public Enlightenment, quoted Obiano as describing Air Peace as Nigeria’s fastest growing

and most ambitious airline in history. Expressing satisfaction with the number of aircraft the airline had acquired since it commenced flight operations in 2014, the governor said: “Of particular interest to both the flying public and the government is its safety record which is excellent owing to the extra mile it goes to not only maintain its machines to the highest global standards but also make its technical crew regard safety as the highest pursuit in the aviation industry”. He commended the professionalism demonstrated by Air Peace staff in their flight operations, saying the airline’s flight services were comparable to those of its international counterparts.

Obiano urged the federal government to support the airline with a flag carrier status, insisting: “This is a more pragmatic step to take than the rumoured current attempt in some quarters to make the President Muhammadu Buhari administration establish a stateowned airline, despite the terrible record of Nigeria Airways and the government’s wise suspension of Nigeria Air last September”. He added: “There is no way any state-owned or promoted airline can enhance Nigeria’s reputation in the world that Air Peace is not doing and will continue to do with greater efficiency and results”. For its part, the National Union

of Air Transport Employees said the airline’s third Boeing 777 aircraft would transform the experience of the travelling public. In a congratulatory letter dated March 28 and addressed to Allen Onyema, Air Peace chairman/chief Eexecutive officer, Ben Nnabue, the President of NUATE, said: “We strongly believe that this new vessel will usher in a luxury experience to the travelling public as safety is already guaranteed.” Air Peace has so far acquired four Boeing 777 aircraft, three of which have been delivered. Since it commenced operations in 2014, the carrier has increased its fleet size to a total of about 37 aircraft.

Ethiopian wins prestigious ‘African Champion of the Year’ award

thiopian Airlines has won the prestigious African Champion of the Year Award on March 26,2019 at the on-going Africa CEO Forum in Kigali which is being attended by more than 1,800 delegates. The Africa CEO Forum is the leading international conference dedicated to the private sector in Africa and hosts the continent’s top CEOs, international investors, experts and high-level policy makers every year. Every year, the Africa CEO Forum Awards recognize the companies and investors that have shaped the year in Africa, during the Africa CEO Forum Gala Dinner. While receiving the awards, Tewolde GebreMariam, group Chief

Executive Officer of Ethiopian Airlines, said, “We are honored to be awarded as African champion. Thank you very much for the strong

vote of confidence that Africa has given us even at the most challenging time in our history. We are still mourning for the loss of the lives of

our esteemed passengers and colleagues at the tragic accident on ET 302 on 10 March 2019. “My sincere sympathy and heartfelt condolences for the families of the victims, the country and the continent of Africa. But we are very grateful to the traveling public which have stood with us in such difficult time. “The vote of confidence is unbelievable. We have never seen such kind of large number of vote of confidence for one of the strongest brands in Africa. Thank you all for all the support you have given us and continue to give us. Together, we will make Africa great and we will put our continent in its right place in the global stage.”

On his part as the guest speaker, Olusegun Runsewe, the directorgeneral, National Council for Arts and Culture and President World Craft Council, Africa Region, called for adequate marketing and promotion of the nation cultural products. “The private sector needs to be assisted to grow through funding supports, loans and concessionary interest rate, this will greatly assist the critical stakeholders in the industry to expand and strengthen the scopes of their business” Speaking earlier at the occasion, Jokotola Pelumi, the former speaker of the Lagos State House of Assembly tasked NANTA to always create value for the industry. He said tourism industry has not fared well, stressing that it is not supposed to be that way. The former Speaker pledged commitment to the success of NANTA in area of legislation, active support for its activities. The AGM which attracted key players in the travel and tourism industry in Nigeria featured presentation of awards to deserving personalities who have contributed immensely to the growth of the industry including Runsewe, Coker and others.

Airbus signs 300 aircraft order from China

irbus has signed an agreement with China for the purchase of 300 aircraft in a deal worth over 30 billion dollars. The agreement with the China Aviation Supplies Holding Company covers the purchase by Chinese airlines of 290 A320-family aircraft and 10 A350s. The deal was signed in Paris during a visit by Chinese President Xi Jinping. No breakdown of the order was given, nor the airlines that would be taking the aircraft. It was also not revealed whether the headline figure includes the firming up of previous commitments or was a completely new order. Guillaume Faury, Airbus commercial’s president said the company’s “expanding footprint in China demonstrate our lasting confidence in the Chinese market and our long-term commitment to China and our partners.” Airbus forecasts that China will need around 7,400 new passenger and freight aircraft during the next 20 years, representing over 19 percent of the world total demand for commercial planes. The current fleet of Airbus aircraft operated by Chinese carriers is 1,730 aircraft, with 1,455 A320-family, and 17 A350-family planes in service.

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Corporate Social Impact

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BUSINESS DAY

Onuwa Lucky Joseph (08023314782) Editor.

The business of giving The feature hereunder is from Black Enterprise. And it’s for helping managers in charge of CSR at Nigeria’s corporates. ROSE STUCKEY KIRK, currently Chief Corporate Social Responsibility Officer for Verizon, gave this interview five years ago, but it’s still as relevant today as it was then with regards to choosing what areas of intervention to play in and how to measure the impact your company is delivering.

Where do discerning customers go?

SONIA ALLEYNE

ONUWA LUCKY JOSEPH

s president of the Verizon Foundation, Rose Stuckey Kirk will admit to reluctantly using the term philanthropy in describing her work with the $76 million charitable organisation. Having spent 26 years in the telecommunications industry, Kirk who is also vice president of Global Corporate Social Responsibility and has held leadership positions in sales and customer relations knows that although it’s important to link philanthropic efforts back to the bottom-line goals of a company, an organization’s good deeds also have to show measurable benefits in the communities it serves. For Verizon, those teams are focused on underserved communities in the areas of education healthcare and energy management. And for Kirk, all philanthropic efforts must be supported by business principles to ensure their success Through partnerships with organisations connected to it targeted communities, Verizon has been able to give technology that has reduced costs and increased efficiencies of its partners as well as improved conditions for its partners’ constituents. Using Verizon technology the Children’s Health Fund projects the reduction of administrative costs buy 600 hours per year at all 6 of its programme sites, giving it an increased capacity to provide an estimated 750 to 1000 wellness visits annually. “I sometimes hate to use the word philanthropy because our model is all about how do we manage this place like we manage our business?” Kirk explains. How do we look at our assets and how can we measure and drive results? My staff is very different than most corporate philanthropy shops. I’ve staffed my organisation with people who not only have the background in skills, but they have the business capability.” Kirk discusses why social responsibility for companies requires more than just giving back You say that corporate philanthropy has changed even over the last 3 to 5 years? What companies have realised is the economies of our nation, whether they are domestic or international, revolve around the well-being of our citizenry. And if citizens are struggling with issues of education, or healthcare, and they are not in a position where they can propel themselves forward, it will be very difficult for companies to be successful. You cannot separate the role of a company when it comes to driving revenue and the role of a company when it comes to its obligations to the community in which it serves. Think about Katrina. Who was the first to get to those citizens of New Orleans? It was not governments it was companies and corporations that put their resources into place and were

the first to respond. When you look at Japan and what happened with the tsunami, it was companies that began to do disaster relief campaigns to provide millions and millions of dollars in relief aid. Why did the foundation decide to focus on the three areas of education, healthcare, and energy? In the US we are behind when it comes to STEM education. So, how do you propel kids forward and give them an opportunity to compete in an increasingly technological environment if they are not given the basics in school? We realised that we could have an impact. Seven out of 10 Americans die from a chronic disease every year in our country, and chronic diseases - heart disease, lung disease, diabetes, asthma – all of that is manageable. Technology is a critical piece in how individuals can manage their healthcare. Then reports show that low income households spend a significant portion of their income on energy. We made a decision that we would focus on those three areas and we would bring all of our network connectivity, all of our partnerships with devices and smartphones and biometric devices to help address those issues. What were your thoughts about how you could make the foundations work more effective? Initially I saw an opportunity to become more proactive and build our own programmes as opposed to being so heavily reactive to funding requests. Over time, I evolved this approach to aligning our work in a manner that took full advantage of both our philanthropy and Verizon’s technological assets – our devices as superior network connectivity, our HIPPA-compliant cloud, our M2M solutions and our various partnerships.

Your programs have delivered very specific results. What drives their success? Our programs are really metric-driven. In our education program we adopted underserved schools across the nation. They are rural, they are urban, they are suburban. We went into the schools and took a look at the science and math classes. We recognized that we could train teachers on how to use smart phones, tablets, and technology in the classroom, change the way that they teach and the way students learn. And we put very specific metrics in place. In the short term we wanted to know if teachers were more efficient in how they used the technology, if students were more efficient in how they used the technology, if students were more efficient in how they were used in the classroom. In the midterm (6 months to a year), we wanted to see an impact on students’ test scores and we {compared them with} students who are in like schools who don’t have {our} program. And then in the long term as these kids graduate and go off to college, we want to understand if they are choosing to major in the STEM subject areas. Participating teachers report that 37% of students showed improvement in learning STEM subjects. Additionally we’ve discovered that 38% of students showed increased engagement and 52% demonstrated increase proficiency with mobile technologies. These students’ achievement gains are rarely seen in education research. We are very specific in measuring and doing comparison work. If we are not making a difference, we want to know why and what we need to do to modify it. Every program that my team runs has three levels of metrics associated with it. Just as we look at marketing as a discipline and resource and tool, our social responsibility work can serve the same purpose and be as effectively utilized.

o w g ov e r n m e n t P R people defend the current state of the Nigerian economy (variously describing it as ‘growing’, ‘competitive’, ‘not in recession’, etc.) is of no consequence to the average consumer or buyer. His pocket, his wallet, her handbag tell a different story. Simply put, things are tough; tougher now than they’ve been in recent memory. And now, just when it seems like bounce-back time, (after the apprehensions around the elections), this might just be the time when many businesses that barely survived the turpitude of the season now finally find themselves going under. This won’t be due to lack of smarts, but because the landscape is inherently inclement and therefore hostile to the idea of thriving businesses. So it bears saying: how does a consumer play his/her part in ensuring that an honest business stays afloat. Do our purchase

decisions even matter? How much do we spend that would be so significant as to be a factor in such a life and death matter? If you take the time to think of yourself as King or Queen Customer, then maybe the importance of that your small splash will begin to register. Little drops as they say make the mighty ocean. Great oaks from little acorns grow. Those sayings are not for nothing. They are borne of humanity’s stock of wisdom that has served us for millennia. The discerning customer ought to take his/her place at a time like this to ensure that businesses that serve the community or help to advance community aspirations make it past the valley of death. So who to look out for: Small Businesses: Their wares may be a little pricier as they don’t have the economies of scale that the big retailers enjoy.

But they are worthy of your patronage as long as they treat you with the customary decency and serve goods and services that are above par. Big Businesses: Look out for the ones that are involved in the community. They may have scaled down their involvement lately due to internal and external economic tensions. However, if they have a track record, you want to remember that. Nigerian Businesses: Everywhere you look, there are big retail shops taking over and putting the old Nigerian owned shops out of business. If they retain your patronage, they will keep serving the community and the larger Nigerian community will be the richer for it. Corporates can do a good job here by ensuring that they do not merely source their raw materials from Nigerian businesses but that they support the businesses to be stronger by availing them technical, financial and material support that enables them be more

competitive and self-sustaining. Female Businesses: This is not to say that businesses run by men should be left to their fate. However, women in these parts, as indeed in many parts of the developing world have peculiar challenges that require communal support of their effort to ensure they and their children lead better lives. Artisanal Businesses: Patronise the arts and craft people. It takes some time to acquire artistic expertise, the type that finds expression in visual design, sculpture, bead making, honey production, basket weaving, tie and dye making, dress making, bukas specializing in local Nigerian dishes and brews, etc. Reward the effort and diligence and adherence to excellence. Keep our local art and craft and other artisanal businesses going with your patronage. At least keep them in business, now that tourists aren’t flooding our shores.

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Thursday 04 April 2019

Corporate Social Impact

Big Banks 2018 CSR spend by the numbers (1) T

The Diamond & Access Bank merger and the portents for CSR

ONUWA LUCKY JOSEPH

ISRAEL ODUBOLA AND ONUWA LUCKY

ZENITH: 3.06 Billion GTB: N928 Million UBA: 1.03 Billion Access Bank: 376 Million ier-1 lenders in Africa’s most populous nation are putting in more effort toward improving their host communities as the cumulative donations of four big banks that have released their financial scorecards for the period ended December 31, 2018, grew 11%. The aggregate donations made by Access Bank, United Bank for Africa(UBA), Zenith Bank and Guaranty Trust Bank in FY 2018 stood at N5.42billion, N540million or 11% higher than the N4.88 billion reported in the previous year UBA, Zenith and GTB reported year on year increase in their donations to community development in FY 2018 except Access that posted a 34% decline. Donations made by UBA, Zenith and GTB notched up by 26%, 17% and 7% respectively in FY 2018. Nigeria’s biggest lender by asset, Zenith Bank, upped donations and charitable gifts to society to N3.06 billion in FY 2018, representing N454million or 26% increase over N2.61 billion reported the year before. Majority of Zenith’s donations, about 51%, were disbursed to States Security Trust Fund, while Nigerian Academy of Neurological Sur-

geons received the least donation of N10million from the bank. GTB raised its donations by N61 million or 7.04% to N928million in FY 2018 compared with N867 million in the prior year. The bank directed its donations across four sectors, namely arts, community development, education and envi-

ronment. A large chunk of GTB’s donations were directed to Financial Inclusion (N295m), Principal’s Cup (N130m), and Africa Centre Development (N75m). The United Bank for Africa upped its donation by 26% or N261million to N1.03 billion in FY 2018 compared with N832million reported in the previous year. About 99% of the bank’s donation in the period under review were directed to developmental projects

#TrashTag Challenge Live in Lagos

ho says that teens of the world are always up to no good? That geriatric badmouthing ‘bad-belle’ must be chewing his nails now as they see young men and women worldwide cleaning up and leaving their environments spick and span and free of trash. Welcome to the #trashtag challenge which has actually been on since 2015 but which got anew lift recently via a Byron Roman viral post on Facebook. Bored teens have come alive suddenly Thankfully, the not so highly regarded Nigerian lazy youth are not missing in action as can be seen from these photos posted online by Funmi Amarvi, dateline Victoria Island. We look forward to seeing similar posts, lots of them, from different parts of Nigeria.

in Nigeria, with Financial Inclusion and Public Enlightenment project receiving the largest share of N400 million. The remaining 1% was committed to other projects in Africa. Access Bank, which in no time will become Africa’s largest lender by customer base, lessened its donations by N191million or 34% to N376 million in FY 2018 compared with N567 million posted in FY 2017. About 53% of Access donations went to Financial Inclusion projects (N100million) and Lagos State Security Trust Fund (N100m), while contribution to Womanpreneur Business Workshop got the least share of N619,500 in FY 2018. (Part 2 of this story will run after the other banks have published their results)

he full details behind the merger story will unfold someday. But this, at least in the beginning, was not the way that Paschal Dozie would have wanted to see things pan out. When it became inevitable – In view of the many things that are yet unsaid, or said by those not authorized to say so – the bank with 19 million customers became junior partner to the one that had 10million customers. That must feel like a massive markdown for one of the revered titans of the banking profession in Nigeria. But then again, this brings to the fore issues of succession planning and corporate governance that make for sustainable organisations that pass the test of time. As has been demonstrated in abroad and in Nigeria, too big to fail is an illusion. Unfortunately, reality doesn’t hit until the quake starts registering on the Richter scale. As for the trade-offs behind the scenes, you can be sure it was raw and blood-drawing, with cherished territories and perches yielded seeing as survival had become the only thing worth fighting for. Somehow, the Diamond guys got a reinforced version of their logo as the new Access Bank logo. But it now comes in the old Access colours. That, for whatever it’s worth, must have been some titanic victory. In the days unfolding, it will become obvious who holds the lever. So far, only one Executive Director position has been conceded to Diamond Bank. There might be plans for more, but that looks unlikely in the short term. As seasoned negotiators know, concessions not extracted at the point of negotiation hardly ever come good. Who willingly yields a choice perch after the deal is signed? That brings us to the matter of postmerger accommodation. Especially for Diamond Bank natives. If a sense of dread runs through that group, it is well founded, going by how mergers tend to crystallize, and more so in a wobbly economy. The upper hand feels no need, and for good reason, for the lower feebler hand to stop twitching. It’s a preconception which might have no foundation in

reality. Nonetheless, power is at play and usually tends to be dealt at the behest of the powerful. At a time when the economy is in a bad place, one can only hope that the émigrés from Diamond Bank will enjoy the advertised warmth and welcome that their new management says will be their lot. As we don’t do pink slips in Nigeria, we stay hopeful that there will be no massive disengagements. Some of that is, unfortunately, inevitable, as duplication of duties cannot be useful for an institution that needs to be as nimble as possible as it hits the ground. But considerations ought not be based solely on capitalist calculations that capitalizes without mercy on misery. Sustainable profit does not always come by such bloodless shrewdness. There’s a place for empathy and for resourceful balancing that ensures growth apace without too excessive shedding of the manpower in place. The boardroom guys will deal with that matter, of course. We

just wanted our two cents in the mix. Hitherto, Diamond Bank was not an especially strong CSR facilitator. It did its bit but not quite in the same way that Access Bank did with its very strident well trumpeted push for embracing sustainability at all levels. It was also a compelling advocate for women and their aspirations. It is sure to continue in that path. CSI hopes that the new Access Bank will play stronger as a supporter and significant factor for the actualization of the common good. Even as the bank works its balance sheet, its social capital ought to be uppermost in its mind. It’s not enough to be regarded as Africa’s shoo-in largest lender by customer base. That size and the quantum of resources available also mean that the new Access Bank must increase its CSR stripes and become the preeminent face of corporate social responsibility. (For feedback, contact us at csrmomentum@gmail.com/ 08023314782)

Nestle, Unilever, Coca Cola, Diageo go for plastic recycling across Africa

estle, Unilever, the Coca-Cola Company and Diageo, four multinationals doing good business in Africa have announced plans to improve the collection and recycling of plastics across the continent by launching the Africa Plastics Recycling Alliance. The four fast moving consumer goods (FMCGs) giants, in a statement, reiterated their take on recycling as a major solution to the global plastics crisis on the continent. But in a swift response, Renee Olende, Plastics Project Lead at Greenpeace Africa said “We know that we cannot recycle our way out of the plastic pollution crisis, yet multinational corporations like Unilever and Nestle continue to invest time and effort into end-ofpipe solutions. Single use plastics are an outdated and unsustainable concept altogether, and it is time for these multinational corporations to show leadership and real innovation by investing their massive resources

into new delivery systems of refill and reuse.” She went further to say “Africa is a critical market for these corporations and we must make real commitment to reverse the current plastic crisis instead of focusing on profits. The truth is plastics are destroying communities, harming marine life, affecting human health and hurting our environment around the world. We need companies like Unilever and Nestle to move away from the

throwaway culture and immediately provide consumers with sustainable alternative solutions - informed by safe and innovative delivery systems.” We agree with her. The multinationals need to work harder to get the consuming public to key into more sustainable solutions that eventually cuts plastic out of the mix. In the meanwhile, plans for recycling area good idea as long as they are honestly and purposefully pursued.

Thursday 04 April 2019

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Energy Report Oil & Gas

Power

Renewables

Environment

‘NPDC cannot begin production until it meets Ogoni demands’ Olusola Bello

takeholders in Ogoni land have said that while they are not averse to the decision of the Federal Government to ask the Nigeria Petroleum Development Company (NPDC) to take over operations in Oil Mining Lease (OML 11), they are however of the view that the company may have the same problems as Shell if it fails to meet the demands of the people. They also doubted if the company could meet the deadline given to it by president Muhammadu Buhari in view of the numerous issues that needed to be settled before it can resume production on OML11. While many of the Ogoni people who spoke to BusinessDay said they welcomed the development, they however stated that the company must meet with credible stakeholders to look at the issues on ground and agree on

how they can move forward. One of the leaders of Ogoni, Ben Birabi told BusinessDay that NPDC would have to discuss with them to find a common ground. “We don’t want the place to be desolate. When NPDC is ready to come we are ready to discuss with them also. We already have documented demands,” he said. The Ogoni Multi-Stakeholders’ Forum had submitted a seven-point demand to the Federal Government listing conditions to be met before the resumption of oil exploration and production activities in the area. Gani Topba of Ken Saro-Wiwa Associates who presented the demands on behalf of Ogoni Leaders to the Federal Government said: “We have consistently maintained in all our correspondences with the Federal Government of Nigeria, and in particular, the Ministry of Petroleum Resources, that we are not opposed to the resumption of oil and gas operations in OML 11

Muhammadu Buhari

(Ogoni Fields).” He said they strongly demand that before the resumption of oil operation in Ogoniland, the suit brought by the Ogoni people to set aside the judgment of the 1995 kangaroo tribunal of the Federal Military Government that led to the gruesome execution of Ken

Gas enormous potential for struggling power sector

igeria has abundance of gas, but this has not robbed off positively on the country, as it wallows in shortage of power. This is the reality in Africa’s top oil and gas producer. Realigning these two issues for the benefit of the country has been a daunting challenge due to lack of investment in infrastructure needed to take the gas to the power plants. Getting gas to power plants would require huge financial commitments by investors. For the country to meet the power requirement of Nigerians, government must court the relationship of investors with deep pockets who can invest for a long period, which is what both the gas and power sectors require to be able to provide stable and reliable power supply. The investors must also be guaranteed good returns on their investments and a stable policy that would also guarantee an enabling operational environment for them. According the operators, the demand for gas will continue to

rise especially as the invention of electric car is on the rise. Victor Eromosele, chief executive officer of ME Consulting, said that Nigeria needs power from all sources, either from fossil fuel or off grid, adding that there were about $4 billion investment opportunities that can be tapped into by investors to bring power to Nigeria homes by adding value to the gas resource . He said there were huge gas resources in the Niger Delta, adding that much of this should have ended up in form of power in our various homes if the necessary investments are made. We must monetise the nation’s gas by putting it into values that can enhance the economy. Already there are a number of gas projects ear-marked for execution in the country by the Nigerian National Petroleum Corporation NNPC. Only two of these projects have had their Final Investment Decisions (FID) taken. These gas projects are valued at $14 billion, while between $2.2 and $2.7 would be

to discuss with the Ogoni people and address all legal issues touching on the development of OML 11 (Ogoni Fields),” they further said. They demanded that all communities in Ogoni should be connected to the national-grid as all the six power plants in Afam are located in Ogoniland. Also, the over 14 Ogoni communities which were destroyed during the military occupation in Ogoniland in the 1990s should be rebuilt and the Ogoni refugees within and outside Nigeria should be rehabilitated.” An indigene of Ogoni and former external relations manager of Shell Nigeria Exploration and Production (SNEPCO), Eddy Wikina, who also toed the line of thought of Ben Birabi, said however he doubted if NPDC can handle the operations of the field because it does possess the capacity and ability to deal with environmental issues that may arise in the cause of it operations.

11PLC raises bar in social investment, renovates 21 classrooms

required for pipeline infrastructure alone to move gas molecules. Currently, the amount of stranded gas in Nigeria is about the equivalent of 5.2 Gigawatts or 5000 megawatts. Stranded gas is the gas that cannot be delivered to power plants because of infrastructural challenges, such as lack of pipelines. Industry operators blame this on lack of investments in the sector, which they trace to investor apathy. This amount of gas can make a lot of impact on the power supply situation in the country if it is delivered to power stations. On the power sector, Anthonia Okoh of Standard Chartered Bank, advised that the government must get its acts together in order to attract the interest of international financial institutions “We must create the environment that makes international investors have trust in our system and operational environment that government would not change the goal post in the middle of the game.”

Olusola Bello, Team lead, Analysts: Isaac Anyaogu, Stephen Onyekwelu, Graphics: Joel Samson.

Saro-Wiwa and eight others, currently before the Court of Appeal, Port Harcourt Division, should be first disposed of and their name cleared from the black books. “The Shell Petroleum Development Company of Nigeria Limited (SPDC) and its parent company, the Royal Dutch Shell, remain persona

non grata in Ogoniland as declared by our forebears in 1993. “The SPDC’s application for the renewal of its expiring lease over the OML 11 (Ogoni Fields) should be rejected. The Ogoni Fields (Block) should revert to the Federal Government of Nigeria, effective from 30th June 2019 and should not be renewed for SPDC. The forum also demanded that the preliminary approvals granted to Robo Michael Nigeria Limited and/or other companies to develop the Ogoni Fields should be revoked/withdrawn. “The environmental catastrophe created by the over three decades of SPDC’s reckless operations in Ogoniland should be cleaned up as recommended in the United Nations Environment Programme (UNEP) Report,” it said. “The Federal Government of Nigeria should come to Bori (the traditional headquarters of Ogoniland)

1plc, formerly Mobil Oil Nigeria Plc, has raised the bar in social investment with the renovation of two building structures consisting of twenty-one classrooms at Baptist Primary School, Marine Beach, Apapa Local Government Area, Lagos State as part of its corporate social responsibility initiatives in its host community. The multi-million naira infrastructure upgrade which was embarked upon as part of the company’s cardinal programme of giving back to the communities where it operates has been handed over to the state government through the State Universal Basic Education Board [SUBEB]. The decision of the oil giant to once again intervene in the development of Apapa Local Government and its environs followed an appeal from the school to carry out the rehabilitation of their building through Marine Beach Community head, their counsellor in the LG and representative of the LG who visited 11Plc office on

the issue . Baptist Primary School is within Apapa LGA and was in a very deplorable state with 80%- 90% of the building roofing sheets blown up leaving the upper floor of the three-storey structure out of use and the walls in dire need of repainting. The pupils of the school and teachers alike were also having a hard time coping with the rigors of using the facility thus inhibiting conducive learning opportunities in the school. Adetunji Oyebanji, the managing director 11Plc, said the company took the opportunity to rehabilitate the school on four different fronts namely: giving back to the host community; creating a conducive learning environment for the pupils and other stakeholders; responding positively to the request of the community heads and government agencies; and avenue to the company’s positive contributions to its customers and community to reinforce its brand equity and corporate image. He pointed out that the school is not only [popular

within the company’s immediate community as it is one of the biggest in the LG and has operated since the 1960s, stressing that the gesture woul go a long way in deepening and reinforcing the harmonious relationship between 11PLC and her host community as well as government agencies . ‘’We are always happy and delighted to give back to our community and the environment as a whole .Without the peace, cooperation and support of the host communities I am certain businesses cannot thrive. So as they say, charity begins at home,’’ he noted. According to him, the project is our humble gesture even as we hope the community appreciates to further serve as encouragement for 11PLC to do more. “We feel glad and satisfied as we know this is a citadel of learning and you cannot imagine what level of good children who come out of this school will do for the greater good of the society as a whole,” Oyebanji pointed out.

Email: energyreport@businessdayonline.com, Tel: +234-8023020011; +234-7037817378

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Thursday 04 April 2019

Energy Report

NNPC expresses commitment to zero gas flare regime

Seplat advocates public, private sectors investments in safety

Olusola Bello and Harrison Edeh

he Nigerian National Petroleum Corporation (NNPC) has expressed its commitment to a zero gas flare regime for every new gas project, even as it trains its sights on commercializing existing gas flare projects for the benefits of the host communities and Country at large. Maikanti Baru, group managing director of the NNPC,stated this while receiving in audience the national leadership of Host Communities of Nigeria (HOSTCOM) led by its National chairman, High Chief Benjamin Style Tamaranebi, at the NNPC Towers in Abuja. Ndu Ughamadu, NNPC group general manager, group public affairs Division, in a release today stated that Baru assured HOSTCOM that NNPC would continue to partner the various host communities to enable them benefit maximally from exploitation of the nation’s hydrocarbon resources. Baru said that the corporation would make sure that no new gas project would be approved without zero gas flare modalities, stressing that for already existing gas flare projects, the NNPC was exploring various options to

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commercialize the gas flare with a view to eliminating it. The NNPC boss commended HOSTCOM for restoring sanity to the Niger Delta region, saying the relative peace had given operators the leverage to concentrate on production for the benefit of the national economy. “I want to thank the Oba of Benin for midwifing HOSTCOM and the traditional rulers of Oil Mineral Producing Communities of Nigeria (TROMCON). For us as operators, we will continue to dialogue with the bodies so as to create enabling operating environment for the business and for the communities,” Dr. Baru

stated. He urged HOSTCOM, as a pan cultural organization, to partner with NNPC in stemming the incessant pipeline vandalism, illegal refineries and illegal crude oil bunkering in the Niger Delta, adding that the elimination of those vices would reduce to the barest level, incidences of environmental pollutions. The NNPC helmsman noted that the clean-up of Ogoniland had commenced in earnest with the release of the first tranche of the funding for the project since last year, adding that HOSTCOM should the environment, water and aquatic animals of the region are not impacted negatively by illegal

bunkering and breaking of petroleum products pipelines. He pledged the commitment of oil and gas operators to abide by Global Memorandum of Understanding (GMOUs) entered into with the communities and noted that GMOUs should not be seen as a replacement for government interventions in communities. He noted that the oil and gas business was a global business hence HOSTCOM should provide hospital environment that would encourage investors to continue to prefer Nigeria to other investment destinations in Africa.

eplat Petroleum Development Company Plc, an independent oil and gas exploration and production company incorporated and operating in Nigeria, has urged the public and private sectors to invest more in research and development aimed at promoting safety. The oil company noted that such investments should cut across the different sectors of the economy as is the case for the oil/gas and aviation sectors, among others. Effiong Okon, operations director of the company, said this at the Nigeria Professional Development Conference and Exhibition in Lagos recently, organised by the American Society of Safety Professionals (ASSP), Nigerian Chapter. The event was themed: Sustainable Safety for National Development. According to Okon, safety is at the forefront of Seplat’s activities, which has enabled it to conduct all its activities across the country with minimal footprint. “We approach safety using the people, environment, asset and reputation model incorporated in our ‘safety first’ policy. We only execute projects that promote continuous reduction of environmental impact in our operations,” he said. He added: We track offshoots from our operations and strive to reduce adverse effects from our facilities.

Our internal use of gas flared reduced by over 95 per cent between 2011 and 2017. “Seplat has incorporated key programmes across all its facilities to achieve flares out by 2020 in line with keeping the environment safe. We comply with all regulatory requirements and benchmark our performance with international standards.” Okon said the company has seen continuous decline in safety incidents over the years and would continue to deploy safety training and coaching to hone safety consciousness and skills of its local contractors. Progressively managing challenges around establishment of support infrastructure for safety management, he noted, remained a priority to the company, adding that: “Since the taking over of our current assets, third-party interference on Seplat’s infrastructure had been significantly minimised.” He said there is the need to develop safety leadership that can change the safety culture of the various sectors of the economy, advocating that safety be included as part of management meetings. He added: “We must entrench the use of safety indicators that can help shape safety culture and put in place a strong reward and recognition system for safety initiatives and achievements with game-changing results.

Siemens Power Services looks beyond oil and gas sphere ...as it diversifies operations

he harsh operating environments of oil and gas companies occasioned by lack of serious investments coupled with low prices of crude oil have led to down time in the operations of most oil servicing companies. The low crude oil prices have made some oil producing companies to reduce the scope of their activities and this has invariably affected some service providers who sometime had to review jobs given them by oil companies for the purpose of reducing cost of services they are rendering. To mitigate against the consequences of these type of situations, some of the oil servicing companies have decided to diversify their operations. They are now exploring other avenues that could help them to survive, especially now that the oil and gas industry in Nigeria is enveloped by high level of uncertainties because of lack of investment. One of such companies that has diversified its operations is the Siemens Power Services, a business unit

that is well known for power generation in oil and gas industry. It is equally reputable in original equipment manufacturer (OEM) in the manufacture of gas turbines and compressors which are used for power generation in oil and gas industry. The gas turbine as the name implies is generating power which is used in the facilities of most international oil and gas companies. The compressors are used to enhance oil recovery because at times, there may be the need to pump more pressure to get a better output from oil well. One thing that is very important to note by all and sundry is that even though Siemens Power Services is known for OEM businesses, it also does non OEM businesses. In other words, it does additional services which complement its core business. Hence the establishment of the workshop in Port Harcourt. While the company says it is not abandoning the services for which it is known for in the oil and gas industry, it is however looking

beyond the sphere of oil and gas industry in order to increase the chances of increasing its revenue base, generate more jobs for Nigerians by using it skills and technology and also actively involved in helping to build the much needed local content development in the country. Carrying out the diversification exercise will provide tremendous opportunities for Nigerians to tap from Siemens technologies. Hence the desire of the company to diversify its operation. To a c h i e v e t h i s, i t s 3-million-euro Port Harcourt workshop has been equipped to meet the diversification efforts. The services that are being rendered, aside from taking care of gas turbines and compressors, include, but not limited to, making available its 20 ton crane capacity for use for those that may need it, extensive machine shop with a lift which is four ton load and five metres between centres. Lathe machining, drilling, milling, grinding machines. Some of these machine do cut equipment into

different sizes, depending on the output. Rotor balancing is used to balance steel, pulp, compressors and turbines, and low speed balancing machine. Instrument repair test, calibration and general fabrication works are also parts of their undertakings. All these can be utilized by other industries. The food and beverage industries for example can benefit from this new move by Siemens Power Services because they have whole lot of machineries they use, especially, those companies that do not have in-country capacity to do some level of precise precision works. According to Seun Suleiman, general manager, Power Services Business, Siemens Nigeria, the workshop does not only support services of gas turbine and compressor but additional works that would enhance the quality of gas turbines and compressor. For example, the workshop has Late Machines which is meant to support additional works. “It is a standard machine

which does some cutting of steel to different sizes and shredding in the oil and gas industry, alignment and balancing of some equipment are also carried out in the workshop. This is a general technology. It is useful for companies that are not in the oil and gas operations,” Suleiman said. He said many companies do not know that such a service can be provided by the company because all they understand and know the company for is gas turbine and compressor business. Siemens Power Services is the one responsible for the life circle of equipment which are supplied to international oil companies operating in the oil and gas company. After the equipment have been purchased, and the customer use them for sometime, there would always be a need to service them and look after them just like the way human beings look after their bodies by taking the necessary nourishments. Basically the company is a Port Harcourt-based service business units. Meaning

that its business is to ensure it looks after customers everyday from the smallest item of a bolt to the biggest item of a whole compressor. According to Suleiman, general manager, Power Services Business, Siemens Nigeria, the workshop does not only support services of gas turbine and compressor but additional works that would enhance the quality of gas turbines and compressor. For example the workshop has Late Machines which is meant to support additional work. It is a standard machine which does some cutting of steel to different sizes and shredding in the oil and gas industry, alignment and balancing of some equipment are also carried out at the workshop. This is a general technology. It is useful for companies that are not in the oil and gas activities. He said many companies do not know that such a service can be provided by the company because all they understand and know the company for is gas turbine and compressor business.

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INSIDE NBA National Executive Committee meets in Abuja to address critical issues plaguing the association

Nigeria’s 2019 Data Protection Regulation: A fair scale for privacy and commercial rights?

O In Brief

30 NBA demands release of its former 2nd vice president, Monday Ubani

31 Energy experts discuss merits of flare gas regulation at Syncrest Energy, GEP workshop

n January 25, 2019, Nigeria’s National Information and Technology Development Agency (NITDA) issued the Nigeria Data Protection Regulation 2019 (the Regulation). The Regulation took effect on same date. In the fashion of the European Union’s Global Data Protection Regulation 2018 (GDPR), the Regulation seeks among other things, to safeguard the rights of natural persons to the privacy of their personal data by, among other measures, regulating transactions involving the collection, use and exchange of personal data. In this brief, we take a cursory look at the Regulation and some of its imperatives for businesses that deal in the personal data of those that the Regulation seeks to protect. Scope and Application of the Regulation The Regulation regulates the activities of Data Controllers and Data Administrators in their use of the personal data of all natural persons who are Nigerian citizens (Nigeria Citizens) or who live in Nigeria (Nigeria Residents); both, Data Subjects – please note that this definition is arguable. A Data Controller is a natural or legal person who collects, controls, processes or is otherwise in possession of personal data, while a Data Administrator is a natural or legal person who processes personal data, usually on the instruction of the

Data Controller. The Data Controller or Data Administrator may be one and same natural or legal person. Both public and private entities may qualify as a Data Controller or Data Administrator to the extent that they deal in personal data. Personal Data Personal data, also referred to as, personal identifiable information (PII) is any information on any identifiable natural person, including: employees, suppliers, counterparties, agents and the general public. Identification or identifiability relates to any information that can

be used on its own or with others to identify, contact or locate a natural person, whether singly or within a context. Such information will naturally include the following details of a natural person: name, address, age or date of birth, identification number, location, photograph, email address, bank details, posts on websites, medical record, media access control (MAC) address, internet protocol (IP) address, international mobile equipment identity (IMEI) number, international mobile subscriber identity (IMSI) number, subscriber identification module (SIM), et.al. Accordingly, identifiability is a key

consideration in whether any data will qualify as personal data for the purpose of the Regulation. Statutory Standards of Care The Regulation imposes strict standards of care on Data Controllers and Data Administrators. Personal data must be collected and processed transparently, and only in accordance with the specific, legitimate and lawful purpose for which it was obtained. Processing of personal data may be done only for archiving, scientific research, historical research or

Continues on page 30

Lagos CJ commissions e-filing probate registry T THEODORA KIO-LAWSON

he Chief Judge of Lagos State, Justice Opeyemi Oke has said that the newly commissioned e-filing probate and archive registry in Lagos is designed to ensure the efficiency of the judiciary, particularly as it relates to probate. The CJ said this, while commissioning the registry, which is situated at the Lagos State High Court in Igbosere. According to her, the event marks a milestone in the history of the Lagos State Judiciary. She said, “This project holds a lot of promises for the efficiency of the Probate Section and indeed the overall effectiveness of the Lagos State Judiciary. “We want to assure you of the effectiveness of the

method while soliciting your support and cooperation in this regard. Our Staff have been well trained and are sure to give you a warm and friendly support, as may be required from time to time,”

Justice Oke said. With the introduction of the e-probate platform, submitted applications for grants will now expected be issued within the space of 12 – 16 Weeks.

The process of payment has been made cashless with less difficulty for all stakeholders. It can be made through the use of POS, and our designated accounts

Probate applications can now be submitted through the online portal at probate Lagos judiciary and its progress monitored. See more pictures on page 31

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Nigeria’s 2019 Data Protection Regulation... you must submit the audit report in (2) to NITDA. 4. If you annually process the personal data of more than 2,000 Data Subjects, then you must submit an annual data protection audit report to NITDA no later than March 15. 5. Designate a data protection officer, whether within or outside your organization, for the purpose of ensuring adherence to the Regulation and your relevant data privacy processes and procedures.

Continued from page 29

statistical purposes of public interest. The Data Controller is ultimately responsible for the infractions of the Data Administrator or any third party engaged by it in relation to the personal data of Data Subjects. The Data Controller must take reasonable steps to ensure that any engaged third party does not have a record of violating the personal data protection principles in the Regulation, particularly those that are express on the use of personal data and on the rights of Data Subjects. The Regulation has no provision limiting the time within which personal data is to be retained. It sets a ‘reasonability of need’ test as it provides that personal data should be stored only for the period within which it is reasonably needed. Rights of Data Subjects: The rights of Data Subjects include the following: 1. Data Subjects have the right to know their rights. The rights of the Data Subject are required to be made known to him before his personal data is processed. In this regard, the Data Controller must ensure that the means through which personal data is being collected has a conspicuous and understandable privacy policy. 2. Data Subjects must expressly consent to the processing of their personal data. In this regard, the Data Controller must expressly request for the consent of the Data Subject before subjecting the data to any processing. It is the Data Controller’s responsibility to ensure that the Data Subject has legal capacity to give consent. Specifically, the Data Controller must be able to show that the Data Subject has validly given his consent. 3. Data Subjects have the unrestricted right to request the deletion and or, on a limited basis, prevent

the processing of their personal data. Accordingly, before obtaining the consent of the Data Subject, the Data Controller must expressly let the Data Subject know of his, Data Subject’s, ability to withdraw his consent at any time. 4. Data Subjects have the right to freely transfer their personal data received from a Data Controller to any other Data Controller. 5. Data Subjects have the right to access their personal data. In this regard, Data Controllers must, within a month, provide prompt and free response, in a structured, commonlyused and machine-readable format, to a request by a Data Subject for his personal data. The Data Controller cannot charge for this service, save in the case of unfounded and excessive requests by the Data Subject.

pervision of NITDA and the AttorneyGeneral of the Federation (AGF) whenever they intend to transfer personal data to a foreign country or international organization. In the absence of any such decision, the Data Controller must ensure the existence of any of the conditions laid by the Regulation to validate any foreign transfer of personal data:

Transfer of Personal Data to a Foreign Country or International Organisation: Data Controllers are required to comply with the decisions and su-

Penalties Breach of the data privacy rights of any Data Subject is liable to a fine of: 1. in the case of a Data Controller dealing with more than 10,000 (ten

Enforcing Data Subjects’ Rights Data Subjects can enforce any of their rights in a court of law. This is without prejudice to the mandate of NITDA’s Administrative Redress Panel (ARP). The ARP is empowered to, among others, investigate any allegation of breach of the Regulation and determine appropriate redress within 28 (twenty-eight) working days.

thousand) Data Subjects, the greater of 2% (two percent) of the preceding year’s annual gross revenue or N10million; or 2. in the case of a Data Controller dealing with less than 10,000 (ten thousand) Data Subjects, the greater of 1% (one percent) of the preceding year’s annual gross revenue or N2million. Immediate Compliance Requirements for Data Controllers: 1. Make your data protection policies available to the general public not later than April 25, 2019. The policies must conform with the Regulation. 2. Undertake a detailed audit of your privacy and data protection policies before July 25, 2019. You may require the services of a NITDAlicensed Data Protection Compliance Organisation (DPCO) for this purpose. 3. Where you process the personal data of more than 1,000 Data Subjects before July 25, 2019, then

Conclusion The Regulation is currently the most comprehensive legislation (subsidiary) that protects personal data rights in Nigeria. Although not as comprehensive as the GDPR, it is, in our opinion, a good way to start for Nigeria. It reflects the reality of the 21st century data economy, in which data, mostly given free although often expensive to collect and process, is the raw material or critical asset of many businesses. Other than the commercial value of the data in itself, some of such businesses proceed to use the information generated from the data to generate even greater financial or other powers for themselves and their consorts. Recognising the rights of the personally identifiable Data Subject is fair balance between the commercial ambitions and success that society needs for its advancement and the individual’s fundamental right to privacy. Recognition is however insufficient, good implementation is. That NITDA is able to implement the Regulation and its future revisions in a manner where the ensuing balance aids the progress of Nigeria’s growing data economy, while upholding the individual’s fundamental right to privacy, is perhaps its real mandate.

Damilola Oshodu, Moyo Omidiran and Bidemi Olumide (bidemi.olumide@ao2law.com)

PHOTOFILE

NBA National Executive Committee meets in Abuja to address critical issues plaguing the association

Paul Usoro, SAN, President of the NBA

LALIVE explores collaboration with Legal Answers

Seni Adio, SAN, Chairman NBA Section on Business Law (L) presenting the Section’s report to the NBA President and other members of the National Executive Committee (NEC).

Augustine Alegeh, SAN, Former President of the Nigerian Bar Association (NBA) speaking at the National Executive Committee (NEC) Meeting which held at the National Secretariat of the Association on Thursday April 28, 2019. National officers of the Nigerian Bar Association

Teinane Okpokiti, Partner, Legal Answers (R) spotted last week at the London office of LALIVE, where the firm was in talks with top management team of LALIVE on possible collaborations. To his right is LALIVE Partner, Timothy Foden. Legal Answers is also set to begin work with Orrick on a financing deal by Mecuria in a few weeks.

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YOUNG BUSINESSLAWYER

Lagos CJ commissions e-filing probate section... Continued from page 29

BUSINESS DAY

LegalBusiness

LB FACT BOARD Did you know that 234,700 patents were registered in Africa in the last 22 years? South Africa accounted for 55% of these, While Nigeria registered a mere 1% i.e. less than 2,500 patents. Source:

The World Intellectual Property Organisation (WIPO)

NBA demands release of its former 2nd vice president, Monday Ubani GLOBALREPORT

he Nigerian Bar Association (NBA) has demanded the immediate release of the former 2nd Vice President of the Association, Monday Ubani. In a statement signed by the National Publicity Secretary, Kunle Edun, the association condemned the act, urging President Muhammadu Buhari to check the activities of the security agencies and ensure they obey the law. It read in part, “ The attention of the President of the Nigerian Bar Association, Paul Usoro, SAN has been drawn to an order of Honorable Justice Sylvanus Oriji of the Federal High Court wherein His Lordship, on March 26, 2019 granted an ex-parte motion filed by Chief Mike Ozekhome, SAN directing the Economic and Financial Crimes Commission to charge, Monday Ubani, a former 3rd Vice President of the Nigerian Bar Association (NBA) and his co-applicant to court on or before Friday, 28/3/2019. The court in the alternative, ordered that, “If the Applicants are not charged to court on or before 28/3/2019, EFCC is directed to release them on bail” The NBA noted that it has been days after the order of court was made and the EFCC, has continued

Ubani

to display daring disobedience to the orders of court by refusing to release Ubani on bail or charge him to court before the 28/3/201. He said “By the provisions of Section 1(1) of the Constitution of the Federal Republic of Nigeria, the provisions of the Constitution of the Federal Republic of Nigeria is supreme and binding on all persons and institutions in Nigeria. “By the further provisions of Section 35 (4) of the 1999 Constitution “ Any person who is arrested or detained in accordance with subsection (1) (c) of this section shall be

brought before a court of law within a reasonable time.” Bemoaning the situation, the NBA observed in its statement that Ubani was still being unlawful held in the custody of the EFCC for more than three weeks, which according to it, was a gross violation of his constitutional rights to personal liberty. The NBA stated, “Democracy thrives only where there is a culture of respect for rule of law and due process by all persons. The EFCC, being a product of law, must also be subject to the laws of the Federal Republic of Nigeria, and therefore, cannot be above the law. The agency’s penchant for disobedience to orders of court is an ominous threat to rule of law and impacts negatively on Nigeria’s investment environment.” The leadership of the association thus called on the EFCC to comply with the subsisting order of the Federal High Court by releasing Monday Ubani or charge him to court, if there was any reasonable cause to so do. It also urged President Muhammadu Buhari to closely monitor the activities of security agencies, like EFCC and DSS, and ensure that they obey the fundamental rights of Nigerians and respect the Constitution of the Federal Republic of Nigeria in the performance of their functions.

Akin Gump Advises Sorenson holdings in note exchange

orenson Communications, LLC (the “Borrower”), Sorenson Holdings, LLC (“HoldCo”) and Sorenson Finance Corp. (together with HoldCo, the “Issuers”) have announced that they are privately inviting the holders of the Issuers’ 13.0% Senior Unsecured PIK Toggle Notes due 2021 to exchange their Existing Notes for cash, term loans under the Borrower’s new second lien term loan credit facility or a combination thereof.

Akin Gump advised longtime client Sorenson Holdings in the matter. The Akin Gump team included corporate partners Daniel Fisher, who serves as co-leader of the firm’s special situations group, Jesse Brush and Jaisohn Im. Akin Gump Strauss Hauer & Feld LLP is a leading international law firm with more than 900 lawyers in offices throughout the United States, Europe, Asia and the Middle East.

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Thursday 04 April 2019

BDLegalBusiness

Energy experts discuss merits of flare gas regulation at Syncrest Energy, GEP workshop

t a workshop organised by GEP Law Consults in partnership with Syncrest Energy limited, George Etomi & Partners and the Federal Ministry of Petroleum Resources last week, experts in the field of energy have highlighted the advantages of the Flare Gas Regulation 2018. The two-day workshop which was facilitated by energy experts from Wycliffe Advisory & Consulting Services, Tranergy & Co, The Nigeria Gas Flare Commercialization Programme (NGFCP), George Etomi & Partners, Primera Africa Legal and Pioneer Energy, had in attendance, key players, in the industry, investors, representatives of the Ministry and Regulatory bodies in the oil and gas sector were in attendance. Hailing the gas flare regulation, which was signed into law in July 2018 by President Muhammadu Buhari, experts held the view that gas flaring in Nigeria was a tremendous waste of scarce natural resource and fuel and as such, the gas commercialisation programme would do well to provide a framework to eliminate gas flaring through gas utilisation projects, which are technically and commercially sustainable. According to the representative of NGFCP, these projects would be developed by competent third-party investors who

L-R: George Etomi, principal partner, George Etomi and Partners; Justice O. Derefaka, program manager, Nigerian Gas Flare Commercialization Program (NGFCP); Abimbola Olufore, managing director, Wycliffe Advisory and Consulting; Wale Ogunbufunmi, managing director, Syncrest Energy and Gas Limited, and Jide Laoye, executive director, Syncrest Energy and Gas Limited, during a 2-day workshop on taking advantage of the flare gas (Prevention of Waste and Pollution) Regulations 2018 organised by George Etomi and Partners and Syncrest Energy and Gas Limited in Lagos, yesterday. Pic by Olawale Amoo

L-R: Abimbola Olufore, managing director, Wycliffe Advisory and Consulting, Ivie Ehanmo and Efeomo Olotu, Partners, GEP

GEP/GEP Law Consults members of the workshop organising committee, L-R: Anthonia Biachi, Yemisi Ogunlesi and Tracy Kadiri at the just concluded Flare Gas workshop.

GEP Team L-R, Oshoka Momoh, Efeomo Olotu, Akin Ogunsakin, Associate, Anthonia Biachi and Tracy Kadiri.

are being invited to participate in a competitive and transparent bid process. The first stage of the bidding process commenced in January 2019. The NGFCP is hoping to attract investment of about $3Bil-

lion USD, creating over 300,000 direct and indirect jobs and reducing CO2 emissions by over 20,000MT yearly. The Flare Gas Regulations was signed into law by President Muhammed Buhari in July 2018.

Chijioke Okafor of CET Power (L) with Sir Emiyarei Ikuru.

P&G to offer Dawn sector-focused advisory services ahead of South-West Investment Summit THEODORA KIO-LAWSON

ommercial law firm, Perchstone & Graeys (P&G) has signed a partnership agreement with a non-profit organisation known as Development Agenda for Western Nigeria (DAWN) towards the upcoming South-West Investment Summit in Lagos. The firm will amongst other things provide of strategic and sector-focused advisory services to the commission with respect to the summit, pre and post event. Speaking exclusively to BusinessDay about this partnership, the director general of DAWN, Oluseye Oluleye, stated that the commission had approached P&G to seek advice on critical issues bothering on its work, particularly as it relates to the summit and how best to harness opportunities in certain sectors of the economy within the region. These areas include, Oil & Gas, Agriculture, Power, Energy, Banking and Finance, Aviation etc. He said “We do hope that this partnership will equip us with the right knowledge and information to identify critical challenges and possibilities for growth and investment in these six states.” Having worked with organisations such as the World Bank and Department for International Development (DFID) in issues concerning the region, the DG revealed that DAWN’s work was beginning to bring some impact in the region, as areas such as, budget planning, ease

of doing business, civil service, etc., were becoming highly standardized in the states. He said, “Last year, we also worked with the World Bank to carry out a study known as the Lagos-Ibadan Economic Corridor, where the potentials and challenges of that corridor was critically examined. This was done over a six-month period, and the report gave birth to further discussions with the states. Currently, there are talks to explore opportunities that could be harnessed over the next 20 years with a view to not only developing but establishing the Lagos-Ibadan Economic Corridor. Oluleye further disclosed that Member states have been very collaborative, with a new appreciation for the fact that working together would bring more advancement to the region. As part of the provisions of this agreement, DAWN has made Perchstone & Graeys its liaison between any identified third party and the commission with respect to matters pertaining to the Investment Summit and other incidental matters. The collaboration also allows DAWN the use of the law firm’s head office as an out-of-station office for the commission to hold meetings in Lagos State, where the need arises. DAWN is a non-profit technocratic institution set up by and comprising of the Governments of six southwestern states of Nigeria namely, Lagos, Oyo, Ogun, Ekiti, Osun and Ondo States. The Com-

Tolulope Aderemi, Partner, Perchstone & Graeys, Oluseye Oluleye, director general, DAWN

mission was established to engender cooperation and integration among these six states with a view to promoting and achieving socioeconomic growth and development in the Region. Also speaking at the signing, P&G partner, Tolulope Aderemi, disclosed that the partnership has a pre-summit phase and a post-summit phase. “We would be working with DAWN on a sector-by-sector basis to identify investments, challenges and other critical issues within the region to be addressed at the sum-

mit and advising the commission on the most appropriate structure between it and foreign investors or between the respective states and the foreign investors,” Aderemi said. Through its partnership with DAWN, Perchstone and Graeys would be working closely with government parastatals in these southwestern states. The firm would ensure that foreign investors who speak to state governments would be interacting and dealing with the relevant offices and officers for specific sectors of the economy.

The P&G Partner further said. “We would assist with developing negotiating capacity for the sort of engagements the states would have at this summit. Post summit, we would also be providing highlevel training for officers of specific parastatals, for specific sectors to equip them with the requisite skills for future engagements.” Currently, all economic advisers in the six – southwest states are working closely with DAWN towards the development and advancement of the region.

Thursday 04 April 2019

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BUSINESS DAY

GARDEN CITY BUSINESS DIGEST

PH SMEs sleeping on registration, structure, online visibility - Eugenia Marcus IGNATIUS CHUKWU

n entrepreneurship enthusiast and women empowerment promoter, Eugenia Marcus, has raised alarm, saying small businesses in Port Harcourt and other Niger Delta states seem not to take basic issues such as registration and structure very serious. Marcus, founder of Fresh View Empowerment Initiative (FVEI), told BusinessDay in an exclusive interview at the weekend in DLine area of Port Harcourt that Port Harcourt businesses were still foot-dragging on whether or not to go online. Marcus, convener of the 2019 first quarter training workshop for women entrepreneurs (especially widows) said their counterparts in Lagos have gone beyond the basic level many years back and are now pursuing higher goals such as creating processes that make their businesses run in their absence and succession plans. Marcus of Tuffles who trained in some of the best business schools in Lagos said: “Lagos is way ahead. They are at the point of putting processes that will allow their businesses to run whether they are there or not. That is the next level. They are exploiting all the opportunities available. In Lagos,

... while Lagos SMEs tear away on faster lane everybody is online and they are taking advantages, they are disturbing on social media. People are making it there and we sit down in here Port Harcourt and look ignorant. Most of them are structured already. Even those running businesses from their homes are registered and they are exploring the opportunities.’ She said the focus of the training last weekend in Port Harcourt was about taking your business online, but that in Lagos, they have gone beyond that stage, and they are cleaning out. “We tell PH people, think of creative ways of business. You cannot sit down and be idle when people are making much more. We are ignorant, sitting in the dark. I am grateful to God for the ability to have impacted on businesses in this part of the country. They have done the easy part; listening. The next is the hard part; taking action”. She told BusinessDay how she has been talking to female entrepreneurs about the need to approach micro finance banks. “As SMEs, we need funding support because of the high interest rates in the industry. I partner with a MFB and I access funds there. They are willing to work with us. The issue is that some of these SMEs have not

PORT HARCOURT BY BOAT

L-R: Eugenia Marcus, and Elizabeth Ajala

done the first steps of structuring their businesses. That is our major concern now. Get the business registered, structure it, and get up on early things. You cannot be running Okay & Sons but it has no account in the bank. Do not get your payment and put it in your pocket and spend on. Mine will not run that way. Choose a form of ownership for your business, register it, and then you see the next steps that will come.” Marcus said the women gathered at the weekend also to encourage small business-

es in the city to keep striving and reinventing themselves to meet customer satisfaction in a changing world. “The needs of the modern world are changing daily and if businesses do not seek ways of meeting these needs, they would not grow to desired height. “It is a quarterly seminar as an NGO to help guard the SMEs and network to grow to success and profitability. It is important tp build a business that can outlast the owner and be sustainable.” Re-inventing yourself

In her presentation, the founder said: “Our world is constantly changing; thus, it is good to sit back and day and see what is phasing out and latch onto what is new. Ask yourself questions such as: where are you now? Try and think and rethink; create and re-create. Face your fears; it may not be easy”. On women, she said: Consider child-bearing age while planning to start business. Don’t just say you can do it when you know you can’t. Put your plans or your thoughts on paper. Beware of who you share your thought with; some might kill your dream. Learn the things you must avoid, and ways not to do what you want to do. Put your past in the past”. To re-invent oneself, she said it could mean discovering some hidden talents not yet tapped. She said it is advisable to take Googles’ “Online Personality Type Test” that can reveal many aspects you may have ignored. “My friend had some talents and was using it to help me and others for long until I urged him to turn it into a travel agency business. Today she is thanking me everyday. The test revealed to me I could be a consultant.” She harped on the importance of regular training to acquire skills and competences.

“Take time out once in a while to re-examine your life, review your relationships, your activities, etc.” She insisted that money may not be the major problem an SME has. “Money can be a mental block to entrepreneurs. It makes them think that is their main problem when actually it is not. There are many ways to get around money problem, if actually it is your problem.” She urged the women to do business as business. “I was doing niche cakes but I realized turnover is key. Now, I can do any type of cake just to satisfy the market. Everybody is doing cake now.” She declared: “Structure your business, register it. Investors and financiers only near you if you are registered and structured.” Go online In her special lecture, the guest speaker, Elizabeth Ajala, an online specialist, explained that a firm’s brand may be beyond the logo and colours. “It is what your customers think of you, not even what you want them to think of you. Yours is to get them to think about you the way you set out to make them do. Strong brand is one that communicates what you want such that your customers feel what you want them to feel.”

The Courage of Brother Maple ...And the kindness of St Patrick’s Hospital

IGNATIUS CHUKWU

atch him, Maple! This young man is one of the strongest characters that often pop up on social media and also at events in PH that have to do with youths, empowerment, entrepreneurship, business development, SME clinics, etc. Maple is very strong on IT and other digital and artificially-inclined intelligence. His social media entries are intelligent, deep, articulate, balanced, and mature. These days in Rivers State, one would hardly listen to a young fellow for five minutes without knowing whether he is PDP or APC. Politics, the parochial type, seems to be the only professions around. People no longer believe a person can be neutral or balanced. Everything is partisanship, parochial one for that matter. The PDP-APC divide is so sharp one would think it’s war. This cannot be said of Dappa Maple. Even his height and build are balanced; neither short nor tall, neither fat nor slim. Everything about him seems measured and balanced; and so are his views. Then, something went wrong last week that shows the infallibility of mortal man. He fell to a slip almost

every writer falls to; the banana peel. St Patrick’s Hospital in Ogbunabali is one of the most reliable medical centres in the Garden City. My daughter had heart issue some years back and I tasted and maybe tested that hospital. Beyond that, I lived in Ogbunabali for some years and we could have easily picked up ugly scents of the place if it was notoriously murky. Near it, as if to bless that part of PH with first rate medical facilities, Egbu’s Pharmacy sits pretty. It is perhaps one of the best pharmaceutical centres in the Niger Delta with an unassuming not-tooelderly professional that is trusted by almost every medical doctor in Nigeria. When an ailment is serious, your doctor will insist you get the drugs from no other than Ebu’s. So, between both facilities and some other ones nearby, Ogbunabali assumed a positive reputation in healthcare delivery. Now, Maple got information from his cousin about neglect at St Patrick’s that allegedly led to the death of the cousin’s uncle. Maple took the campaign up on social media and it trended with the full weight of his very strong social capital and media integrity. Outburst followed, but soon, he found he had stepped on a banana peel. Hear him; “On Wednesday 27th March, 2019, relying on information from my younger cousin, Ms Onella, that her uncle, Mr. Emmanuel, who was admitted at St Patrick’s Hospital in Port Harcourt, was allegedly declared

‘‘

dead by the hospital. I shared the story on my Facebook page without hearing from the Hospital. The post generated much interest and I got calls, including from a few individuals I respect. “But after speaking with the Chief Medical Director of the Hospital, the Uncle in question and even his Son, Mr Douglas, they emphasized that no such thing happened. No matter how convinced I was about the story, and regardless of my concerns which now stand invalid because those directly concerned didn’t confirm the story, I hereby publicly tender my unreserved apology to the Chief Medical Director and St Patrick’s Hospital. “I acknowledge and admit that I erred in publishing such an unverified story which dents the image of the reputable Hospital. I also apologise to

I also apologise to the friends, family, well wishers and entire Management of St Patrick’s Hospital. I am truly sorry

the friends, family, well wishers and entire Management of St Patrick’s Hospital. I am truly sorry”- Dappa Maple. So, he did extensive investigations and alas, it was untrue. Maple did what most young persons won’t do. He admitted he was wrong, apologised on his handles. The hospital charged at him through lawyers, and demanded for written and published apology in national and local papers. Maple agreed. He went round and raised the money, drafted the refutal, sent it in for approval, and after he went to national dailies. Most other young fellows would go defensive, would accused the hospital management of high-handedness and victimisation, all to rally round the youths for solidarity and support. He did not. He paid in the funds for adverts. Then, just then, the hospital in all its magnanimity of heart reached out to Maple and said, do not bother. Oh, Glory, Glory!. Maple is loved by the media and in the media. The pardon spread as widely as his criticism. Love flowed freely to both Maple and St Patrick’s. We still commend both to this hour. Every long-lasting writer steps on banana peels. I once did. Do you know why many to this day call me the Python? Long ago, we got a story that a Shell worker in Onelga was swallowed by a python in the bush. They showed us photos. We all sent in the story, but soon, most others got hints it was forged to extort us.

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Investing in Rivers State The hidden treasures in co-location scheme • Nigeria can make $2Bn by setting up offshoot plants in NLNG alone • Nigeria can create 2m jobs in five years from the new idea • What FG needs to do, now Ignatius Chukwu

igeria stands a chance of making over $2Bn in one year alone just by allowing some plants to be set up in the NLNG complex in Bonny Island to explore and exploit wastes that serve as raw materials in the oil and gas industry. This is the finding of a painstaking study by a team led by A.A. Adeleye on behalf of some stakeholders. The finding is part of a bigger study to determine the benefits should Nigeria adopt a global practice of allowing smaller plants to be located in a bigger complex. It is called ‘Co-location’. The study reveals how Nigeria could create over two million jobs before the next five years from plants co-located inside complexes such as the NLNG and Port Harcourt Refineries in Rivers State a well as the Refinery in Warri and Kaduna and Ikot Abasi Aluminum Smelter Plant, all owned by the federal government. Focusing on the NLNG in the report that was made available to BusinessDay, the researchers mentioned the Liquefied Natural Gas (LNG), Natural Gas Liquids (NGLs), and Domestic Cooking Gas (LPG) as key products that can be produced in the NLNG for the local market through co-location. The study showed that potentials in the NLNG plant for other plants would change fuel source from ethane alone and utilize the extracted ethane as feedstock by installing ethane cracker plants in the place. In term of financial and economic benefits waiting to be tapped, the monetization of 2.7 million metric tons of ethylene per year. Ethylene is a colorless flammable gas from petroleum, natural gas, or ripening fruit. It is used in the manufacture of polymers and other chemicals, in metallurgy, to ripen and color harvested fruit. Experts said this alone would fetch over $2Bn in revenue to Nigeria with many jobs in the process. “There are over 20 potential petrochemical plants that can spring off from the product of Ethane Cracker such as Ethylene, Ethanol, Ethylene oxide, Polyethylene, Ethylbenzene, and Polyethylene Chloride. In manpower terms, the extra plants and use of idle facilities in the NLNG alone can create jobs thus: Polypropylene would create 100,000 direct jobs and 600, 000 indirect ones. Carbon Black

can create 50,000 direct jobs and 250,000 indirect ones; while ethylene can create 200,000 jobs and one million indirect jobs. The process of exploiting these potentials have been outlined for the FG by the experts in the following ways: To sensitize the custodians of the existing hydrocarbon complexes; Create a platform to explore the co-location strategy; and formalize engagement and alignment with interested stakeholders. The process would involve identify co-location, engage and align with stakeholders, establish Win-Win strategy, study, evaluate and liaise, as well as proffer functional solution, develop responsibility matrix, and execute solution and monitor progress, so said the experts. Adeleye urged the FG to deploy some already identified analytical tools to deploy cost-effective solution and optimize the value of assets, facilities and services. The tools already identified include PESTLE (Political, Economic, Social, Technological, Legal and Environmental); SWOT (Strength, Weakness, Opportunity and Threats); CCF (Cost Constraints Framework) and M-CRIA (MacroConflict Risk Impact Assessment. The roadmap may include to identify a potential location for sharing of infrastructural facilities and services; liaise and officially communicate with the management of the potential location; establish the current status of each infrastructure and services; complete preliminary investigation to include detailed audit and status of existing facilities, utilities and services to be shared; complete needs assessment of all the participants that would share the infrastructure and services; define the scope

of engagement between the stakeholders including the legal framework; complete a detailed study on the utilization of the infrastructure and services (Electric power and utilities); and conduct a detailed study on the cost benefits (CAPEX and OPEX) for upgrade, expansion and optimization of existing infrastructure and services, if required. Others include retain multidisciplinary consultants to utilize PESTLE, SWOT and M-CRIA analytical tools to deploy costeffective solution and optimize the value of assets, facilities and services; engage multidisciplinary consultants to facilitate the negotiations for co-location arrangements including the terms and conditions of sharing infrastructure and services; appoint multidisciplinary consultants to concentrate scarce resources and management on key value-adding activities such as customer acquisition, service quality, operational excellence and strategic growth; and deploy an optimized solution for the infrastructure and services. Other facilities The study which was presented to media experts in Lagos last week also looked at targets of the report which include governments, investors, communities, Civil Society Organisations (CSOs), and media influencers. The aim may be to ensure that the FG takes advantage of this critical discovery to solve the job disaster that is waiting to happen and boost gross domestic product (GDP). Adeleye’s report showed that the surveyed facilities have extra landed property, infrastructure & services, power, process and instrument air, water including firewater, process water, portable water, boiler feed water, and cool-

ing water. The places also have transport and logistics. The strategy would be for the FG to study the findings and put in place appropriate regulations and laws to enthrone an era of co-location so that the wasting assets and raw materials would be exploited by smaller plants by the private sector. Most new comers may be scared of the cost of land, power, roads, water, security, etc. But by co-locating with the giants, the new ones would find easy to set up and share costs. The FG is not expected to spend a dime, except probably on consultancy and basic recurrent spending. The philosophy is to share already existing facilities, utilities and services; reduce costs of obtaining feedstock; reduce capital and operating costs, optimize the value of assets, facilities and services; and understand and manage host community dynamics, according to the lengthy report. The benefits would be eempowerment and job creation, skilled and semi-skilled workers, implementation of gas exploitation (GBI) Initiatives, improved national GDP and economic diversification, and spin-offs, stable, viable and sustainable businesses. Warri Refinery Warri Refinery complex that may look comatose was found to possess huge potential in colocation benefits because of huge assets lying fallow or being grossly underutilized. It was found to have potential for rrefinery products, Liquefied Petroleum Gas (LPG) (C3, C4, and mixed), premium motor spirit (PMS), Light & Heavy Naphtha (LN&HN), Automotive Gas Oil (AGO), Dual Purpose Kerosene (DPK), and Fuel Oil. There Petrochemical Products such as Propylene Homo-polymer, and Propylene Copolymer. It has

potential for Carbon Black (CB) such as Hard Black Grades that sell for N330, N375, and N220. Existing facilities in Warri Refinery include landed property, jetty facilities, and infrastructure and services with 125MW of electrical power, water treatment plants, two nitrogen plants, compressed air systems, and wastewater treatment plants. “There are over 20 potential petrochemical plants that can spring off from Polypropylene such as Propylene plant, Isopropanol plant, Isopropyl Benzene plant, Butyraldehyde plant and Allyl Chloride plant, Carbon Black, Tyres, Rubber (Footwear), printer’s ink, Carbon paper and Gaskets.” The ‘Urgency of Now’ Catastrophe is imminent-jobs creation not matching population explosion. Nigeria has urgent situations that need immediate answers. Several local and international agencies have painted gloomy pictures of Nigeria’s position on several indicators. For instance, it has been stated by the World Bank that Nigeria needs to create 60 million jobs in the next 10 years when the unemployment figure is expected to hit 60 million people. Gas-Based Industrialization (GBI) will enable Nigeria to maintain a minimum 3 per cent GDP growth. Nigeria at 2017 is the 7th most populous country and 50 per cent of total population is of working age (15-54 years, according to the CIA’s 2016 report which must have been overshot by several inches. However, 13 per cent of total population is unemployed and many other authorities put youth unemployment at 50 per cent. The study shows that; “Projection of population of working age in 10 years (122million) is nearly as high as current total population. If no drastic policy changes are made, the rapid growth in total population will be accompanied by rapid growth in unemployment.” Investment in domestic Gas Based Industrialisation (GBI) has the potential to alleviate the current and future unemployment burden of the rapidly expanding population. Nigeria has the 9th largest gas reserves in the world, with proven gas reserves of 188 trillion cubic feet (tcf ) of gas. Little effort has been made in the exploration of non associated gas historically. Natural gas exploration was mainly undertaken by the oil majors (Shell,Chevron, Agip, Texaco, Mobil, Elf, Ashland, and Pan Ocean) with Shell taking the lead.

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What Zuckerberg should learn from Berners-lee on setting internet rules FRANK ELEANYA

im Berners-Lee inventor of the World Wide Web (www) was in Nigeria in March as part of a 30 hour tour of a few cities around the world to mark the birthday of the web – 30 years old. He may not have pulled in a quarter of the crowd that Facebook draws at any of its events, but only a few people would have doubted the sincerity of Berners-Lee in asking the world to sanitize the internet. At the 2018 Web Summit in Portugal, the father of the web also gave the same message, this time in front of over 70,000 people; it easily resonated among the world leaders, tech business owners and ecosystem that attended the event. Fast forward to March 30, 2019, Facebook CEO, Mark Zuckerberg is making a similar proposal, this time asking governments to create new rules and more regulation for internet companies, but even his followers cannot only wait to see his recommendations die a natural death, they want him to look in the mirror first.

Writing in the Washington Post and on his own Facebook page over the weekend, the Facebook CEO asked “governments and regulators” around the world to play more active role by updating the rules for the internet. He set out four areas in which he believes regulations are needed including harmful content, election integrity, privacy and data portability. “ Internet companies should be accountable for enforcing standards on harm-

ful content,” Zuckerberg said. “It’s impossible to remove all harmful content from the internet, but when people use dozens of different sharing services – all with their own policies and processes – we need a more standardised approach.” Taken literarily, Zuckerberg’s proposal is as bold as it is timely. It is coming at a time when millions of online users are facing different threats including rise in online criminality, fake news

Digital transformation isn’t for CIOs alone in the company – experts FRANK ELEANYA

he chief information officer (CIO) may have the primary responsibility of deepening the culture of digital transformation in an organisation, but any meaningful and sustainable transformation will have to involve everyone in the organisation, says experts at a recent Breakfast meeting organised by Phillips Consulting in Lagos, Nigeria. Digital transformation has become the major preoccupation of many businesses given that it has disrupted many industries and sectors. The effective use of new digital technologies has led to revenue growth higher than their competition for many companies. But some still find it difficult to figure out what digital transformation effectiveness looks like. Felix Nwoshu, Principal Service Delivery Manager, Microsoft who spoke during the breakfast meeting, said everyone in the organisation from the CEO to the

staff should be involved in any digital transformation agenda. Collective involvement has implications for cyber security strategies as well. Cyber criminality targeting businesses is growing on a daily basis. In Nigeria alone, about 60 per cent of companies suffered cyber-attacks in 2018 according to data from NITDA. Nwoshu noted that a lot of companies are finding difficult to respond to the growing cases of attacks. He recommended the ‘Never trust, always verify’ or ‘Zero Trust’ strategy. “Assume all your resources are on the open internet,” he said. The ‘Zero Trust’ strategy essentially implies that before any form of data or company information is giving out to anyone – including those that person may know – the recipient is thoroughly verified. According to him, people remain one of the weakest links in the cyber security chain. Hence, ensuring limiting access to the minimum has become one of the strategic ways many businesses now reduce their

exposure to cyber criminals. Citing a recent study, Nwoshu disclosed that 87 per cent of senior managers admitted to accidentally leaking business data. Bala Fakandu, deputy director, Office of the National Security Adviser (ONSA) said from a government perspective, awareness is also a critical component to fighting cyber breaches. Public officers and government departments are the most exposed. Hence, there is an urgent need, he says, for capacity building towards digital transformation in the public service. He also identified some of the major constraints of identifying and prosecuting cyber-crimes in Nigeria such as awareness, capability and funding. “Until we get facts, we would not be able to make an arrest,” he said. Jason Ikegwu, associate partner, Pcl, noted that digital transformation has gone beyond adoption. “It is about moving from adoption to addiction, where it is about survival and relevance,” he said.

platforms, hate speeches, cyber racism and supremacist ideologies. Cyber bullying statistics worldwide also reveal alarming facts about virtual harassment. His recommendations, broad as they may seem, has however failed to win the hearts of people on social media including his followers on Facebook. One of Zuckerberg’s followers, Dan Genduso said Facebook’s advanced systems make it hard to trust the

company. “Facebook isn’t operating on a very high level of trust right now,” he wrote. “Why does Facebook feel that it is okay to capture data about me in the first 20 minutes of me going to another website that I’ve never been to prior and have no history of agreeing to a terms of use?” “Dear Mark, why does Facebook block people who speak out, an opinion that is harmless?” asked Martha Klopper, another follower of Zuckerberg. “What is happening right now? For me it is as if both sides do not want to understand each other.” One of the lessons Zuckerberg could learn from Berners-Lee is one of the things Facebook is most guilty of – sincerity. First, in his essay, Zuckerberg praises the efforts his company has been making in curbing harmful content; he suggests government is to blame for not engaging enough with content creators. “Facebook gives everyone a way to use their voice, and that creates real benefits – from sharing experiences to growing movements,” he wrote. The government’s weak role-play means that even responsible companies like

Facebook which must necessarily “make mistakes” because of its market scale are not held accountable. In the case of Berners-Lee, there is no dancing around to find where the problem lies or who to blame; no effort at pushing an ‘Us’ and ‘Them’ narrative. As Zuckerberg is just realising, it always backfires. “You can’t just blame one government, one social network or the human spirit,” Berners-Lee wrote in a post to mark the 30th anniversary of the web. “Simplistic narratives risk exhausting our energy as we chase the symptom of these problems instead of focusing on their root causes. To get this right, we will need to come together as a global web community.” David Cicilline, the chairman of antitrust committee in the US House of Representatives was among the first officials who dismissed Zuckerberg’s call. According to him, Zuckerberg does not get to make the rules anymore. “Facebook is under criminal and civil investigation,” Cicilline told the Financial Times. “It has shown it cannot regulate itself. Does anyone even want his advice?”

With better internet, top Nigerian ads on YouTube will do better CALEB OJEWALE

igerians are likely to spend more time consuming digital content, particularly videos but poor internet service makes it appear to some as a luxury. Despite this, the top 10 ads on YouTube’s Nigerian Leaderboard gathered over 17 million views in 2018, a figure that has now increased by over a million. While it may not be possible to determine (at least now) if advertisers on the video platform got expected commercial value for their investments, what has been shown is that they at least got substantial attention from the audience. Among the top-ten ads at the end of 2018, the Union Bank of Nigeria’s Enabling Success video which according to Google had 2.7M views at the end of 2018, had risen by a million views to 3.7M views at the time of writing this article, while others had not substantially changed. They include; MTN’s Traditional Wedding Day video ad at the end of 2018 had 2.6 million views; Jumia’s Black Friday 2018 advert - 2.3M views,

and Stanbic IBTC’s Enabling you to be you video - 2.1M views. Others are the United bank of Africa - 919 Dance Video with 1.6M views; MTN MPULSE - The Takeover, 1.6M Views; Airtel NG - The-Inlaws –Tutorial, 1.4M views; P&G Nigeria - Ariel Assurance, .3M views; GTBank - Come Let’s Eat Together GTBank Food & Drink 2018; 1.2M views, and the advert by LG INVERTER with 1.2M views. Conversely, the global best performing YouTube ad at the end of 2018; Alexa Loses Her Voice – Amazon Super Bowl LII Commercial, had 50.1 million views. It appealed more to audiences in countries such as the US where internet connectivity is anything but luxury. The Speedtest global index ranks Nigeria 139 in quality of fixed broadband with an average download speed of 10.47 Mbps, whereas the global average was 55.58 Mbps. For Mobile network speed, Nigeria is ranked 107 in the world with an average speed of 12.22 Mbps in February 2019, whereas the global average speed was 25.27 Mbps. “Sometimes it can be discouraging when you put in a

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

lot of effort to produce a video and then it gets very little views,” Tobi Ayeni who runs the MissTechy channel told BusinessDay in a publication on how poor internet affects Nigerian content producers. Mark Angel, who runs Nigeria’s biggest YouTube channel with 715 million views and 3.5 million subscribers, described data and telcos as the “biggest challenge”. According to him, there are no policies in favour of the users, and these need to be put in place. The more people use internet, the more they are likely to consume content, and this will in turn be a source of revenue for content producers. Just as the content producers expect to get more views, so are local companies and advertisers likely to perform better in reaching target audiences. H o w e v e r, f o r J u l i e t Ehimuan-Chiazor, Google Nigeria’s country director, the Nigerian brands that made the top-ten list embraced the storytelling power of YouTube. “In 2018, as in every other year, clarity of purpose, generosity of spirit and finesse in execution mark out top performers,” Ehimuan-Chiazor said.

36 BUSINESS DAY NEWS

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Reduced productivity from illnesses costs Nigeria N316trn ... ranks highest in losses to GDP in Africa CALEB OJEWALE

he indirect cost of illness in Nigeria as at 2015 has been estimated at $879 billion, more than double the country’s GDP, and accounting for about 36 percent (more than one-third) of the $2.42 trillion total productivity loss across the World Health Organisation (WHO) African region, according to a recent exhaustive report on ‘The indirect cost of illness in Africa’ produced by the WHO. The report also noted that approximately 50.9 percent of loss in lower-middle-income countries (LMIC) was borne by Nigeria, which in 2018 had a paltry health budget of N340 billion ($946m), equivalent to $5 per person when divided by the country’s 193 million population. “Things cannot get better once you do not put money in health, the country is playing lip service with health,” Francis Faduyile, president, Nigeria Medical Association, told BusinessDay in an interview when asked about the preference of political officeholders for overseas treatment. According to WHO, the diseases afflicting the African population are responsible for a substantial loss in health, estimated at 704,765,879 DALYs in 2015 alone. The disability-adjusted life year (DALY) is a measure of overall disease burden expressed as the number of years lost due to ill health, disability or early death. It is calculated as the sum of the Years of Life Lost (YLL) due to premature mortality and the Years Lost due to Disability (YLD) for people living with a health condition or its

consequences. “When we strengthen our regulatory system, we will reduce the cost of illnesses in Nigeria,” said Chimezie Anyakora, chief of party, United States Pharmacopeia (USP), Nigeria. Anyakora explained that when poor quality medicines are removed from circulation by more stringent regulation, Nigeria will spend less because money spent on poor quality medicine is wasted fund. Also when medicines are of good quality, diseases are tackled early enough to avoid complications and more spending. NAFDAC has worked very hard on this front in the past few years. In the WHO African Region, total losses amounted to 629,603,271 DALYs. Out of that total, 416,671,978 DALYs (59.1 percent) were from communicable, maternal, perinatal and nutritional conditions; 216,073,399 DALYs (30.7 percent) were from non-communicable diseases (NCDs), and 71,551,401 DALYs (10.2 percent) were from injuries. Five countries (the Democratic Republic of the Congo, Ethiopia, Nigeria, South Africa and the United Republic of Tanzania) accounted for almost 50 percent of the total DALYs accrued in the region. To arrive at these values, the study quantified the GDP losses associated with these DALYs. Losses are estimated for all causes of DALYs by age group, by World Bank income group classification of countries and by regional economic community (REC). The estimated GDP losses due to ill health, disability and premature death vary substantially by age and disease categories and by economic group and REC.

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Thursday 04 April 2019

FEC okays transaction parties for N3.4trn promissory note to offset local debt TONY AILEMEN, Abuja

ederal Executive Council (FEC) on Wednesday approved the appointment of Transaction Parties for the N3.4 trillion promissory note to offset local debt at the cost of N689.96 million (including fees and expenses to the Transaction Parties). Minister of finance, Zainab Ahmed, disclosed this while briefing State House Correspondents after the weekly FEC meeting presided over by President Muhamadu Buhari. The minister said the funds would be sourced from proceeds of FGN Securities Issuance. Three categories of Transaction Parties are to be appointed for the implementation of the Programme and they include “An International Accounting Firm operating in Nigeria (for verification of the liabilities); ii) Financial Advisers (for the structuring of the Promissory Note); and, iii) Legal Advisers (for legal

advisory services and litigations that may arise.” She disclosed that the Bureau of Public Procurement (BPP) had issued Due Process “No Objection” for the appointment of the successful bidders and their respective Fees and Expenses as detailed in Table 1 below. The recommended Bidders and their Fees and Expenses include KPMG, Joint Financial Advisers and Zenith Bank/Zenith Capital. Others include Coronation Merchant Bank/Access Bank, UBA/United Capital, Joint Legal Advisers and SimmonsCooper Partners, D.D. Dodo & Co as well as Perchstone & Graeys at the total cost of N689.955 million. The FEC had at its meeting of July 12, 2017, approved the Establishment of a Promissory Note Programme for the settlement of Inherited Local Debts and Contractual Obligations of the Federal Government (the Programme) estimated at N3.4 trillion. According to breakdown of the Creditors released by the minister, Pension Liabili-

ties amounts to N400 billion, while Staff Claims of N270 billion, with unpaid Salaries and 3rd party deductions standing at N24.95 billion. Contractors Claims amounts to N45.36 billion, while Fuel Supply Accrued interest and Foreign Exchange differentials N514.29 billion. Federal Government indebtedness to State Governments Claims amounts to N487.85 billion, with Ministry of Health Outsourced Liabilities standing at N9.04 billion. Federal Government will pay N596.51 billion to contractors as well as N350.12 billion for Export Expansion Grant (EEG) Scheme, with N112.96 billion as judgment debts while Discos get N26.71 billion and Gencos, N495.67 billion. The minister, while explaining benefits of the Programme, said it was expected to provide stimulus to the economy and unlock investment across a number of sectors currently having liquidity issues. “An immediate a positive impact on the non-per-

forming loan ratios of banks, which will in turn, increase the banks capacity to lend, as well as enables the Federal Government to formally recognise and account for its true liabilities in line with the International Public Sector Accounting Standards (PSAS). “The President had forwarded the Programme for the approval to the National Assembly in compliance with the Fiscal Responsibility Act, while the National Assembly granted the approval in December 2018, for the Issuance of Promissory Notes to two (2) creditor categories from the Programme: “They included refund to 21 State Governments for projects executed on behalf of the Federal Government (Refunds to 4 States – Bauchi, Delta, Kogi and Taraba, were not approved) (N488,743,526,204.77). “The National Assembly also approved Payment to Oil Marketing Companies (OMCs) for Fuel Supply Accrued Interest and Foreign Exchange Differentials amounting to N348,003,054,975.00. L-R: Temitope Aladenusi, chief strategy officer/ cyber risk services leader, Deloitte West Africa; Haruna Jalo-Waziri, managing director/ CEO, Central Securities Clearing System (CSCS) plc; Adetokunbo Omotosho, managing consultant, Infoprive Group, and Ayokunle Adaralegbe, chief risk officer, CSCS plc, during the maiden edition of Cyber Security Workshop organised by CSCS plc themed “Building Effective Cybersecurity Response in Nigeria’s Capital Market”, in Lagos, yesterday.

Nigeria, seven others top list of world’s most hungry countries Taraba: Hundreds turn IDPs, property looted as Jukun/Tiv crisis escalates ISAAC ANYAOGU

ll over the world, about 113 million people are chronically hungry and nearly two-thirds of those facing acute hunger come from eight countries - Afghanistan, the Democratic Republic of Congo, Ethiopia, Nigeria, South Sudan, Sudan, Syria and Yemen, a new report by the United Nations Food and Agriculture Organisation (FAO) notes. The FAO, World Food Programme (WFP) and EU “Global Report on Food Crises 2019” shows that the number going chronically hungry has remained well over 100 million over the past three years, with the number of countries affected rising. There were 11 million fewer people believed to be in

food crisis in 2018 compared with 2017, in 17 countries, acute hunger either remained the same or increased, the report indicates. The report also states that an additional 143 million people in another 42 countries are just one step away from acute hunger. Climate and natural disasters pushed another 29 million people into acute food insecurity in 2018, says the report, and that number excludes 13 countries - including North Korea and Venezuela - because of data gaps. “It is clear from the Global Report that despite a slight drop in 2018 in the number of people experiencing acute food insecurity - the most extreme form of hunger - the figure is still far too high”, said FAO director-general, José Graziano da Silva, speaking at

a two-day conference to discuss the findings, in Brussels. “We must act at scale across the humanitariandevelopment-peace nexus to build the resilience of affected and vulnerable populations. To save lives, we also have to save livelihoods”, he said. While critical to saving lives and alleviating human suffering, humanitarian assistance does not address the root causes of food crises, WFP Executive Director, David Beasley noted in Brussels, highlighted the importance of “attacking the root causes of hunger: conflict, instability, the impact of climate shocks”. “Boys and girls need to be well-nourished and educated, women need to be truly empowered, rural infrastructure must be strengthened in order to meet that Zero Hunger goal.

NATHANIEL GBAORON, Jalingo

undreds of Tiv farmers on Wednesday continue to flee Wukari town and its environs into neighbouring Benue State following escalation of the crisis between Jukun and Tiv in the area. Violence broke out in Kente Village of Wukari Local Government Area of the state on Monday following what locals described as an age-long problem, but triggered by a minor misunderstanding between Jukun and Tiv youths. Rev. Fr. Peter Tari, the Parish Priest of St. Mary’s Catholic Church Wukari, told our correspondent that he had taken hundreds of displaced persons into the Parish House as IDPs.

Tari, who lamented the looting of property and burning of houses in Wukari and the surrounding villages, expressed disappointment over the crisis and called for urgent intervention. “The situation is not any better. I am around the Federal University Wukari trying to rescue some of my parishioners. “I was ashamed when I saw Jukun youths burning and looting Tiv people’s houses few meters away from General Hospital Wukari on Tuesday. “Whatever is the issue, I want to call on the state government and the security agencies to quickly resolve the crisis in the interest of peace, and development,” he said. Chairman of Wukari Lo-

cal Government Council, Daniel Adi, told our correspondent in a telephone interview that he has been touring the trouble spots with security agencies to calm the tension. “We have arrested so many people in connection to the crisis and looting of property. Many of those arrested are now at the Police Area Command in Wukari. Police Public Relations Officer, Taraba State Police command, ASP David Misal told our correspondent that security personnel have been drafted from Jalingo and Takum to Wukari to calm the situation. “I can confirm to you that the situation is now calm and we are intensifying efforts to restore peace total peace in the area,” he said.

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Zedcrest Capital adjudged Proprietary Oil sustains 2019 high rally as Saudi Arabia keeps Asian prices unchanged Investment Company of the Year IFEOMA OKEKE

ew-age financial solutions firm, Zedcrest Capital Group, Tuesday, was adjudged the Proprietary Investment Company of the Year at the International Standard Leadership Summit & Excellence Awards organised by the World Quality Alliance. World Quality Alliance standards panel nominated Zedcrest Capital after their 2018 industry review. Commenting on the award, Adedayo Amzat, CFA, group managing director of Zedcrest Capital, said, “We are delighted by this recognition and are challenged to do more to grow the Nigerian economy. “Our proprietary investment arm is invested in a portfolio of companies in the financial services and real estate sectors and is ready to expand into other critical sectors of the economy through the deployment of capital into start-ups and high growth business opportunities”. Zedcrest is renowned for its significant investment in Zedvance, one of Nigeria’s top three consumer lend-

ing franchises that recently clocked five years in operations. Zedcrest is also acknowledged for an expansive pipeline of deals it has facilitated for several clients and investors. Speaking on the theme of the summit, “Developing Sustainable Standards in the era of Artificial Intelligence”, David Ugo Mba, Director of Technology Capital & Capabilities at the Strategic Business School, Lagos, said many multinational companies already recognize the benefits of Artificial Intelligencebased systems and will further leverage on the power of AI in the future. “AI is fuelling powerful ways to help companies get closer to their customers, and share information and knowledge in a personalized exchange”, he said. He also urged Nigeria businesses to embrace AI as it would help improve their productivity and enhance efficiency to service their customers better. The event, which held at the Sheraton Hotel & Towers, Lagos had in attendance industry captains from the financial, Information Technology and manufacturing sectors.

STEPHEN ONYEKWELU

nticipations of more US sanctions against Iran, further Venezuelan supply disruptions and improved expectations about global oil demand have sustained oil price at its 2019 high of above $69 and could exacerbate OPEC-led supply cut. “China’s Purchasing Managers’ Index (PMI) number was the most significant monthly increase since 2012, which should ease concerns around a potential threat to oil demand,” Stephen Innes, head of trading and market strategy at SPI Asset Management, said. Brent futures reached a session peak at $69.52 a barrel, the highest since November 13. The global benchmark rose 36 cents, or 0.52 percent, to settle at $69.37 a barrel. US West Texas Intermediate (WTI) crude rose 99 cents, or 1.61 percent, to settle at $62.58 a barrel, after touching $62.75, its highest level since November 7. “The supply cuts have been there for a while but Venezuela is not improving,” said Olivier Jakob, analyst at Petromatrix. “That is taking a lot of oil away from the mar-

Konga grows by 750% since Zinox acquisition, targets 2021 for profit margins JUMOKE AKIYODE-LAWANSON

ith over 750 perc e n t growth since its acquisition of Zinox, as a result of innovative implementations, Konga is on the path to becoming Africa’s first e-commerce firm to turn profitable as it targets 2021 financial year to give stakeholders dividend – a development that will change the outlook of the sector for good. Nick Imudia, ex-vice president of Nokia and coCEO, Konga Group, says going by the huge strides recorded by the business within the past 12 months, it is clear that Konga will keep her promises to stakeholders by the 2021 financial year, noting that from then on, it will be huge profit. “We understand this market more than any competitor and have been investing creatively nationwide to resolve issues like warehousing, delivery logistics and payment headaches, including working with Microsoft in the past five months to deploy the most robust technology platform that will manage our aggressive expansion. “We are almost there

and few weeks from now, the nation will start feeling the power of Konga before we start rolling out to other English-speaking West African countries,” Imudia says. Imudia, who spoke with select journalists at the Lagos International Airport upon return from South Africa for a business summit, discloses that Konga is more than just an e-commerce company and has grown more than 750 percent since acquisition. “There is no reason why Konga cannot emerge as the first profitable e-commerce company in Africa. We are determined to set this record in the e-commerce world. Over the past 18 months since the business was acquired by the Zinox Group, there has been a huge transformation which has repositioned Konga as one of the most viable ventures not just in Africa but globally, as justified by our elevated rating by Early Metrics,” he says. When asked why Konga had not raised any form of capital from investors, he notes that the management of the new Konga was more interested in restructuring and positioning the business on the path of consistent growth rather than rush to raise money.

“As you know our investors are people who take commercial decisions and are not into losing money as a lifestyle. The management of Konga has enough resources to drive the company’s ambitions of becoming number one in Africa. As a result, it is not looking to rush to take investor funds, even though we have received quite a number of very good offers from potential investors in the past few months. “We want to make it profitable first and then invite value-adding investors, not just cash investors. I am sure you know the capacity of our investor, they are experienced, successful and have combined local knowledge and international network of over 35 years.”

CHANGE OF NAME

I, formerly known and addressed as Theresa Bello Nee Uwandulu now wish to be known and addressed as Theresa Umoeka. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Bende Deborah now wish to be known and addressed as Bende Deborah Kelech. All former documents remain valid. General Public please take note.

ket.” Further supply losses from Iran and Venezuela could widen an OPEC-led production cut that took effect in January, designed to prevent a price-sapping rise in inventories. Supply from the OPEC nations hit a four-year low in March, a Reuters’ survey found, because top exporter Saudi Arabia cut more than it had agreed to and due to the involuntary declines. Three of the eight countries to which Washington granted waivers to import Iranian oil have now cut their shipments from Iran to zero, a US special representative said on Tuesday. Meanwhile, a crude terminal in Venezuela, also under U.S. sanctions, halted operations again due to power problems. “The latest driver appears to be the idea that tightened supplies are going to create a stronger fundamental picture,” said Gene McGillian, director of market research at Tradition Energy. “The market keeps pushing higher.” However, state-owned Saudi Aramco may cut the official selling price (OSP) for its flagship Arab Light crude by 5 cents a barrel for May.

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BUSINESS DAY

Agric reform: Edo, NIRSAL, Sterling Bank partner on mechanised farming, development of 1500ha rice farmland

uilding on the strides made in the agricultural sector in the state, the Governor Godwin Obaseki-led administration has concluded plans on a partnership with the Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL) and Sterling Bank on the development of at least 1500 hectares of farmland in different locations across the state. Edo State acting governor, Philip Shaibu, who disclosed this when a team from NIRSAL paid a courtesy visit to the Government House in Benin City, assured farmers in the state of adequate incentives to boost productivity. He said the state government was committed to the partnership, which ensures that farmers get necessary financial support to fast track the introduction of mechanised farming in the state. According to Shaibu, “I commend the banking sector for coming to the rescue of the agricultural sector. They are making the process of introducing farmers to new techniques and technologies easy. This will help in boosting productivity.”

He added that the state government designed an entrepreneur programme for youths, which will help in grooming them for profitable agribusiness. Special adviser to the Governor on Agriculture, Forestry and Food Security Programme, Joe Okojie, reiterated that agriculture remains the easiest and fastest way to create wealth, noting, “People don’t pay much attention to agriculture in this country, but this system seems different in the sense that it is going to be strictly mechanised. We aggregate all the farmers, link them to funding, inputs and markets.” He said there were offtakers for whatever the farmers produce, which is going to boost their confidence in developing large expanse of farmland. According to him, “For instance, we have a rice belt in Iguoriakhi, where we are doing above 500 hectares of rice. We aggregated all the farmers that have been traditionally farming rice and helped in developing the land. We brought in the NIRSAL, to take it from mechanisation to harvesting.

38 BUSINESS DAY NEWS

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Nigerian banks rediscover retail clients in... Continued from page 1

into the market to attain the retail

lending growth. Fintech companies, from Renmoney to Paylater, are already making significant inroads into retail lending and it appears the banks are now latching on to the perceived opportunities in that segment. Peter Amangbo, Zenith Bank’s CEO, also said in an earlier interview that the country’s biggest bank by assets plans to expand retail loans as a percentage of total credit to about 4 percent this year, from less than 1 percent in 2018. The renewed focus on consumer

lending is a sign that the banks see a recovery in consumer spending in 2019 and are positioning to take advantage of that recovery. Consumers are expected to loosen their purse strings to some extent this year as inflation slows and the economy continues to recover. The banks are making the shift to retail lending following a lull in lending over the past three years as non-performing loans picked up in the aftermath of a sharp drop in oil prices that made it difficult for borrowers to service their loans, forcing banks to write off a huge chunk of credit extended to the oil and gas sector, to which most lenders were

heavily exposed. Banks NPLs have, however, turned the corner since then, falling to within single digits after soaring to over 20 percent in 2016. The loan improvement, which has been buoyed by higher oil prices and stability in oil production, hasn’t necessarily translated to loan growth with the banks happier to continue reducing NPLs and park cash in risk-free government securities with double-digit yields. The loan books of two of the big five banks, GTB and Zenith Bank, shrank in 2018 despite initial guidance for 10 percent loan growth as lenders shied away from extending credit in an economy still recovering from a contraction in 2016.

GTB, the biggest bank by market capitalisation, cut loans and advances to customers by 13 percent to N1.26 trillion in 2018 from N1.45 trillion in 2017. Zenith Bank, the biggest lender by assets, also cut credit growth by 13 percent to N1.8 trillion from N2.1 trillion in the period under review. This year, GTB is targeting a 5 percent loan growth while Zenith targets 7.5 percent loan growth, having missed last year’s target. Agbaje said the motivation to grow GTB’s loan books is not due to falling yields on government securities which have slipped some 200 basis points this year. “I don’t see a significant decline in yields at least in the first half of the year, if the Central bank continues to

Thursday 04 April 2019

tighten monetary policy,” Agbaje said. The CBN cut benchmark interest rates for the first time in three years at the Monetary Policy Committee (MPC) meeting in March. The key rate was brought down to 13.5 percent from 14 percent in what lenders say is more of a signalling effect than a sign the CBN is cutting back on aggressive monetary tightening. The bankers say the rate cut is insignificant and does little favours for lending. Instructively, the CBN governor said the CBN will continue its normal practice in the market despite the rate reduction, a statement interpreted by the banks to mean a continued commitment to maintaining exchange rate stability by mopping excessive naira liquidity.

At last, Wike wins with 886,264 votes in... Continued from page 2

L-R: Cynthia Lareine, executive director, International Lawyers for Africa (ILFA); George Etomi, principal partner, George Etomi and Partners; Femi Fadahunsi, partner; Chinyere Okorocha, partner, Jackson, Etti, and Edu, and Seni Adio, chairman, Nigerian Bar Association-Section on Business Law (NBA-SBL), at the NBASBL ‘Building UK and Nigeria legal sector collaboration’ seminar in Lagos, yesterday. Pic by Olawale Amoo

Structural, policy challenges constrain... Continued from page 1

holds bilateral discussions with

members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. “Under current policies, the outlook remains therefore muted,” the IMF said in the report. “Over the medium term, absent strong reforms, growth would hover around 2½ percent, implying no per capita growth as the economy faces limited increases in oil production and insufficient adjustment four years after the oil price shock,” the IMF said. It forecasts that growth will accelerate to 2.1 percent this year from 1.9 percent in 2018, on the back of improvements in manufacturing and services, supported by spillovers from higher oil prices, ongoing convergence in exchange rates and strides to improve the business environment. However, risks are moderately tilted downwards, according to the IMF. On the upside, oil prices could rise, prompted by global political disruptions or supply bottlenecks. Bold reform efforts, following the election cycle, could boost confidence and investments, especially given relatively conservative baseline projections. On the downside, additional delays in reform implementation, a persistent fall in oil prices, reduced oil production, increased security tensions, or tighter global financial market conditions could undermine growth, provoke a market sell-

off, and put additional pressure on reserves and/or the exchange rate. Current growth rates would still leave Nigeria as one of Africa’s least buoyant economies and will be below the rate of population growth, which is almost 3 percent. The unemployment rate was 23 percent in September. The IMF emphasised that phasing out implicit fuel subsidies while strengthening social safety nets to mitigate the impact on the most vulnerable would help reduce the poverty gap and free up additional fiscal space. Nigeria caps gasoline at N145 per litre ($0.40, or $1.51 a gallon), among the 10 cheapest levels worldwide, according to GlobalPetrolPrices.com. Nigeria spent N623 billion ($1.7 billion) on fuel subsidies last year, the IMF estimates. The IMF welcomed the authorities’ tax reform plan to increase non-oil revenue, including through tax policy and administration measures. It stressed the importance of strengthening domestic revenue mobilisation, including through additional excises, a comprehensive VAT reform, and elimination of tax incentives. Securing oil revenues through reforms of state-owned enterprises and measures to improve the governance of the oil sector will also be crucial, the IMF said. With inflation still above the Central Bank of Nigeria (CBN) target, the IMF generally considered that a tight monetary policy stance is appropriate. It encouraged the authorities to enhance transparency and communication and to end direct central bank intervention in the economy to allow focus on the central bank’s price stability mandate.

Directors commended the authorities’ commitment to unify the exchange rate and welcomed the increasing convergence of foreign exchange windows. They noted that a unified market-based exchange rate and a more flexible exchange rate regime would support inflation targeting. Directors also stressed that elimination of exchange restrictions and multiple currency practices would remove distortions and facilitate economic diversification. The IMF welcomed the decline in nonperforming loans and the improved prudential banking ratios but noted that restructured loans and undercapitalised banks continue to weigh on financial sector performance. They suggested strengthening capital buffers and risk-based supervision, conducting an asset quality review, avoiding regulatory forbearance, and revamping the banking resolution framework. The IMF also recommended establishing a credible time-bound recapitalisation plan for weak banks and a timeline for phasing out the state-backed asset management company (AMCON). The IMF also urged the authorities to reinvigorate implementation of structural reforms to diversify the economy and achieve the Sustainable Development Goals. It pointed to the importance of improving the business environment, implementing the power sector recovery programme, deepening financial inclusion, reforming the health and education sectors, and implementing policies to reduce gender inequities. The fund welcomed improvements in the quality and availability of economic statistics from the National Bureau of Statistics (NBS) and encouraged continued efforts to address remaining gaps, including through regular funding.

When results of the four outstanding local governments were announced on Wednesday evening, Wike’s votes soared to 886,264, with Awara recording a distant 173,859, resulting in his emergence as the winner. On day one of the collation, Wike bagged 15 states while his closest rival, Awara won in two local councils. The next day, Wednesday, April 3, 2019, Wike won in four more local council areas. The state has 23 LGAs. The electoral law requires a contestant to win the highest votes in addition to at least 25 percent in two-third of the local councils, which is 15 states in the case of Rivers State. Meanwhile, the APC, which is not on the ballot but which is believed to be pushing the AAC, has threatened to go to court after INEC would have announced results to challenge the validity of the collation. Atiku Abubakar, presidential candidate of the PDP in the February 23 election, congratulated Governor Wike on his victory. “My hearty congratulations to Governor Nyesom Wike on your

hard earned re-election. It gives me much pleasure to see a political force for good, such as yourself, overcome the anti-democratic forces of dictatorship and oppression,” Abubakar said in a statement he personally signed. “The People’s Democratic Party is blessed to have a political gladiator, such as yourself, on our side. The citizens of Rivers State are fortunate to have a genuine progressive return to extend the frontiers of progress and development for them. And I am favoured to count you, Governor Wike, as my friend and brother, and Rivers State as my second home,” Atiku said. The former vice president further said, “As your victory is savoured by men of goodwill all over Nigeria, I am sure you will continue the pattern of good works for which you have become known. “Nigeria needs men like you; men who can remain firm, unbowed and resolute in the face of trying times. You have proved that you have character under trial, and not just when the going is good. Such refinement will stand you in good stead as, by the grace of God, you finish the good work you have started in Rivers state.”

Crown Refinery signs MoU with Ondo State... Continued from page 2

several infrastructural projects in the sates and would create massive employment opportunities for indigenes of the state “The project host communities would benefit from infrastructural developments as we are partnering with Simens company to provide over 40 megawatts of power for the state. We are also going to be awarding scholarships program, entrepreneurial opportunities as well 2000 direct and indirect employment opportunities”, he noted. The Nigerian, and the West African market’s demand for petroleum products has been on the increase, but this demand has been largely unmet by the existing supply from refineries, across the region. Amid a much higher demand for the product relative to supply is the fact that the West African sub-region still imports most of her refined petroleum product due to political will to develop a functional refinery. Nigeria, Africa’s biggest oil producer have four refineries that have long been sitting idle. BusinessDay in a report earlier his week noted that Nigeria’s state owned oil firm and sole importer of crude oil into the country recorded a loss in full year 2018 despite Brent crude averaging above $70 in the larger part of the year. This poor performance is seen as a show of

shame when compared with its counterparts from Brazil, China, Norway and Russia. Despite this loss overtime, Nigeria has continued to maintain a status quo that is seen as unsustainable and detrimental to its economy. In 2018 alone, the country spent N730.9 on subsidy which it has stylishly called under-recover, BusinessDay reported this week. In light of this shortfalls in supply, that the private players are coming into the sector to bridge the gap. Africa’s riches man and chairman of Dangote refinery, will be flagging of his refinery with a production capacity of 650,000 Bpd in 2021. “The market is deep enough! For us, it is more of contributing to an industry output that will meet the demand”, Kazeem noted. Also, note should be taken of the wider West African market, which provides additional opportunity for export. On his part, the governor of the state, Rotimi Akeredolu said the state will continue to render utmost support in seeing that the firm achieve success in line with its vision and mission statement. According to him, the investment is a much needed one for the state to create jobs and open us the economy to growth opportunities hence the state has provided the firm with 190 hectares of land for he execution of the project.

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Ignatius Chukwu

Nyesom Wike

democracy. While dedicating the victory to God and the ever conscientious people of the state, Obuah further lauded the victory as unprecedented in the annals of the state, as according to him, it could only take God’s intervention to survive the gang-up and the evil conspiracy by those he

Group advises Oyo governor-elect to constitute elders’ advisory council Akinremi Feyisipo, Ibadan

gitators for Good Governance in Nigeria, a sociopolitical pressure group, has called on the governorelect of Oyo State, Seyi Makinde, to score a first on assumption of office, by constituting Elders’ Advisory Council to support his administration with useful and timely ideas to move the state forward. The EAC, the group said, should comprise men and women with track records in public and private sectors, administration, economy, sports and other fields of human endeavours. In a statement by its state coordinator, Adebowale Adeoye, said past governors, deputy governors, secretaries to the State Government, Head of Service and credible labour leaders be injected into the body, to serve in such advisory capacity, to channel development for the state, in line with the vision and manifestoes of the ruling government. The group also described his emergence as the will of God backed up with unmatched and unimaginable determination of the people of the state “to liberate themselves from slavery, bad governance and unilateral actions of just one emperor that has destroyed all known principles of democracy in the state.” It however, advised Makinde not to betray the trust and confidence that the good people of the state have in him, that motivated them to massively vote him as the governor of the state. Adeoye also called the attention of the governor-elect to the steps taken by the group on his behalf during campaign and election periods,

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Jubilation sweeps across P/H as Wike wins s jubilation reverberates through the length and breadth of Rivers State following G overnor Nyesom Wike’s declaration as winner of the March 9, 2019 Governorship Election in the State, the Rivers State Chairman of the People’s Democratic Party (PDP), Felix Obuah has joined the train of well wishers to congratulate the Governor-elect on his well-deserved and landslide victory. Obuah, while speaking shortly after the declaration of Governor Wike as the winner of the March 9, 2019 governorship election, said the victory has once more put paid to any doubt about God’s infallibility, especially to those who put absolute trust in Him. The State PDP Chairman said the victory is not just victory for Governor Wike and the PDP but indeed a victory for all lovers of true democracy as well as the good people of Rivers State even as he also described it as a litmus test for our

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since parts of it will form the yardstick to measure his achievements, forthwith. He said: “We have sent experts out to take note and record of the present situation on ground, the state of facilities in the various hospitals, schools and other government establishments. We took this step to make available to the people of Oyo State the reality and true position of things as at the time your administration takes over to avoid future denial and as well encourage people to appreciate every effort of your administration towards returning the state to its pacesetter status. “A critical assessment of the present situation of each sector of the economy in Oyo State confirmed the enormous task before the incoming administration of Your Excellency and upon which your administration will be judged.” The group also charged Makinde to ensure that the promises made on his behalf by the group are attended to and executed. “You will recall Sir, as published in some dailies that prior to the governorship election after our decision to back Your Excellency as the right candidate for the state, we then moved round the six geopolitical zones in the state and consulted with who is who in the society, leadership of the various groups including professional bodies, communities, association, veterans and Pensioners and Aid Organisation. “Our position on what to expect from your administration if voted for were made known and we got them convinced, and they promised to give their votes to Your Excellency. We have no doubt in our mind that they fulfilled their promise.

described as enemies of the state. “This victory has gone to show that our God is a miracle worker. God has clearly shown that the fervent and heartfelt prayers being offered by Rivers people on daily basis are not in vain. Truly, he has disappointed all the counsel of Ahithophel including all those who

Ganduje, 27 elected House members get certificates of return in Kano Adeola Ajakaiye, Kano

arrogate the place of God to themselves”, Obuah said. The PDP Chairman said the reelection of Governor Wike should serve as a lesson and reminder to all political office holders not to take the people to whom absolute power belongs for granted and ensure at all times that people-oriented programmes at the grassroots are paramount to bring about the much desired catalyst for social and economic development. “Knowing that ‘Mr. Projects’ is ever magnanimous in victory, I urge all Rivers people including those candidates who lost out in the election to cooperate and work in harmony with Governor Wike so as to hasten the development of our dear State”, Obuah said. The State PDP boss also commended the Independent National Electoral Commission’s (INEC) State Resident Electoral Commissioner (REC), Ubo Effanga, security agencies and all those who ensured that peace and orderliness prevailed during the collation and announcement of the historic election results.

overnor Abdullahi Umar Ganduje has said his new administration which takes effect on May 29, would place emphasis on the development of the huge human capital existing in the state, as well as making the state a viable investment destination. In order to achieve these goals, Ganduje disclosed that the incoming administration would step up investment in public education sector, in addition to strengthening investments in providing adequate social infrastructure to boost economic activities. He made this disclosure on Wednesday, when the Independent National Electoral Commission (INEC) presented certificates of return to him and his deputy Nasiru Yusuf Gawuna, as well as 27 All Progressives Congress (APC) out of the 40 elected members of the state assembly. Thirteen members-elect of the Kano State Assembly on the platform of People’s Democratic Party (PDP) were, however, conspicuously absent during the ceremony held at the indoor sports hall of Sani Abacha Stadium.

Observer group decries Nigeria’s high voter apathy Iniobong Iwok

oalition of Democrats for Electoral Reforms (CODER), a group involved in the monitoring of the 2019 general election, has decried voter apathy across the country in the recently concluded elections, saying there was urgent need for introduction of a Voter Participation Certificate (VPC) to be owned by every eligible voter in order to address such problem in future. The group further enjoined President Muhammadu Buhari to formally put in motion every arrangement necessary for the country to use May 29, 2019 for not just swearing in of elected officials but to deliberately and wholeheartedly celebrate the joyous occasion of the 20th anniversary of the uninterrupted democracy in Nigeria.

Wunmi Bewaji, executive director/chair Transition Committee of CODER, stated this Tuesday at a press briefing in Ogba, Lagos, describing the level of voter apathy throughout the country in the last election as alarming, especially in urban centres and among the elite.” Bewaji noted that records from the group show’s that 18percent turnout was recorded in Lagos, while it was 56percent in Jigawa. According to her, “CODER notes a very high level of voter apathy throughout the country. The data is alarming. Millions of PVCs remain uncollected till date. Data suggests acute apathy especially in urban centres, particularly amongst the elite.” “To safeguard our democracy, there is the instant need to explore voter’s preregistration and incentivisation of franchise with the introduction of a Voters’ Participation Certificate (VPC) with attendant

benefits and consequences. “For example, possession of a valid PVC could be made a criteria for employment/promotion in the civil service, for postgraduate admissions, participation in the NYSC, to obtain drivers licence, international passports, for registration of companies, etc,” Bewaji said. He lamente d Indep endent National Electoral Commission (INEC)’s failure to develop and enhance its human capital, stressing that personnel of the electoral body were poorly trained which affected their capacity to execute the task assigned to them by law. “CODER observes INEC’s lack of attention to provision of voting access to voters especially the weak. Poor location of polling stations, haphazard placement of voting materials, self-accreditation, etc, all add up to disenfranchise many, especially the aged, the sick, disabled and illiterates.

Kogi Assembly recommends state CJ’s removal Victoria Nnakaike, Lokoja

ogi House of Assembly has recommended the removal of the state Chief Judge, Justice Nasir Ajanah, over alleged gross misconduct including financial breaches. This followed the adoption of the report and recommendations of the House Committee on ‘Public Accounts on the State Auditor General’s Report on 2016 Financial Statements’ in Lokoja. The Chairman of the committee, Ahmed Mohammed (APC-Ankpa), while presenting the report said that the Chief Judge should step aside to defend himself over the alleged indictment by the Auditor-General of the state.

Mohammed also said the Public Accounts Committee was set up in line with Section 103 of the Constitution of the Federal Republic of Nigeria 1999 (as amended) at the plenary sitting of the House on Monday, 24th December 2018. According to him, “The committee was mandated to investigate and reporte cases of financial breaches, noncompliance with financial regulations and poor handling of financial records by various Ministries, Departments and Agencies (MDAs) of the State Government.” He equally said that Kogi State Judiciary was said to have during the year ended December 2016, expended its budget above the approved limits provided in some sub heads as contained in the 2016 Appropriation

Law to the tune of N7,574, 850 without the approval of virement application. “It was also reported by the State Auditor-General that Kogi State High Court made huge cash withdrawal to the tune of N137,607,334.11). The cash was withdrawn from High Court Bank account in the year under review. This transaction was said to have breached the provisions of Chapter 6, Regulation 632 which stipulates that “the use of cash for payment is hereby prohibited”, he said. The committee therefore, recommenced the removal of the Chief Judge for gross misconduct or in the alternative, he should step aside pending his appearance before the House Committee on Public Accounts to defend himself.

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How Ogun, Kogi are becoming solid minerals investments’ haven Laterite production amounted to 3.7 million tonnes; shale, 2.79 million tonnes, and Sand, 2.39 million tonnes. The five most produced solid minerals equalled 40.3 million tonnes, representing 88 percent of the nation’s solid minerals production. Others are granite dust, 1.95 million tonnes; granite aggregates, 1.6 million tonnes; clay, 0.93 million tonnes; coal, 0.40 million tonnes; dolorite, 0.15 million tonnes, and stone dust, 0.11 million tonnes.

TELIAT SULE

n the last few years, Ogun State, otherwise known as the Gateway State, emerged as the nation’s industrial hub, accounting for a significant portion of the nation’s industrial production. That wasn’t by accident, as it followed several conscientious efforts made by the state government which were geared towards making the state investors’ delight and supported by a one-stop shop which caters for the needs of the investors. A number of investors’ forums left no serious local and foreign investors in doubt that Ogun meant business. One of the immediate or short term successes recorded by the drive to make the state investors’ haven is that Ogun in 2018 topped the chart of the states in Nigeria with the highest solid mineral production. It was followed by Kogi, the Confluence State where miners produced 15.1 million tonnes of solid minerals. Others states are Cross Rivers, 3.49 million tonnes; Akwa Ibom, 1.92 million tonnes; FCT Abuja, 1.89 million tonnes; Edo, 1.71 million tonnes and Sokoto, 1.64 million tonnes. Although Zamfara State witnessed a high number of security breaches in 2018, dogged miners produced 1.56 million tonnes of solid minerals; Gombe, 1.47 million tonnes; Ondo, 1.44 million tonnes, and Lagos, 1.31 million tonnes. In 2018, miners produced 55.85 million tonnes of solid minerals, representing 22 percent over 45.78 million tonnes produced in 2017.

Source: NBS, BRIU

With the production of 27.2 million tonnes limestone, this solid mineral accounted for 49 percent of the nation’s solid mineral production in 2018. Granite production in 2018 equalled 9.6 million tonnes and when combined with limestone, the two most produced solid minerals accounted for 66 percent of Nigeria’s solid minerals production. Solid minerals investors also produced 5.08 million tonnes of laterite; 3.5 million

tonnes of clay and 3.4 million tonnes of granite dust. The five most produced solid minerals amounted 48.76 million tonnes, representing 87 percent of the nation’s solid minerals production in the last fiscal year. Sand production amounted to 2.28 million tonnes; granite aggregates, 2.1 million tonnes; shale, 0.95 million tonnes; sapphire, 0.64 million tonnes; coal, 0.35 million tonnes; lead/zinc, 0.31 million tonnes and manganese, 0.16

million tonnes. That was not exactly the trend in 2017 when the five most produced solid minerals were granite, limestone, laterite, shale and sand. In 2017, granite production amounted to 17.45 million tonnes while limestone produced in the country totalled 13.96 million tonnes. When combined, the two most produced solid minerals in the country in 2017 accounted for 69 percent of the nation’s solid minerals production in the country.

Dangote Cement gives hope to solid minerals investors Dangote Cement Plc is a good case of how profitable investments in solid minerals could turn out to be. Since inception, the cement giant has recorded many feats, and today, the firm stands as the most capitalised stock on the Nigerian Stock Exchange (NSE). In 2018, Dangote Cement posted N901 billion as gross revenue representing 11.9 percent increase over N806 billion the firm made in 2017. Gross profit was N517.9 billion for the period in contrast to N454.3 billion it realised in 2017. Operating profit for the period was N338.69 billion, a 11.3 percent improvement when compared with N304.2 billion realised in 2017. Profit after tax was N390.3 billion, translating to a whopping 91 percent increase over N204.2 billion it realised in 2017. It has proposed N16 per share final dividend for shareholders. The firm has production plants majorly in Ogun and Kogi states, which are the topmost states for solid mineral production in Nigeria. 12734BDN

Ranking of solid minerals by production Limestone, granite, laterite, clay and granite dust were the five most produced solid minerals in Nigeria in 2018.

Source: NBS, BRIU

New investments in solid minerals sub sector Symbol Mining from Australia, according to our earlier findings, began the production of high grade zinc and lead in Bauchi State, North East Nigeria. The project was executed in collaboration of two local joint venture projects which are Tawny and Imperia in Nasarawa and Bauchi states respectively. The list of new investors also includes Minutor International that is interested in gold, zinc, lead, lithium and copper in mining sites across Nigeria. We also have Africa Industries , and with its 12 subsidiaries is interested in extracting iron ore from mining sites in the country. There are Mines Geo-techniques and Numero Resources Limited which have their eyes on gold in Kebbi State. In addition, Segilola Nigeria Limited mines gold in Osun State just as KCM Mining Limited is into iron ore production in Kogi State. Further, in December 2018, Kian Smith Limited got the first license to start gold refinery in Ogun State. Importance is attached to gold because according to the Federal Ministry of Mines and Steel Development, a well organised gold value chain, has the potential to trigger an economic revolution in

the same way it revolutionised countries such as India, South Africa, Switzerland and others. The company will work on the model which sources gold from registered artisans for effective monitoring and regulation of gold. According to Kian Smith Trade and Company, Ofosinere Teriba, vice chairman indicated that about 500,000 jobs would be created in the industry within the two years of its operation. He assured that Kian Smith would provide 99.99 percent refined gold, including three tonnes of gold, one tonne of silver, among other mineral resources.

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Regional analysis of the telecom sector’s voice subscribers (Part 2) ADEMOLA ASUNLOYE

nternet usage continued to gain ground across regions in Nigeria as it recorded 47.33 per cent penetration among 195 million Nigerians in 2018. Nigeria leads the African continent in internet usage going by the number of internet users in the country which increased to 92.3 million in 2018. The figure is projected to grow to 134.2 million users by 2020. In Q4 2018, the number of active internet subscribers’ base grew by 13.54 percent year-on-year (YoY). Active internet subscribers’ base increased across the 6 geopolitical regions in Nigeria by 8.26 per cent in Q4 2018 from 103.5 million internet subscribers’ base in Q3 2018—the Telecoms Data report from National Bureau of Statistics revealed. The total number of subscriptions by the 4 major network providers generally increased across regions in Q4 2018. MTN gained 2.97 million new subscriptions which was amounted to 4.6 per cent of a total 67.1 million subscriptions; AIRTEL rose by 6.9 per cent to 44.2 million subscriptions; GLO by 10.8 per cent to 45.3 million subscriptions, and 9MOBILE by 3.7 per cent to 15.9 million subscriptions. The multiplicity of active internet subscriptions which accumulated to 112.1 million was largely a shared contribution from the major network providers nationwide, where MTN alone had the highest contribution of 39.2 per cent to the total active internet subscriptions in the quarter. Unlike active voice subscribers, AIRTEL ranked 2nd with 26.6 per cent contribution while GLO, 9MOBILEand OTHERS contributed 25 per cent, 8.9 per cent and 0.4 per cent respectively to the total active internet subscriptions in Q4 2018. The number of active internet subscribers’ base in MTN, AIRTEL and GLO increased Quarter on Quar-

Source: NBS, BRIU

ter (QoQ) by 8.48 per cent, 6.56 per cent and 2.26 per cent respectively to 43.9 million, 27.8 million and 28.1 million active internet subscribers respectively across the geopolitical zones in Q4 2018. In contrast, 9MOBILE and OTHERS network providers had 2.3 per cent and 1.7 per cent decline respectively in active internet subscribers’ base to 9.9 million and 433,000 active internet subscriptions within the same period. The percentage contribution of each network provider across the Source: NBS, BRIU

regions presented in the chart below showed that 39.2 per cent of the total active internet subscribers were garnered by MTN. Similarly, AIRTEL internet subscribers accumulated 26.6 per cent of the total internet subscribers; GLO, 25 per cent; 9MOBILE, 839 per cent, and others contributed 0.4 per cent to the total active internet subscribers across the regions. The analysis of the data within the region showed that MTN network provider dominated in all the 6 regions with the highest number of active internet subscriptions in Q4 2018. Following MTN is GLO and AIRTEL, which they both had high percentages of active internet subscriptions. While GLO came next to MTN in the North Central, South-South and South West, AIRTEL was next to MTN in the North East, North West and

South East. However, AIRTEL had 1.7 million active internet subscribers more than GLO across the regions. The least percentages of active internet subscriptions were recorded by the 9MOBILE and others network providers. The analysis of the active internet subscriptions between regions where each network provider is entrenched showed that MTN had its peak active internet subscriptions in the South East; AIRTEL in the North East; GLO in the North Central; 9MOBILE in the South West and others in the South West. In the North Central region, FCT had the highest number of active internet subscriptions accounting for 25.3 per cent of the total active subscription in the region; Bauchi in the North Eastern region with 20.3 per cent; Kano (North West), 31.22 per cent; Anambra (South East), 28.5 per cent; Rivers (South-South), 27.4 per cent, and Lagos State with 45.4 per cent contribution to the active internet subscriptions in the South West region. On a state by state basis, the top 5 states in consecutive order ranked by the degree of activeness of internet subscriptions are Lagos in the South West region with 15.68 million subscribers, Ogun (South West), 6.60 millionsubscribers; Kano (North West), 5.84million subscribers; Oyo (South West), 5.79million subscribers, and the Federal Capital Territory, Abuja in the North Central with 5.22 million subscribers. In contrast, the least 5 states ranked by the degree of active internet subscriptions are Jigawa State in the North West with 1.22 million subscribers; Yobe (North East), 1.17 million subscribers; Ekiti (South West), Ebonyi (South East), 905,000 and the least number of active internet subscriptions was recorded in Bayelsa in the SouthSouth region with 823,000 active internet subscriptions. Across and within the regions, the Centre of Excellence—Lagos State recorded the highest number of internet subscribers in Q4 2018 representing 14.1 per cent and 45.4 per cent respectively. Data showed that the 34.56 million active internet subscribers in the South West region of the country which was the highest across regions, was accumulated due to the high percentage contribution of Lagos alone. The next region is the North Central region with 20.63million active internet subscribers. The North West, South-South and South East zones recorded 18.71 million active internet subscribers, 16.45 million active internet subscribers and 10.72 million active internet subscribers respectively in the last quarter of 2018. Across the regions, North East Nigeria recorded the least number of 9.79 million active internet subscribers.

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Trump’s healthcare focus for 2020 election worries Republicans Democrats believe president’s call to overturn Obamacare is a ‘gift’ for the party COURTNEY WEAVER

resident Donald Trump is ploughing ahead with a plan to make healthcare a key focus of the 2020 election, worrying fellow Republicans, and elating Democrats, who believe the issue is a winning one for their party. While Mr Trump said he would hold off on forcing any big healthcare vote until after the 2020 election — a reversal from just a few days ago — the president has continued to raise the prospect of “a really great” Republican healthcare plan, which would have lower costs for consumers than Barack Obama’s Affordable Care Act (ACA). Such a plan, the president claimed, was already in the works in Congress. “I think the Republican Party will become the party of healthcare,” Mr Trump said in the Oval Office on Tuesday. “I see what the Democrats are doing and it’s a disaster what they’re planning and everyone knows it . . . Obamacare has been such a catastrophe.” For Democrats, the president’s decision to focus on scrapping Obamacare, as the law is known, has been treated as “a gift”, as one Democratic lawmaker put it. The party seized on Mr Trump’s announcement that Republicans would wait to roll out any healthcare bill until after the 2020 election as proof that it had no alternative proposal. “They have no plan,” claimed Chuck Schumer, the Democratic Senate minority leader. “What a ruse. What a shame. What a disgrace.”

The importance of healthcare in US politics was demonstrated in the 2018 midterm elections. Exit polls showed that 41 per cent of US voters — a plurality — identified healthcare as their top issue of concern — marking the first time it had been a number-one issue for voters in more than a decade. By comparison, only 21 per cent of 2018 voters cited the economy as their biggest issue, while 23 per cent cited immigration. As 2020 approaches, Democrats are debating whether the party should push its own healthcare insurance overhaul that would cover even more Americans, while Republicans are worrying about the Trump administration’s recent decision to argue in court that the entire ACA should be overturned. Such a move would affect roughly 20m Americans, who are currently covered either under the act’s insurance exchanges or by the Medicaid expansion provided under the law. Some Republican lawmakers cited by Mr Trump as working on a new healthcare bill appeared to want to focus the conversation elsewhere. Rick Scott and Josh Hawley, two Republican senators, both emphasised that their main legislative focus was lowering prescription drug prices — an issue that has bipartisan support. Democrats have attacked Mr Trump’s recent actions, putting forward a resolution of disapproval on the administration’s aim to dismantle the ACA, which guarantees health coverage for people with preexisting medical conditions. In a news conference on the steps of the Capitol on Tuesday,

Nancy Pelosi, the House speaker, in Washington to announce legislation to lower healthcare costs and protect people with pre-existing medical conditions © AP

Nancy Pelosi, the House speaker, and other Democrats accused the Trump administration of “radically expand[ing] its war” on US healthcare. “Little children with pre-existing conditions — the president is saying to them, ‘You now have a lifetime limit on the insurance you can receive’,” she said. Polling data explains why Democrats believe healthcare will play well for them in 2020. Asked in 2018 exit polls which of the two parties would be better at helping Americans with pre-existing conditions, 58 per cent of voters said Democrats, while just 34 per cent

said Republicans. Henry Aaron, a senior fellow at Brookings, said he was “mystified” by Mr Trump’s decision to zero in on the ACA — particularly at a moment when the political winds appeared to be at the president’s back following the conclusion of Robert Mueller’s investigation into Russian interference in the 2016 election. “Everything I’ve heard suggests that Republicans in Congress are really not anxious to return to this issue,” Mr Aaron said, adding that he had seen “no indication” from the Trump administration that a Republican alternative to the Affordable Care Act was in the works.

In the meantime, Mr Trump’s focus on the issue helped shift attention away from the Democratic divide over “Medicare For All” — a proposal to expand the healthcare plan covering older people to all Americans. While most Democrats believe that US healthcare coverage should be expanded, there are divisions over how to pay for such an expansion and whether Americans should be allowed to keep their existing private insurance. “Anything that is able to tamp down this debate so it doesn’t become divisive for the party is good news for Democrats,” Mr Aaron said.

spent $2m lobbying for NY congestion charge Indian election finance rules spark Uber Car-booking giant was biggest backer of campaign to levy tolls on vehicles entering Manhattan calls for greater transparency Critics say Modi-backed system of electoral bonds legitimises covert political funding AMY KAZMIN

uring his first prime ministerial campaign in 2014, Narendra Modi dashed around India in a corporate jet and two helicopters owned by Gautam Adani, a billionaire industrialist whose interests span ports, power and other infrastructure businesses. Mr Modi’s use of the aircraft was criticised by the rival Congress party, prompting Mr Adani to later say that the politician had not used them for free. But the rates Mr Modi paid for the service, which enabled him to address more than 400 far-flung election rallies and still sleep in his own bed every night, were never disclosed. Such opaque relations between tycoons and politicians are entrenched in India, which is gearing up for general elections due to start on April 11. As in the US, India’s political parties rely heavily on contributions from businesses to finance campaigns. Yet India’s weak and poorly enforced laws on political donations have long ensured the precise links between businessmen and the parties they support are shielded from public scrutiny. Two years ago, Mr Modi’s government unveiled what it called a major clean-up to purge “black money”

from politics, introducing a system of “electoral bonds” for companies and wealthy individuals to make legal, anonymous donations to political parties. But critics say the scheme has merely legitimised and legalised the covert corporate political contributions that were once made through furtive cash transactions. They argue the scheme was specifically designed to conceal the links between elected officials and the corporate interests. “The question is, do citizens have a right to know where political parties get the money they are spending on elections,” said Jennifer Bussell, a professor of political science and public policy at the University of California Berkeley. “If you think that they do, this is a questionable model of election finance.” The bonds — which act like a promissory note — are purchased from the State Bank of India for the exclusive purpose of donating to political parties rather than individual candidates. The parties must then deposit the funds in special accounts. The SBI only knows who bought the bonds but not where they went, while only the recipients are supposed know their benefactors’ identities. Parties must also report precisely how much money they raised through the bonds and how the funds were spent.

SHANNON BOND

ber has spent $2m lobbying for congestion pricing in New York City since 2015, culminating in a first-in-the-nation plan to address problems exacerbated by the rise of carbooking apps. The US car-booking giant was the biggest backer of a campaign to levy tolls on vehicles entering Manhattan below 60th street that was adopted into the state budget at the weekend. The plan, which will take effect in 2021, is expected to raise billions of dollars to fund the city’s ailing subways and other public transit systems. Uber lobbied lawmakers, ran television ads and contributed $700,000 to the advocacy group Fix Our Transit — more than the Real Estate Board of New York, which put in $500,000. It also had backed previous unsuccessful efforts to pass congestion charges. The car-booking industry has emerged as an unlikely champion of congestion pricing in US cities from New York to Seattle and Boston, which are grappling with decaying infrastructure, underfunded transit systems and car traffic clogging streets and contributing to pollution. Apps such as Uber and rival Lyft have been blamed for

putting more cars on the road and undermining public transit across the country. San Francisco’s county transportation authority has blamed car-booking services for half the increase in the city’s congestion between 2010 and 2016. The companies have zeroed in on congestion pricing as their preferred solution rather than efforts to tax car-booking or limit the number of cars on the road. Uber sued New York in February over a cap on for-hire vehicles licenses the city council passed last year. “Long term, what we’re working for is a system that helps people understand the impact of driving a car into the congested core of a city,” said Andrew Salzberg, Uber’s head of transportation policy. “New York is an important moment in time but it’s also part of a broader strategy.” Uber in September committed $10m over three years to support what it calls “sustainable mobility” by advocating for congestion charges as well as direct funding for transit systems, better parking regulations and an increase in bikes and scooters. Lyft, which has about 30 per cent US market share versus Uber’s 70 per cent, according to research group Second Measure, has also thrown its weight behind congestion pricing. It contributed $75,000

to the New York campaign, and has pledged to spend $50m a year on local transportation initiatives. In contrast, New York’s taxi drivers have opposed congestion pricing, arguing it puts even more strain on them at a time when disruption from rivals has led to a rash of suicides. Raising the cost of driving a car into midtown Manhattan or other central parts of cities has counterintuitive benefits for Uber and its peers. Less traffic means shorter wait times for passengers. They are also betting on a broader shift away from private car ownership to other forms of transportation they offer, including shared rides, bikes and scooters, and to public transit. Uber says many customers combine an Uber trip with the bus or subway. “What we see around the world is users of Uber tend to be heavier than average transit users,” Mr Salzberg said. Uber’s embrace of regulations in this form is a contrast to the company’s reputation, until very recently, of defying local laws and thwarting regulators as it raced with Lyft to launch in new markets. After a tumultuous 2017 in which co-founder Travis Kalanick was ousted as chief executive, his replacement, Dara Khosrowshahi, promised a new company culture committed to “doing the right thing”.

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FT Ghosn pledges to ‘tell the truth’ at upcoming press conference

Algeria enters new era after President Abdelaziz Bouteflika resigns Country plunged into uncertainty as leader bows to pressure from protesters and military

Tweet by former Nissan chair comes as legal team weighs risk prosecutors may bring fresh charges

HEBA SALEH

KANA INAGAKI, LEO LEWIS TOKYO AND DAVID KEOHANE

arlos Ghosn has vowed to fight a rising tide of allegations and “tell the truth” next week at his first press conference since his November arrest, as his legal team weighs the risk that Japanese authorities could shortly bring fresh charges against him. The former Nissan chairman said on Wednesday via a newly created and verified Twitter account that he would hold a press conference on April 11 in Tokyo — his first since being released on bail a month ago after 108 days in detention on financial misconduct charges. “I’m getting ready to tell the truth about what’s happening,” Mr Ghosn, who has maintained his innocence, tweeted despite a ban on the use of any internet-enabled mobile phone or computer as part of his bail conditions. Within four hours of setting up his Twitter account, Mr Ghosn had more than 13,000 followers. But within 90 minutes of his tweet, which emerged around 1pm in Tokyo, people close to Mr Ghosn said they were considering bringing forward the date of the press conference to allow him to make his case to global media before any potential new indictment. The concerns in the Ghosn camp arose from reports in Japanese media including public broadcaster NHK and the Yomiuri newspaper that Tokyo prosecutors were considering fresh charges against Mr Ghosn, over payments made to a Nissan-Renault distributor in Oman that are suspected to have been subsequently diverted for his personal use. The prosecutors’ plans for fresh charges, if confirmed, would mark a key shift in the tone of official accusations against Mr Ghosn. Existing indictments accuse him of understating his remuneration and of breach of trust, while the Oman investigations appear focused on whether the former Nissan chairman personally benefited from alleged malfeasance. Nissan’s partner Renault alerted French prosecutors last week to about €10m in suspicious payments to Suhail Bahwan Automobiles (SBA), an Omani distributor with ties to Mr Ghosn’s friend, according to people familiar with the investigations. An internal investigation by Nissan has also found that about $35m in payments were made to SBA between 2011 and 2018. Mr Ghosn is believed to have instructed some of those payments, which were originally approved by managers at Nissan, to be diverted to a Lebanese company called Good Faith Investments, which was set up by Mr Ghosn’s former lawyer, according to two of the people. Of the money transferred to SBA and other related entities, nearly $30m is suspected to have gone via Good Faith into Shogun Investments, an investment firm partly owned by Mr Ghosn’s son. The Lebanese firm also spent over €10m to buy a yacht, which Mr Ghosn named Shachou, which means president in Japanese, the people said.

Thursday 04 April 2019

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Ana Botin, executive chairman. The unveiling of the three-year strategic plan was overshadowed by the bungled attempt to hire Andrea Orcel as chief executive © Bloomberg

Santander seeks extra €1.2bn in cost cuts to hit ‘ambitious’ target Drive to boost profitability made more challenging by ECB’s ultra-loose monetary policy DAVID CROW AND STEPHEN MORRIS

anco Santander unveiled an additional €1.2bn of cost cuts on Wednesday in an attempt to hit financial targets that have become more demanding after the European Central Bank signalled its intention to maintain ultraloose monetary policy. In January, the Madrid-based lender said it aimed to boost its return on tangible equity — a measure of profitability — to between 13 and 15 per cent within three years, compared with 11.7 per cent in 2018. At the time, analysts described the profitability goal as “ambitious” and the target has since become even more challenging after the ECB signalled there was little prospect of interest rate rises in the near future. The central bank hopes its dovish stance will boost flagging growth in the eurozone but the policy threatens to further depress profitability at Europe’s already struggling lenders. The unveiling of Santander’s three-year strategic plan was partly overshadowed by a dispute over the bank’s bungled attempt to hire Andrea Orcel, the former

boss of UBS’s investment bank, as its next chief executive. Santander rescinded the job offer in January after concluding it could not defend a sign-on package worth tens of millions of euros. Mr Orcel has since hired lawyers to explore legal action against the Spanish lender. Almost €1bn of the new cost cuts will hit Santander’s operations in Europe, with about a tenth of that falling in the UK, while executives hope to save €270m in Latin America by overhauling the bank’s technology systems. Santander said the extra savings would push its cost-to-income ratio below 45 per cent within three years, compared with 47 per cent at present. To achieve this, the lender needs to reduce its cost base to €9bn from about €10bn. The bank said it hoped to achieve an extra €250m of cost savings from the integration of Banco Popular, the ailing domestic peer it bought for €1 in 2017, as it prepares to cut several thousands of jobs and close hundreds of branches. Santander als o gave its elf a three-year deadline to turn round its struggling US business. Santander US generated a return

on equity of 4.12 per cent in 2018, well below its cost of equity, which the bank estimates at 8 to 9 per cent. Santander, run by executive chairman Ana Botin, has large retail operations in nine countries across Europe and the Americas. In the past two years it has slashed back its branch network in Spain and the UK as it attempts to boost returns against the backdrop of low interest rates and Brexit. In addition to the new cost cuts, Santander said it hoped to write more business in fastgrowing Latin American countries such as Brazil. The region currently accounts for 25 per cent of the lender’s risk-weighted assets but the bank said that could increase to 30 per cent in the medium term. Santander also said it would slash the number of executives that sit on its management committee from 24 to 11 in a move designed to enable the lender to make decisions more quickly. Nathan Bostock, chief executive officer of Santander UK, will no longer sit on the committee, with Europe represented by Gerry Byrne, who heads the group’s Polish operations.

Low unemployment and high incomes help voters swallow their MEHUL SRIVASTAVA

ichael G ershenzon, a 36-year-old physiotherapist whose business extends from the knees of injured footballers to the backs of ageing millionaires, is what pollsters describe as a single issue voter. “Yes, I worry about security, but not a lot,” he said. “For me, one thing matters, only one thing: who can keep the economy strong?” After much research and consideration, Mr Gershenzon has reached a conclusion that he finds barely palatable. Much as he abhors Benjamin Netanyahu’s rightwing politics, he feels he has no choice but to vote for the Israeli prime minister’s Likud party next Tuesday. “The last 10 years have not just been good for me and Israel, they

have been very good,” said Mr Gershenzon, who in the past few years has doubled the floor space at the clinic where his clients include footballers from Tel Aviv’s Hapoel club. “I am not willing to take a chance that someone else can manage things so well.” In an election in which Mr Netanyahu is on the defensive on nearly every front — his personal probity, the intractable conflict with Hamas, his embrace of an extreme rightwing ally to boost his chances of a coalition — his performance on the economy has become an asset that his rivals barely bother to challenge. The prime minister began his current stint in office in 2009 and some economists call the years since a golden decade. Unemployment has plunged to a record low, incomes have soared to a record high, the deficit has largely been tamed, and Israel’s tech scene has produced

salacious tales of multibillion-dollar deals and lured tens of billions of dollars of foreign investment into the high-wage sector. Voters consistently list the economy as their top concern, and high prices and inequality — especially for the ultraorthodox and Arab communities — remain contentious issues. But compared with the 1980s, when Israel struggled with hyperinflation and had to issue a new currency, Israelis live in an era that the OECD recently described as “remarkable”. When Mr Netanyahu was finance minister between 2003 and 2005, he was largely credited with rescuing the Israeli economy from the impact of the second intifada, which saw investment, tourism and business appetite shrivel under a spate of suicide bombings. Government expenditure soared because of security costs.

lgerians woke to a new political era on Wednesday after Abdelaziz Bouteflika, the ailing president, resigned under pressure from protesters and the military, a move that plunged the country into an uncertain political transition. Protesters had staged huge demonstrations for six weeks, calling for Mr Bouteflika’s departure, but they are seeking broader regime change and are unlikely to be satisfied if the old regime survives under a new president. The military, which delivered the final push to dislodge 82-yearold Mr Bouteflika, may be reluctant to allow further concessions that could lead to an overhaul of the political system in ways it cannot control. “Algerians have good reasons to celebrate this victory over an authoritarian regime,” said an editorial in TSA Algérie, a news website. “But there are also serious considerations why they should be anxious. Since independence, political transitions managed under the aegis of the military have not been successful.” Mr Bouteflika’s resignation was announced by the state news agency on Tuesday night shortly after the army piled more pressure on him by calling for the immediate start of a constitutional process to declare him unfit for office. Television footage showed him handing his resignation to the head of the Constitutional Council in the presence of Abdelkader Bensalah, the Speaker of the upper chamber of parliament, who is expected to become interim president under rules set out in the constitution. General Ahmed Gaid Salah, the chief of staff and until recently a close ally of the president, had issued a sharply worded statement earlier on Tuesday saying the army “sided completely with the demands of the people” and that “its sole ambition was . . . protecting Algerians from the gang that had seized control of their destiny”. This was an apparent reference to Mr Bouteflika’s inner circle, which includes his brother Said and a range of politicians and senior businessmen. The head of state has been in office since 1999. He suffered a stroke in 2013 that paralysed him and left his speech impaired. He has not been heard by the people of Algeria for six years. Many suspect that his entourage has been ruling in his name. Gen Salah signalled the army’s impatience with Mr Bouteflika’s clique, accusing them of “prolonging the [country’s] crisis” in his statement, which was issued by the defence ministry after a meeting of commanders of the branches of the military. The chief of staff had already called last week for implementation of the constitutional article that would declare the office of the presidency vacant because the incumbent was unfit. However, no steps were taken — possibly because allies of the president blocked it.

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Stocks to watch: Casino, Hansen, Just Group, Ferrexpo, Superdry Burberry may struggle to hold gains as tourism spending slows, says Merrill Lynch BRYCE ELDER

asino slipped after Moody’s downgraded the French retailer’s credit rating by two notches. The rating agency put Casino on a Ba3 rating, three levels below investment grade, and maintained a negative outlook. Moody’s cited Casino’s poor free cash flow generation and its limited ability to reduce its debt, in spite of large disposals. The rating agency also highlighted weakening liquidity and said that persistently high leverage at Casino’s parent company Rallye created “substantial uncertainties”. Casino responded by saying that Moody’s analysis was based on gross debt at the 2018 year end, so failed to take into account either the asset disposal plan or the future reduction in bond debt. The move would have no effect on the availability or cost of its financial resources, it said. Analysts saw little new in the Moody’s note. Casino had already dropped around 15 per cent after full-year results last month heightened concerns around debt, interest costs and weak free cash from its French business. Chr Hansen, the Danish ingredients maker, was the Stoxx 600’s sharpest faller in weaker than expected second-quarter results. Organic sales growth came in at 8 per cent rather than the 10 per cent expected by the consensus, due in part to the US-China trade war affecting sales to cattle farmers in North America, while margin pressure meant adjusted net profit was 3 per cent lower than forecast at €79m. Hansen also flagged unexpectedly weak demand for food colourings in Latin America, but maintained full-year targets. JPMorgan Cazenove said that with Hansen up 19 per cent year to date and starting the day at a valuation of 45 times 2019 earnings,

compared with European Ingredient peers on 31 times, the stock was vulnerable to any disappointment. Sellside stories Merrill Lynch downgraded Burberry to “underperform” with an unchanged £18 target as part of a luxury tourism report. Softer Asian demand in February followed a slide for the Chinese renminbi against the Hong Kong dollar but should have improved in March, while Europe and the US have been decelerating against fourth-quarter levels, said the broker, which cut earnings-per-share estimates for the sector by 3 per cent on average. Burberry trades on 24 times 2019 earnings, a 26 per cent premium to history and 14 per cent above peers, Merrill said, adding: “We see 2 to 9 per cent downside risk to full-year 2020-21 consensus estimates and believe Burberry’s premium valuation may come under pressure until evidence of a brand turnaround starts to build.” JPMorgan upgraded Just Group, the annuities specialist, to “neutral” from “underweight”. The broker said it had previously been negative based on Just’s unattractive dividend yield, its limited balance sheet flexibility to absorb macro stresses and its raised debt leverage following its recent fundraising. But JPMorgan said the stock’s 50 per cent underperformance versus the insurance sector in the year to date led it to consider if there was further downside potential. JPMorgan estimated an intrinsic value of Just’s back book of £640m under base-case assumptions, in excess of its £560m market capitalisation. “On top of it there would be some value for [a] new business franchise which to us implies that market is already pricing in concerns on UK macro and relatively weaker balance sheet,” it said. “Thus, we see limited downside risk to current share price.”

Mauricio Macri’s ‘whatever it takes’ move fails to stem peso slide Argentina president must tackle weak currency and high inflation before contesting elections BENEDICT MANDER

he fate of Argentina’s promarket president Mauricio Macri is riding on whether or not the central bank can pull off a difficult trick: stave off steep falls in the peso while stifling record levels of inflation. With a presidential election just seven months away, few investors dare to make any bets. The central bank redoubled its efforts this week by setting an interest-rate floor of 62.5 per cent, following a forceful move last month to tighten its monetary policy as the country hit its highest inflation rate in almost three decades, at an annualised pace of more than 50 per cent. The measures included extending its policy of zero growth in the money supply from June to November, in a bid to shrink liquidity. “It was a Mario Draghi ‘whatever it takes’ moment,” says Walter Stoeppelwerth, the chief

investment officer at Portfolio Personal Inversiones, alluding to the European Central Bank president’s 2012 pledge to save the euro. But continuing volatility in the peso after it plumbed new lows last week has investors on edge, together with a slew of poor economic data — from poverty and employment to economic activity and inflation — that are dimming the outlook. The peso is the world’s worstperforming emerging market currency this year, down almost 12 per cent against the dollar, a fall more than twice as severe as the Turkish lira. Last year it halved in value — again, almost twice as much as the lira. The sharp moves are “paralysing investors from making significant bets on Argentina”, says Pablo Goldberg, portfolio manager and senior strategist for emerging market debt at BlackRock, a US asset manager.

Tencent scores overseas hit with PUBG mobile game ‘PlayerUnknown’s Battlegrounds’ attracts 263m users in a year and the attention of Indian regulators LOUISE LUCAS

encent, the Chinese tech giant, has scored its first big hit overseas, wooing 263m users to its PlayerUnknown’s Battlegrounds mobile game in the past year, according to data from app tracker Sensor Tower. Tencent and rival Alibaba have grown to a combined market valuation of $930bn on the back of strong growth in China, where many of their foreign rivals such as Facebook and Google’s YouTube are blocked. However, they have struggled to gain much more than a toehold overseas. At the same time, smaller Chinese tech companies have successfully expanded abroad. TikTok, the popular short video app owned by ByteDance, passed 1bn downloads worldwide last month, while sev-

eral other Chinese start-ups are adopting business models wholly predicated on overseas markets. Yet the huge popularity of PUBG Mobile shows Tencent is making some headway in India, a favoured market for both Tencent and Alibaba as they plot global expansion. Even so, as in China, PUBG Mobile has not escaped the notice of regulators in India, who are wary of a violent game that can prove addictive. Some cities in Gujarat, a state in north-west India, have banned the game altogether. Tencent said it was working on efforts to promote “healthy and responsible” game playing in India, much as it has in China. “We were thus surprised to learn that local authorities in a few cities have decided to impose a ban on playing our game,” the company

said in a statement. “We are working to understand the legal basis of such bans, and hope we can have a constructive dialogue with relevant authorities to explain our objectives and that they withdraw the prohibition.” Randy Nelson, head of mobile insights at Sensor Tower, attributed the game’s popularity in India to the fact it can run on a wide variety of phones, including lower-end Android phones. About 70 per cent of the game’s downloads in India come from the Google Play store. Tencent has historically lagged behind Alibaba in India, but has taken steps in recent months to expand in the country. Tencent has launched on India’s Unified Payment Interface payment system and taken stakes in food delivery service Swiggy and messaging app Hike Messenger.

Oil prices approach $70 a barrel Opec production cuts and sanctions on Venezuela and Iran push up Brent crude DAVID SHEPPARD

il prices rose to a high for the year near $70 a barrel on Wednesday, extending a rally on Opec’s intentional production cuts and the sanction-hit output of Venezuela and Iran. Brent crude, the international benchmark, hit a 2019 high of $69.96 a barrel in early trading, up 0.7 per cent to the highest since November. US benchmark West Texas Intermediate rose to a high

of $62.99. Oil prices have bounced in 2019 following a brutal sell-off in the fourth quarter, which dragged Brent prices from a four-year high above $86 a barrel in October to near $50 a barrel by the end of the year. The recovery has come as Saudi Arabia has led Opec in slashing output to compensate for fastgrowing production from US shale, while Venezuela and Iran’s output has fallen sharply due to US sanctions.

Price gains have so far been capped below $70 a barrel, however, due to the ongoing threat of a further jump in shale production and pressure from US president Donald Trump on Opec not to over tighten the market. PVM analyst Stephen Brennock said there was “a growing sense of inevitably that this stubborn barrier will soon be vanquished” but cautioned it may “take one more catalyst” to push above $70 a barrel.

European stocks at seven-month highs ahead of US-China trade talks MICHAEL HUNTER AND ALICE WOODHOUSE

opes that the US and China were closing in on a trade deal pushed stocks higher on Wednesday following a report from the Financial Times that the two sides had smoothed out most outstanding issues. The Europe-wide Stoxx 600 added 0.6 per cent and reached its highest level since late August. Frankfurt’s Xetra Dax 30 gained 1.2 per cent. London’s FTSE 100 was held back by a stronger pound and

gained just 0.1 per cent. US futures trade expected the S&P 500 to rise 0.5 per cent at the Wall Street open. The yield on 10-year US Treasuries crossed back up over 2.5 per cent as the improving sentiment toward growth drew investors out of the debt. It rose 3.4 basis points to 2.5133 per cent. Brent crude neared $70 a barrel, rising for a fourth consecutive day to a new high for 2019 on signs of falls in Opec production and growing confidence in the outlook for

global growth. Mainland China’s CSI 300 added 1.2 per cent, a one-year high. The gains for Chinese equities also come as a survey of China’s service sector found activity rose to a 14-month high in March, echoing improvements in the manufacturing sector. Larry Kudlow, the director of the White House National Economic Council, said he expected “additional headway” would be made in talks that resume in Washington on Wednesday.

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Thursday 04 April 2019

ANALYSIS US and China draw closer to final trade agreement Two sides haggle over implementation and enforcement issues as talks are set to resume JAMES POLITI AND LUCY HORNBY

Demographic time-bomb: Finland sends a warning to Europe Facing a rapidly ageing population, the country’s difficulty in passing reforms highlights the hurdles ahead RICHARD MILNE

n a new building wedged between the sea and a power station in north-west Helsinki, a closely watched experiment in elderly care is taking place. A group of about 30 people aged over 60 are eating dinner at a housing development called Kotisatama, whose facilities include two saunas, a roof terrace and an exercise room for circuit training and pilates. But there are no staff. Kotisatama is a community house in which both single elderly people and couples live together and share the chores. “The main purpose of this house is to keep us active,” says Leena Vahtera, a 72-year-old resident and chair of the project. “This is not a nursing home.” Her husband died in 2007 while her two sons have their own families. “I didn’t want to be a burden to them. I saw how my own mother was so lonely. We are sure that the state can’t provide the services that old people may need one day. We want to make decisions on our own lives,” she says. The Kotisatama development is attracting a lot of attention because Ms Vahtera is part of one of the most rapidly ageing populations in the world. Among rich, industrialised countries only Japan and South Korea have had larger increases in recent years than Finland. While people over 85 represented just 1.5 per cent of the population in 2000, today they are 2.7 per cent, and by 2070 are expected to be close to 9 per cent. Finland has been discussing what to do about its demographic problems for almost two decades, pushing reforms of its healthcare, local government, social care and pensions system. “Finland is a rational country. It’s something we have taken very seriously and we have looked decades forward — something not done in most countries,” says Ilkka Kaukoranta, chief economist at SAK, Finland’s trade union confederation. Yet finding answers has proved nigh on impossible. Finland’s three-party coalition government collapsed last month over its failure to pass landmark healthcare and local government reform and ahead of an election on April 14. The only long-term issue related to demographic trends that has been addressed in two decades of trying has been pension reform. For Europe, Finland may be a warning about the intractable political problems that lie ahead. Its population is ageing faster than any other European country, although Germany and Italy will have bigger peaks of older people later on this century. The lesson from Finland may be that trying to make health and elderly care costs sustainable

involves the types of political choices few governments are willing to make, raising questions about long-term economic growth and the health of public finances for increasingly cash-strapped governments across Europe. While parts of the rest of Europe face what researchers at the Robert Schuman Foundation have called “demographic suicide”, the lessons from the Finnish experience are complex. Breaking the omertà around ageing — as the Foundation argued for — has not particularly helped in Finland. “In European terms we have been preparing early but only a little has been done,” says Marja Vaarama, a professor of social work at the University of Eastern Finland. The country is a vivid demonstration that demographic change forces hard choices between politically unpalatable reforms and potentially deep belt-tightening. As a senior eurozone official remarked at the height of the 2010-11 sovereign debt crisis involving Greece, Spain, Portugal and others: “If I want to get really depressed, I think about what we’re not talking about at all — the ticking demographic time-bomb.” “It’s very demanding and very tough to do. There are so many practical problems to be solved. Europe is going to be even messier,” says Timo Soini, the outgoing foreign minister, speaking before the government’s collapse. Another top Finnish policymaker is blunter: “This is a serious blow to our credibility as a reforming nation. But if we can’t do it, what hope have the rest?” Finland’s ageing population results from the baby boom that followed the 1939-40 Winter war with the Soviet Union and the second world war. Life expectancy has steadily risen and now lies at about 79 for newborn boys and 84 for girls. Over 65s passed the under 14s as a bigger age group a few years ago and by 2070 they are expected to be about a third of the population — compared to just over half for people of working age and about 10 per cent children. “This is the main engine to the structural imbalance of our economy and our public finances,” says Kai Mykkanen, Finland’s interior minister. In recent years, Finland has started to calculate its so-called sustainability gap — the long-term difference between government spending and income that will be aggravated by an ageing population. For now, it is about 4 per cent of gross domestic product. Successive governments in Helsinki have tried to narrow this gap with a broad array of policy proposals. Major reforms of the pensions system were passed in 2001 and again in 2014, and most experts now think it is on a solid financial footing. But reforming health and social

care has proved far more difficult, defeating each of the last three governments. Part of the problem is that health and social care are the responsibility of municipalities and these range massively in size, from the largest — Helsinki — with more than 600,000 inhabitants to the smallest with just 92. Providing a full range of services is increasingly difficult for many of the smaller municipalities and waiting times are often long. The current government tried to combine a shake-up in local government with the health and social care reform package. The problem was that the two main parties in the coalition come from completely different constituencies. The Centre party of Prime Minister Juha Sipila draws its support from predominantly rural areas while the National Coalition party of finance minister Petteri Orpo are more focused on the big cities. Healthcare experts suggested having five or six regions, centred around Finland’s biggest cities. But this was anathema to the Centre party, which instead proposed 18 newly formed counties. It is a painful lesson for the rest of Europe as political fragmentation is increasing across the continent, making government formation in many countries highly difficult and complicating the chances of changing such sensitive policy areas as healthcare. “It’s hard to do reforms with multi-party governments,” says economist Olli Karkkainen. The final reform proposal was highly complex and ended up drawing opposition from many quarters including complaints that it went against Finland’s constitution. The reform ran out of time before parliament was dissolved for the national elections. The Centre party in particular is expected to be heavily punished in the polls, in large part due to resentment over the healthcare issue. The next government in Helsinki is expected to make another attempt at reforming health and social care, perhaps by breaking it up into its individual parts to try to make it more manageable. But a three- or four-party coalition is likely to be needed, complicating matters further. All this could weigh on Finland’s public finances with credit rating agencies warning they may take negative action if reforms do not materialise. Economists at the Finnish central bank looked into the similarities between their country and Japan — with Finland’s population in 15 years’ time expected to look like Japan’s today — and concluded: “If decisions on reforming the structures of the economy are postponed far into the future, in the light of Japan’s experiences this may result in reduced growth and employment, with consequent high costs.”

op US and Chinese officials have resolved most of the issues standing in the way of a deal to end their long-running trade dispute but are still haggling over how to implement and enforce the agreement, people briefed on the talks have said. Liu He, China’s vice-premier, was preparing to meet Robert Lighthizer, the US trade representative, and Steven Mnuchin, the US Treasury secretary, for a potentially climactic negotiation session starting on Wednesday in Washington. The talks are the latest in a series of meetings over the past four months. Although an agreement was within reach, the two sides remain apart on two key issues — the fate of existing US levies on Chinese goods, which Beijing wants to see removed, and the terms of an enforcement mechanism demanded by Washington to ensure that China abides by the deal. “We’re getting into the end-game

between the US and China regards what happens the day after a deal is reached. China wants to see the tariffs imposed by Mr Trump’s administration on $250bn of goods over the past year removed immediately, while Washington wants to preserve some of them in order to keep pressure on Beijing to comply with the deal. Meanwhile, Mr Lighthizer is insisting on Washington’s right to unilaterally impose punitive tariffs on China if there is a violation of the agreement, and a guarantee that China would not retaliate with its own tariffs or challenge the action at the World Trade Organization — difficult concessions for Beijing to accept because they are seen as undermining its sovereignty. One possible compromise could involve a gradual lifting of US tariffs based on specific triggers and implementation dates, people close to the talks have said. Larry Kudlow, the director of the White House National Economic Council, gave little hint of what may

Robert Lighthizer, US trade representative, Liu He, China’s vice-premier, and Steven Mnuchin, US Treasury secretary, are scheduled to resume talks on Wednesday in Washington © AP

stage,” said Myron Brilliant, executive vice-president for international affairs at the US Chamber of Commerce. “Ninety per cent of the deal is done, but the last 10 per cent is the hardest part, it’s the trickiest part and it will require trade-offs on both sides,” he told reporters on Tuesday. If this week’s round of discussions is successful, it could pave the way for a summit between Donald Trump, the US president, and Xi Jinping, the Chinese president, this month, to sign an agreement that would lift a big cloud hanging over the global economy and financial markets. But in the absence of a breakthrough this week, China and the US could decide to extend the negotiations, possibly all the way until the G20 summit in Japan at the end of June. In the most destabilising scenario, the talks could be ended abruptly, leading to a new escalation in tariffs and new stress for the markets. “Decisions have to be made: do we want this deal or not?” said Derek Scissors, a resident scholar at the American Enterprise Institute, a conservative-leaning think-tank. “Until President Trump looks at the final version, and listens to Lighthizer’s recommendation and decides he wants to stand up and endorse this, there’s always a possibility it doesn’t happen.” The deal under consideration would include a ramp-up in Chinese purchases of US goods to narrow the burgeoning bilateral trade deficit and a series of measures by Beijing to open its market to foreign businesses, including in digital trade. It is also expected to include some pledges by China to rein in the forced transfer of technology from US companies and the alleged theft of intellectual property. However, the breadth of Chinese concessions on these fronts remains unclear. The biggest source of tension

come in the talks this week, saying he expected “additional headway” to be made, but adding that there were still “some issues” to be resolved in what was a “larger, grander discussion than anything we’ve ever had before” with China. “Things have to get done, I’m not going to get ahead of that story, we’ll see,” Mr Kudlow said. Since Mr Trump and Mr Xi agreed to launch talks to end their trade war at the G20 summit in Buenos Aires last December, hopes for an agreement have waxed and waned. In late February, after Mr Liu’s last visit to Washington, a deal seemed extremely close, but the negotiations slowed again in March. Last week, Mr Mnuchin and Mr Lighthizer were back in Beijing, and the atmosphere improved. “Both governments understand the stakes here. We have been encouraged by the tone over the past few weeks,” Mr Brilliant said. William Zarit, a senior counsellor at the Cohen group, said the Chinese were also “pretty optimistic” about the prospects for a deal, despite worries among hawks in Beijing that they are at risk of conceding too much. “You wouldn’t see such frequency of visits if they weren’t getting anywhere,” said Mr Zarit, a former US official based in China. Observers of the US-China relations have cautioned that even if a deal is reached, it would not eliminate the other sources of tension in the economic and strategic duel between Washington and Beijing. “My impression is that the Chinese expect other issues to become more salient in the bilateral relationship after a trade deal is signed, including South China Sea, Taiwan and Xinjiang,” said Bonnie Glaser, senior adviser for Asia and director of the China Power Project at the Center for Strategic and International Studies in Washington.

BUSINESS DAY

Thursday 04 April 2019

MADE IN ABA

How Aba shoe, garment industries lift thousands out of poverty ODINAKA ANUDU

ohn Okereke left his Abiriba community for Aba, Abia State’s industrial capital, in 2012. Before April 2012 when Okereke joined the Aba shoe industry, he had been a well-known village champion, whose source of livelihood was running errands for the aged and women in exchange for money. City dwellers would hire him to take care of their aged parents for N2,000 each month. This was 2012, and at 27, Okereke did not consider this an ideal source of livelihood. As of 2011, three families had hired him and all together paid him N6,000 every month. In the minds of his paymasters, he was now engaged and at least would not indulge in criminal activities. But the young man was thinking differently. For him, N6,000 could not provide a quarter of his basic needs. He had only primary education and could not be employed at the local government when the opportunity came in 2010. Despite this disadvantage, he decided to take a forward step in 2012 by first exiting his Amaja clan. It was a big blow for the families that depended on him for humanitarian services, but this move, like Robert Frost’s ‘The Road Not Taken’, made all the difference. He became an apprentice at a shop at Bakassi (Umueghilegbu) Industrial Market, Ariaria, in Aba, serving for six months. It was a difficult period for him. But the difficulty soon gave way to hope. With the financial assistance of friends in late 2012, he found a small shop at Bakassi. In early 2013, he got a contract to produce 1,379 pairs of leather shoes for a secondary school in Anambra State at N1,300 each. With the assistance of three newly employed

staff members, he was able to meet the one-month deadline. This enabled him to walk home with N1.79 million, a quarter of which was his profit. Like Okereke, the Aba shoe and leather industries are lifting a number of Nigerians out of poverty, making a huge chunk of them millionaires. The industry is mainly made up of small and medium-scale players who are now fairly competing with China in terms of design and price. It provides employment and reliable source of livelihood for the shoemakers and their employees. Four million pairs of shoes are produced each week in Aba by over 70,000 shoemakers, mainly micro- and small-scale, according to leaders of various sections of Ariaria Market in Aba. The industry is currently worth over N120 billion, according to BusinessDay’s calculations. Ariaria Market is the shoe hub in West Africa, with nine clusters, including Imo Avenue, Shoe Plaza, Bakassi (Umueghilegbu) Industrial Market, Old Site, Bag, Belt, Trunk Box and Powerline Clusters. Traders from Cameroon, Togo, Mali, Ghana

and other parts of West Africa file at the market to buy shoesand resell in their countries. Brand names such as John Wax, Virgy Shoes, Anzy, Ncol Shoes and, later, Aris Ken were household names from Aba shoe cluster that made millions from shoe production in the 1980s. Aba has some of the best shoemakers, such as Divine Promise Industries Nigeria Limited, owned by Promise Ekpo; Napico Investment Nigeria Limited, and Frantonia Industries Limited. There are equally Cuwill Enterprises Nigeria and OC Williams Industries, among others, which have produced millionaires, thanks to the industry. Many young Nigerians have found solace in shoemaking after school, thereby reducing the unem-

ployment rate in Africa’s most populous country, where almost 50 million people roam the streets in search of phantom jobs. Okechukwu Williams is the president of Leather Products Manufacturers Association of Abia State (LEPMASS). “I know that this cluster has produced millionaires. People like Anzy Shoes started here, but he is now into food processing, oil and gas, among other businesses,” Williams said. The industry is now gaining patronage from government agencies, including the military. Between January and June 2017, shoes and garment worth over N1.6 billion were bought from Aba by the Nigerian military, individuals and corporate organisations. These included 50,000 pairs of military boots by the Nigerian

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Many young Nigerians have found solace in shoemaking after school, thereby reducing the unemployment rate in Africa’s most populous country, where almost 50 million people roam the streets in search of phantom jobs.

Army, the cost of which is estimated at N300 million; orders from the Nigerian Navy, the National Youth Service Corps (NYSC), the police and Civil Defence Corps, Okezie Ikpeazu, Abia State governor, told BusinessDay in an exclusive interview. The Nigerian Prisons bought more than 50,000 pairs of shoes from Aba in 2017, apart from direct orders from Aisha Buhari, wife of the president, for the supply of thousands of pairs to school children in internally displaced persons (IDPs) camps in the northeastern Nigeria. These government agencies had been known for importation of footwear from China, Italy and Spain. “The total direct orders into the Aba economy were able to change the timidity of the Aba business person from spending 18 hours a day preparing a shoe, only to wake up to acknowledge somebody in Japan who did not do anything but just stamp ‘Made in Aba’ on the shoe,” Ikpeazu said at the investiture of the 15th president of the Aba Chamber of Commerce, Industry, Mines and Agriculture (ACCIMA) in Aba in 2017 “Apart from our local market, we have patrons from Cameroun, Gabon,

Equatorial Guinea, Congo DR and the rest, and most of these customers are foreigners,” said Williams of LEPMASS. Apart from shoes, Aba is also known for garment making. Garment makers in the city, especially those specialising in corporate wear, operate from Cameroun Road, Tenant Road, and Market Road, which are linked to Azikiwe Road. The buildings are not arranged in any particular order or sequence and the industryis not organised. Like shoemaking, the garment industry is creating a number of jobs and empowering the young generation. At 58 Ehi Road, Aba, garment makers have eight shops with 12 to 13 workers. These shops produce, on a weekly basis, 100 shirts, 110 pairs of trousers, 100 skirts, and 15 pairs of suits. A pair of trousers sells for N1,000, while a piece of suit goes for N4,000 to N5,000. There are 16 shops at 146 Ehi Road, Aba, with three mini shops called ‘attachments’. Over 30 garment producers operate from there. Similarly, 129 Ehi Road hosts 40 shops with 60 to 70 workers. In the same vein, 156 Ehi Road is a three-storey building accommodating 144 shops. Each of the shops has five workers, including an assistant. Onyeka Ikeme is one of the shop owners here. Ikeme produces 20 shirts, six suits, 30 skirts and 20 pairs of trousers a week. He has customers from Imo, a neighbouring state, that come weekly to patronise him, as well as two buyers from Cameroon. He also has four staff members. “Many poor people today have been lifted out of poverty,” said John Nkezie, an Aba-based garment maker. “All we now need are funds and machinery to do better,” he added.

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Opinion

Why is Africa so poor? (1)

CHRISTOPHER AKOR

aren Acemoglu and James Robinson in 2010, in a highly topical and bold paper in the Economic History of Developing Regions titled “Why Africa is poor”, tries to provide an empirical explanation for why Africa, especially south of the Sahara is the poorest part of the earth. As institution scholars, they expectedly traced Africa’s poverty to its highly extractive political and economic institutions, which do not provide incentives to Africans as citizens to save and invest, and also provide no incentives to politicians/leaders to provide public goods. But even before then, in another path defining paper “The Colonial Origins of Comparative Development” they explained how the European colonisation enterprise created these institutions in some places while also creating exactly the opposite set of institutions in some other parts. Hear them: “At one extreme European powers set up extractive institutions to transfer resources from a colony to themselves, and this led to the creation of economic institutions supporting such extraction, particularly forms of labour coercion

such as slavery, monopolies, legal discrimination, and rules that made the property rights of the indigenous masses insecure.” At the other extreme, Europeans settled and tried to replicate, or in fact improve over, European institutions. This led to inclusive institutions, which were much better for economic growth.” Of course, the determining factor for the type of institutions created in a particular colony was the feasibility of settlements. As they explained “....in places where the European mortality rate from disease was relatively high, the odds were against the creation of settler colonies with inclusive institutions, and the formation of extractive institutions was more likely. Sadly, these colonial institutions have tended to persist even after the colonies have won their independence. For the most part, independence leaders in Africa were more interested in inheriting the throne of the departing colonialists than in promoting genuine and inclusive growth and development of their countries. Therefore, they sought to retain the character of the colonial state with its over-reliance on violence to maintain order and neutralise oppositions and deepen the extractive institutions left behind by the colonial state. Rather than work to dismantle the colonial ‘gatekeeper’ state set chiefly for revenue generation and for balancing the instability of internal political control against the influence of external factors, they even became more reliant on the gate keeping role of the state to extract revenue and maintain control. Even more tragic is the tendency of

post-colonial leaders in Africa to jettison, circumvent or even destroy inherited formal state institutions. Early independent leaders, who claimed to be so much in a hurry to develop their countries, were impatient with the workings of the formal institutions of state bequeathed by the colonialists and in most cases sidelined or altogether destroyed these institutions and personalised power. Over fifty years down the line, none of these countries has developed. Rather, they have been turned to virtual wastelands, ravaged, as it were, by tyranny, bad governance, impunity, mindless orgies of crime and death, poverty, hunger and diseases. Yes, these countries now have the worst socio-economic indices in the entire world! What these leaders – and unfortunately, even succeeding ones - specialised in doing is what Ricardo Hausmann terms ‘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. So, for instance, countries will have Central Banks that are supposedly independent, but in reality are mere puppets of the regime in power and whenever the regime is facing revenue shortfalls, rather than going the conventional, and I dare say difficult route of undertaking hard reforms to bring the economy back to shape, it takes a short-cut by directing the Central Bank to keep printing it more money. The end result will be the case of Zimbabwe or even Venezuela, for instance, where inflation rose millions of percentages and rendered the country’s currency absolutely worthless leading to its abolition. Even Nigeria’s central

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...strong inclusive institutions are the best guarantees for sustainable growth and development and not strongmen

bank has joined the trend printing over N7 trillion for the government as loan. This is not even talking about African leaders’ penchant for disregarding the rule of law, disobeying court orders and even undermining or destroying the judiciary. Most of them do not respect the sanctity of contracts. The template for most African leaders – regardless of whether they are democracies or not – is that they must exercise absolute authority and their powers cannot be constrained or checked by whatever institution. It was even the legendary Leopold Sedar Senghor of Senegal who scuffed at the idea of sharing power in Africa describing it as inherently unAfrican and impracticable. One lesson these African countries and leaders ought to have learnt by now is that strong inclusive institutions are the best guarantees for sustainable growth and development and not strongmen. Strong institutions are enduring and guarantee societal progress no matter the people inhabiting them. Having a regime of strong institutions though, has a particular drawback: No one person no matter how important, can exercise absolute powers. It comes with constraints, checks and balances on the powers of all office holders, including that of the president. It is built on the premise that absolute power corrupts absolutely and that personal rule is subject to the whims and caprices of rulers and tends to fizzle out when the ruler departs.

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

The maturation of Nigerian democracy, 1999-2019

ik MUO

owards the end of 2018, I decided to run for the presidency of our great country, a post for which I am indubitably more qualified than many of the contestants ( see Muo for President; Business Day, 26/9/18 and 2/10/18). However, looking at what has happened in the past one month- the bizarre, the bad the ugly and the very ugly, I am glad I threw in the towel even before the race began. I would have lost everything, including my sanity. You see, when the irrepressible Fela described Nigerian democracy a demonstration of craze and said of all those involved dem all crazy, people thought that he was the crazy one. A review of political practices and attitudes in Nigerian from 1999 to 2019 shows that the demons have actually gone crazy and we all know what to expect from a mixture of demonism and craziness I was two years old when Nigerian became independent in 1960 but thanks to the ability to read and write and a natural spirit of enquiry, I now know a lot about what happened. We had politicians, who, though they were not saints, had some vision of the future, took politicking as a serious business, uttered several quotable quotes and were committed to the Nigerian dream. Along the line, the political crises in the West

occurred( a primitive version of what is happening now), the soldiers came calling, initially to deal with the ten per-centers and install Awolowo asthe Prime Minister, then a counter coup, which was totally northern, a police action which lasted 3 years and then the Gowon era and the failed 3Rs. The soldiers, who had tested the forbidden fruit, continued with the political relay race until, Shagari and NPN came on board. That era of political flamboyance was cut short by the soldiers who eventually handed over to one of them, a soldier turned civilian, a militician, the one and only OBJ. OBJ started saying and doing the right things but before long, he enthroned the do-or-die political model and became infested spirit of third term. It didn’t work out for him and he wanted to rule by proxy by imposing Yar’Adua on the country. UMYA offered servant-leadership, publicly declared his assets, admitted that he was the beneficiary of a flawed electoral process and went to work to clean up the system. It is not easy to assess his tenure because everything was overshadowed by the politics of ill-health, cabalism and death. He was survived by GoodLuck, the Niger-deltan who went to school without shoes and whom either did not know how to deploy the powers he had ( Nigeria has the most powerful presidents in the world) or was determined to do politicking differently or was determined to make history. And in 2015, the APC, an amalgam of desperate and disparate politicians cut short the proposed 60 year reign of the PDP, accusing Jonathan of cluelessness among other things. The APC promised CHANGE and offered everything, including turning the desert into a riverine area. But they did not tell us the cost of these changes and some of us were so carried away with their smooth stories that we did not interrogate

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However, I have examined the 2019 elections and the practice of democracy especially since 1999, with the eyes of an elder and I strongly believe that our democracy has matured, with its principles and practices

their proposals. In 2019, the APC-appointed INEC conducted an election that has so far lasted one month. Everything that could conceivably go wrong with elections has gone wrong with this election. Inconclusiveness and supplementary elections became the key features; elections and collation of results were canceled, suspended and/or, postponed. Over-voting was observed; violence was commonplace; INEC officials were kidnapped or coerced to announce results and the soldiers became the new face of democracy in Nigeria. People who were anxious to vote in the national election abandoned the polling booths in the subsequent elections because he who fights and runs away lives to fight another day. For now, the tribunals and their shareholders, the lawyers, have taken over. We experienced bipartisan democracy in places like IMO and Ogun states, where the governors belonged to two parties . We also had democracy by remote control in a place like rivers where APC contested every inch of the way even when they were not in the ballot. Of course, the president had told the world that APC won Osun State through remote control! People have complained against the various aspects of the elections and some of these complains were coloured by political, ethnic or religious considerations. Some rational and pro-National issues have also been raised, especially how the 2019 election has been the worst in recent time, how the monies spent were wasted because the votes did not count and the voters were not allowed to have a say. CSOs who always poke their noses into what does not concern them complained that the 2019 election was a step back from that of 2015, with one of them, HURIWA accusing INEC of committing more crimes than Evans, the billionaire

kidnapper. Our philosopher, Douglas Anele certified democracy dead andwent on to conduct a coroner’s inquest while Ango Abdulahi saw the election as monumental failure. Members of the APC and their supporters are not complaining, except in places like Zamfara and Rivers, though their jubilation has been subdued. However, I have examined the 2019 elections and the practice of democracy especially since 1999, with the eyes of an elder and I strongly believe that our democracy has matured, with its principles and practices. That is the good news. However the bad news is that anybody who expects that the principles of Nigerian democracy will be similar to what obtains elsewhere will surely be in for a rude shock! (To be continued) Other matters: Why money leads us! As a banker in those old good days, I used to go on ‘specie’ (cash collection from one branch of the bank to another) from Enugu to all over the former Eastern Nigeria and even beyond. Then, it was normal to cordon off the road from say, Enugu to PH, and no vehicle was allowed to overtake the specie-convoy. That was about 35 years ago. Today, with the cashless policy, online banking and bulletproof cash movement vehicles, I thought that the era has gone. You can imagine my shock when on 8/2/19, we were forced to join a money-movement motorcade as a bullion van and its security details blocked the road and prevented people from overtaking along the express way from Sagamu to Ijebuode. It took us about 1 hour to cover a distance that ordinarily took around 15 minutes. Continues online at www.businessday.ng

Ik Muo, PhD. Department of Business Administration, OOU, Ago-Iwoye 08033026625; muoigbo@yahoo.com, muo. ik@oouagoiwoye.edu.ng

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