BusinessDay 04 Aug 2020 by BusinessDay

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More jobs at risk as Shoprite, others pull plug on Nigeria

How Nigeria’s monetary, fiscal response to COVID-19 compares 3,000 direct jobs, over 17,000 indirect jobs at risk with peers

DIPO OLADEHINDE, BUMMI BAILEY & ENDURANCE OKAFOR

igeria’s struggle to create jobs is getting worse as Shoprite joins the list of other multinationals exiting the country, after 15 years of operations. The promise of Africa’s biggest economy to create jobs for its teeming population is turning peril as multinationals drawn to Nigeria by the prospect of a population bigger than Ghana, Kenya and South Africa com-

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MICHAEL ANI & FAVOUR OLAREWAJU

N *These include job losses in local companies.

iger ia’s respons e t ow a rd s c a l m i n g the economic and h e a l t h c r i s i s o ccasioned by the coronavirus (COVID-19) pandemic falls short in comparison with peer countries. While central banks and governments in South Africa, North America, Asia and Europe have offered huge fiscal Continues on page 30

Tuesday 04 August 2020

BUSINESS DAY

news 48m stolen barrels of crude: A case of cross-border fraudster trying to dupe Nigeria – Ozekhome MICHAEL ANI

he claim by Samano SA DE CV, an oil and gas trading company, that some 48 million barrels of crude oil were stolen from Nigeria and shipped to China in 2015 has been described as a case of international cross-border fraudsters trying to dupe Nigeria by getting some kind of compensation in the name of whistle-blowing. Mike Ozhekome, a senior advocate of Nigeria, who appeared as a guest on Channels TV Sunrise Daily on Monday, explained that the said, “The allegation is baseless and does not add up with his own investigation and analysis of the matter. “How can anyone claim that 46 million barrels of crude oil left the country for China? Which port did it pass through? Who sold it? Who bought it? And how did it get there? Where is the evidence to substantiate these claims?” he asked. Recall that Samano SA DE CV had recently petitioned the Nigerian National Petroleum Corporation (NNPC) over what it termed failure of the corporation to pay it whistle-blowing percentage. The oil and gas company demanded a whistle-blower compensation fee of 5 per-

cent, claiming it had in 2015 given the corporation reliable information on massive crude oil theft involving 48 million barrels that it claimed was stored in several ports and terminals in China. In a July 23, 2020, letter from Lords and Temple titled ‘Formal request for the payment of 5 percent whistleblower compensation for information furnished in respect of crude oil stolen from the Federal Republic of Nigeria’, signed by Gboyega Oyewole, a senior advocate of Nigeria, on behalf of Samano SA DE CV, the legal firm said its client was approached in 2015 by a group in China with the intent to sell the stolen crude. In the letter, addressed to the group managing director, NNPC, Mele Kyari, Lord and Temple said the crude was believed to have been stolen from Nigeria and stored in various ports and terminals in China. However, instead of indulging in the act of buying the stolen crude, the company reported the case to the NNPC. But despite assurances to its client that investigations into the matter would be made as well as the award of due compensation to its client, the legal firm said, no payment had been made to its client since then.

COVID-19: Easing of dine-in restrictions may bring only little respite to restaurants BUNMI BAILEY

estaurants in Nigeria have in the past five months seen up to between 50 percent and 60 percent drop in sales due to restrictions imposed by the Federal Government to combat the spread of the coronavirus pandemic, according to estimates by practitioners who spoke with BusinessDay on the matter. A relaxation of the restrictions by the middle of this month will offer little comfort to the business, experts say. A BusinessDay survey of some restaurants in Lagos and Abuja, Nigeria’s major cities, found that they were not generating enough sales from take-outs (prepared food packaged to be consumed away from its place of sale) and food delivery services they were allowed to operate. Wale Abioye, a manager at Sweet Sensation, a Lagosbased fast food restaurant, says operators generate more revenue from dine-in services than take-outs because people are more likely to make more purchases if they stay longer in the restaurants, unlike one-time purchases from take-outs.

“Government regulations and the fear of COVID-19 are a challenge because there is no continuous purchase. A lot of people that do repeated purchases through deliveries which cost money don’t get the full value of their money for what they are spending on, because they pay that part of value for deliveries,” Abioye states. Gboyega Olurankinse, owner, Elevens Restaurant and Lounge, a Lagos-based restaurant, notes that generally for restaurateurs, take-outs have affected their business because most people love dine-in services as they provide an avenue for people to gather, relax and spend time with their families. “For me, sales have roughly dropped by 60 percent. And with that, we had to cut cost by rationing staff and reducing some processes like energy cost,” he says. In March, when the number of new cases of COVID-19 started to increase, restaurants limited dine-in table services to only 20 people, while other customers were offered take-outs instead. When there was a full lock-

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Godwin Obaseki, candidate of the People’s Democratic Party (PDP) and Edo State governor, addressing supporters in Akoko-Edo Local Government Area, flanked by his running mate and deputy governor, Philip Shaibu (l) and chairman of Edo PDP governorship election campaign council, Dan Orbih, during the governor’s kick-off of his re-election campaign in Igarra, Akoko-Edo Local Government Area, Edo North Senatorial District, yesterday.

Calls heighten on vigorous implementation of economic sustainability plan Cynthia Egboboh, Abuja

conomic experts have charged the Nigerian government on need to urgently and vigorously implement its sustainability plans to spur economic activities and save the ailing economy from deeper woes. This is especially as the Purchasing Managers’ Index (PMI) slumps further to 41.1 percent. The PMI, which measures the prevailing direction of economic trends in the manufacturing and services sectors, has recorded a steady decline in five consecutive months from 60.8 percent in December 2019 to 41.1 percent in June 2020. The PMI has been largely affected by the lockdown of both the local and global economy to curtail the spread

... as PMI slides to 41.1% of the COVID-19 pandemic, and according to experts it is expected to decline further in preceding months except strict efforts are made to implement policies and plans that can boost economy activities. The Monetary Policy Committee of the CBN, at its monthly meeting held in July, noted the gradual, but persistent decline in the Manufacturing and nonManufacturing Purchasing Manager’s Indices below the benchmark. The Manufacturing PMI declined to 41.1 index points in June 2020 from 42.4 index points in May 2020. Conversely though, the non-Manufacturing PMI improved to 35.7 index points in June 2020 from 25.3 index

points in May 2020. The Committee attributed the trend in the Manufacturing and non-Manufacturing PMI to slower growth in production levels; new domestic orders; employment rate; raw materials supply, and new export orders. Johnson Chukwu, CEO, Cowry Asset Management, in an interview with BusinessDay says there is an urgent need for the government to develop and implement economic policies to boost the nation’s economy as well as purchasing power of the citizens. Chukwu notes that the contraction in PMI speaks to the level of confidence on the economy of the country, which has remained weak as the impact of the Covid-19

pandemic rubs off on all sectors. “As it stands today, we may be expecting consumption to further decline, and if the manufacturers perceive a continuous decline, they may not be encouraged to produce,” he states. Apart from the economic sustainability plan, there is need to develop and ensure implementation of specific policies to address issues relating to the different sectors, he notes. “Like the survival fund, if they can begin an early implementation of the fund, it will go a long way in stabilising the economy. “While we celebrate the CBN N50 billion fund for MSMEs, there is need to ensure that more resources

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Here’s solution to banks illegal stamp duty deductions Hope Moses-Ashike

he untold hardship bedevilling Nigerians is worsened by illegal stamp duty and sundry deductions by banks as customers go to social media to cry out. Stamp duty is applicable on all dutiable instruments, such as agreements, contracts, receipts, memorandum of understanding, promissory notes, insurance policies and other instruments stipulated in the Schedule to the Stamp Duties Act, Cap S8, Laws of the Federation of Nigeria 2004 (as amended) (SDA or “the Act”). The Finance Act, 2019, expanded the scope of the SDA to include technology, e-commerce and cross-border transactions, in line with global practices and current economic realities. KPMG summary of Federal

Inland Revenue Service (FIRS) guidelines indicates that a fixed-rate of N50 FIRS’ adhesive stamp is applicable on all receipts. Also, electronic transfers above N10,000 through the Deposit Money Banks (DMBs) will attract a stamp duty of N50, which the DMBs are obliged to remit to the FIRS. The Service recently announced that a total of N66 billion was generated as Stamp Duty charges for the period of January to June 2020. Here are some of the complaints from customers “I had a funny experience with this stamp duty some time back. I did a transaction, got debited (the amount+charges) and they collected stamp duty. Transaction didn’t go through. After complaining to the bank, it was refunded. They still collected stamp duty on the refund,” a customer tweeted. Sharing her experience

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with BusinessDay, one Mrs. Aneke, could not hold it but burst out in anger, “what is wrong with this bank? The middle-aged woman who lives in Festac was offset by stamp duty deductions from her account even when she did not do any transaction.” A customer with Twitter account name Oluwa Jidex, wrote FirstBank, saying “SMS charges were deducted from my account and to check my balance this morning it amazes me that N50 was deducted again as stamp duty... this charges are becoming unbearable... pls look into this ASAP”. Another customer, Michael Koublanou, said, “Sterling charged me stamp duty, they come charge VAT on the stamp duty charges as well”. Isaac Archibong, a customer of Fidelity Bank plc, tweeted, “Please you people should stop deducting money @Businessdayng

from my account in the name of stamp duty... N100 was deducted yesterday and N50 again this evening, let this madness stop please”. Responding to Archibong, Fidelity Bank said, “Thank you for contacting us. Please be informed that Stamp duty is Statutory/levied to the Federal Government as regulated by CBN, this was official in 1st February, 2020. The charges are done on all deposit/inflow/ transfer from N10,000 and above”. “On the issue of stamp duty, I feel it is an aberration to charge the same fee from somebody that receives N1000 and another that receives N1 million. Too many issues in the stamp duty policy of the CBN that make it look like the apex bank is allowing the banks to extort, even poor Nigerians

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news Calls heighten on vigorous implementation... Continued from page 2

are channelled to them from time to time to create a sustained growth, stimulate and encourage them to produce more, so as to moderate further decline,” he advises. Also speaking with BusinessDay, Aliu Hassan, an Abuja-based economist, says Nigeria may face deeper contraction in preceding quarters of 2020, as PMI drops below 50 percent for the second consecutive months amid economic uncertainty. “With Nigeria having PMI figure below 50 for the second consecutive months shows that there may be more decline in the remain-

bined such as Shoprite are retreating, while those staying behind are either downsizing or cutting cost due to economic challenges facing the country. Nigerians have neither favourable business climate nor high purchasing power to sustain their business operations so much so that they can no longer cover Shoprite’s cost of doing business. The Cape Town-based grocer said Monday that it had begun the official process that considers the sale of the majority or entirety of its supermarkets stake in Nigeria, according to its trading statements released for the 52 weeks that ended June 2020. Shoprite’s decision to leave Nigeria means 3,000 direct jobs and over 17,000 indirect jobs are at risk, a development that means doom to the country’s misery index that has deteriorated beyond crisis levels, and ought to be the government’s top concern as it has social implications. Nigerian Economic Summit Group (NESG), an independent, non-partisan, non-sectarian organisation, says between 2015 and 2018, 16.2 million people were added to Nigeria’s unemployed labour force while the problem of underemployment continues to be a major challenge. “Nigeria needs to create at least 3.3 million jobs per annum to cater for new labour market entrants,” NESG states. To put this in proper context, it means that at least 100 million jobs are required over the period to maintain the unemployment rate at 23 percent. “Apart from the issue of growing unemployment, multinational exits send a signal to the global community that Nigeria is a tough place to do business; even as economic and business conditions have been exacerbated by the pandemic,” Damilola Adewale, a Lagos-

ing quarters of 2020. The global economy is still shaking, hence the need for more deliberate efforts to ensure economic stability in Nigeria,” Hassan states. As the manufacturing index recorded a decline, production level, new orders, employment level, and raw material inventories all recorded further decline compared to their May 2020 figures. Hassan stresses that as key sectors continue to record declines, there may be increase in unemployment rate, businesses may be forced to lay off workers in order to keep up with production cost coupled with poor demand.

L-R: Moyosore Onigbanjo, Lagos State commissioner for justice/attorney-general; Obafemi Hamzat, deputy governor, Lagos State; Babajide Sanwo-Olu, governor, Lagos State; Hakeem Murk-Okunola, head of service, and Akin Abayomi, commissioner for health, during a news conference on the update of the COVID-19 pandemic in the state and opening of worship centres.

More jobs at risk as Shoprite, others pull... Continued from page 1

based economic analyst, says. Many medium enterprises like Shoprite’s exited the Nigerian market between 2013 and 2020 owing to sluggish growth, recession, regulatory pressure and poor economic management. A report by the National Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency (SMEDAN) puts this number at 2,877, which shows why the unemployment rate is 23.1 percent in Africa’s most populous country. “One big lesson here for foreign retailers is the fact that a large population size does not invariably mean a larger market. Until effective demand, purchasing power of Nigerians improve and betterment in macro fundamentals, foreign retailers might not step their feet into Nigeria,” Adewale says. Frank Jacobs, former president of MAN, told BusinessDay that 54 firms closed their factories between 2015 and 2016 owing to foreign exchange shortages. For Shoprite parent company, the Nigeria unit has been a drag on Africa’s biggest retailer, despite contributing far less than the South African operations where 78 percent of the group sales are made during the year. Shoprite’s supermarkets in South Africa have contributed 75 percent to total group sales in the last five years, according to data compiled by BusinessDay. To make things worse, sales in the Nigerian supermarkets have been declining since last year while the South African unit has managed to grow sales against the odds. The South African unit saw sales rise 8.7 percent, but in the Nigerian stores, sales declined by 6.3 percent in 2020. Shoprite’s unique www.businessday.ng

calendar means the year 2020 ended in June. While sales in Nigeria contracted by 5.9 percent and 6.7 percent in the first and second half of the year, respectively, sales in South Africa grew by 9.8 percent and 7.5 percent in the first and second half of the year. Nigeria’s corporate tribulations began in 2015, when tumbling oil prices battered Nigeria’s mono economy, which relied on crude for two-thirds of government revenue as government inertia and its controversial policies helped inflict more woes on the economy. Capital controls and restrictions on currency trading imposed, backed by President Muhammadu Buhari, made matters worse as foreign direct investors started tip toeing out of the harsh economic realities that suddenly hit them while portfolio investors including Aberdeen Asset Management plc and Ashmore Group plc, which together oversee about $450 billion of assets, retreated from the Nigerian market. BusinessDay analysis took a closer look at those international companies who have completely shut down their operations in Nigeria and the reason why they left. Mr Price Mr Price Group, a South African clothing and homeware retailer, announced plans to exit Nigeria two months ago. Mark Blair, chief executive of the company, told analysts at the group’s full-year results presentation in June that the company would now focus on its home market. “Quite frankly I’m not prepared to invest any further whether it’s an investment in time or in money into a country that is volatile as it is,” Reuters quoted Blair to have said. “In the early days, we

were making money but now we just came up against too many roadblocks, whether it’s getting the money out, etc.” “We are really going to focus on South Africa in a more concentrated way,” Mark Stirton, the company’s chief financial officer, said. OPay After a profitable 2019 for the Norway-based Chinesebacked OPay, the company announced that several of its subsidiaries will be exiting Nigeria or temporarily stopping operations. In 2018, Chinese investors backed the start-up with $180 million to take over the mobile money space in Nigeria. “We can confirm that some of our business units, including the ride hailing services, ORide, OCar as well as our logistics service OExpress will be put on pause. This is largely due to the harsh business conditions which have affected many Nigerian companies, including ours, during this COVID-19 pandemic, the lockdown and government ban,” the company announced in a statement last month. In January 2020, Lagos State Governor Babajide Sanwo-Olu announced a ban on motorcycle and tricycle operations in subSaharan Africa’s largest city. Ride hailing services, a sector where OPay had begun to dominate, were affected by the ban. Tiger Brand International South African largest food company, Tiger Brands, pull out of its struggling Nigeria venture in 2015 following an unfruitful $181.9 million acquisition of 63.35 percent stake in Dangote Flour Mills (DFM), a Nigerian company that produces flour, noodles and pasta. Tough economic conditions in Nigeria, which include the devaluing of the naira and the fuel crisis in May and June 2015, meant

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that the company could not meet its customers’ demands on time as their stock which was trading around N9 in 2013 fell to N1.23 by the end of 2015. “Hindsight is always a perfect science! At the time, it was the right decision but we could not have anticipated the global economic circumstances which would impact the business. The impact of low oil prices and the devaluation of the Naira against the US Dollar, and could not have been foreseen,” then Chief executive officer, Tiger Brands Limited, Peter Matlare explained in 2015. CEO of Tiger Brands Limited explained that Tiger Brands had made significant investments but the company continued to struggle with losses, which brought the board of Tiger Brands to consider either the two options of either further recapitalisation or find alternative option, the board subsequently settled for alternative options. By the end of 2015 in order to save over 3,000 jobs that are at risk, Aliko Dangote was forced to buyback the company at a nominal value of N1 by initiating a “repurchase Share Sale Purchase Agreement” for a company he had he initially sold for about $200 million. “Tiger Brands Limited will sell its shares (3,283,277,052) to Dangote Industries Limited for a nominal amount ($1) in consideration for Dangote Industries Limited injecting N10 billion in January in the form of a convertible (at lender’s option) shareholders’ loan,” the Share Sales Purchase Agreement (SSPA) stated. The then-outgoing CEO stepped down at the end of 2015 after eight years at the helm after financial results proved the investment was a grave mistake. Also, Tiger brand’s investment in Deli Foods (49 percent), makers of Digestive and Crackers @Businessdayng

also went awry. They had also written down N3.5 billion. Brunel Services plc In 2015, a Dutch stock exchange-listed staffing agency Brunel international pulled out of Nigeria because of the “continuing feeling of corruption and bribery,” its chief executive, Jan Arie van Barneveld, was quoted to have said. “The security risk and bureaucracy make it almost impossible to guarantee the quality of our services and the safety of our workers in Nigeria in the future,” Van Barneveld was quoted to have said by DutchNews. The decision to shut down in Nigeria was a huge blow to Nigeria’s increasing unemployment figures, as the personnel service provider Brunel is headquartered in Amsterdam and has offices in more than 40 countries worldwide; “In Nigeria, we had the feeling that we were being constantly cheated and bribed,” said van Barneveld in his newspaper interview,” chief executive of Brunel services said. Truworths International Truworths International Limited closed its two remaining Nigerian stores in February 2016, as stringent regulation of stock imports, foreign exchange controls and rising costs made it too difficult for the South African retailer to operate in Africa’s biggest economy. “The clothing company struggled to get stock into Nigeria and cash out of the country,” CEO Michael Mark was quoted to have said at that time. “Truworths’ dollar rental bill also soared as the rand weakened against the US currency,” Mark, CEO of Truworths International, said. According to the CEO, the regulations were always making it extraordinarily

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Wike signs N300.37bn revised 2020 budget Ignatius Chukwu

overnor Nyesom Wike of Rivers State on Monday signed into law the revised 2020 budget now down to N300.37 billion from N530.81 billion passed in December 2019. The signing followed the presentation of the budget by the majority leader of the state House of Assembly, Martin Amaewhule, at the Government House in Port Harcourt. The budget is a 48 percent reduction from the N530.81 originally budgeted. G overnor Wike said the unfortunate effect of the Covid-19 pandemic, particularly in Nigeria, necessitated the review. The implication of the review of the budget, according to the governor, is that budgetary allocations including capital and recurrent expenditures have been reduced. However, this, he said, would not affect the delivery of quality developmental projects and s er vices to Rivers people. The governor is constructing three flyovers at N21 billion and recently awarded a third with two link roads at N18 billion. Th e st ate re c e ntly g ot

N78.9 billion refund for federal road projects executed in the state in the past. Many citizens have suggested what projects to be targeted by the windfall but the governor has so far remained silent. S i g n i n g t h e re v i s e d appropriation law, Wike said: “It is most unfortunate that everybody is living a different life now because of the pandemic, which calls for us to face the economic reality. C ov i d - 1 9 h a s a f f e c t e d economic activities and revenues of government, and so it became necessary to review our budget. “By the revised budget, it means that so many things have to change. We have cut down the capital and recurrent expenditure to face the reality. “We are the only state that has not cut dow n the salaries of political appointees and elected officers. Virtually all the States have cut down 20 to 30 per cent of salaries of political appointees. Having cut down the recurrent expenditures, the overhead will no longer be the same”, he said. The governor also stated that his administration was determined to ensure that the proposed reconstruction of the House of Assembly quarters stands

the test of time. “One thing I can assure you is that we are working with Julius Berger Nigeria Plc to reconstruct the Assembly quarters. We want something that will stand the test of time. “A good living environment and quality houses will enhance your input and services to our state,” he stated. The governor promised to release the balance of funds for the 2018 constituency projects of the legislators. Also speaking, the majority leader of the house, Martin Amaewhule, said the Rivers State revised appropriation law No. 7 of 2020 was intended to make provision of services to fall into current reality. “Against the approved figures of sum of N530.81 billion which the house approved in 2019, as a result of the prevailing economic circumstances of the country, the house now approved a total sum of N171.33 billion for capital expenditure. For the recurrent expenditure, N129.37 billion bringing a total of N300.37 billion” he added. Speaker of the house, Ikuinyi-Owaji Ibani, noted that Governor Wike has conscientiously implemented policies and programmes to benefit Rivers people.

NUC gives Nigeria varsities till August 5 to show readiness to reopen KELECHI EWUZIE

ational Universities Commission (NUC) has given all the federal, state and private universities till Wednesday August 5, 2020 to complete a template form showing their readiness to resume academic activities which have been closed since 23 March due to the coronavirus pandemic. NUC, the regulatory and licensing body for universities in Nigeria in a letter to the vice-chancellors of the 171 approved universities, outlined the measures needed to be taken by all institutions. Chris Maiyaki, director, directorate of the executive secretary’s office in a letter seen by BusinessDay said the National Universities Commission has developed a template to generate data/ information on the preparedness of universities for possible reopening and resumption of academic activities amid the Covid-19 pandemic. Maiyaki stated that the universities were also required to

indicate the measures/strategies that have been put in place preparatory to the safe and hitch-free reopening of institutions in readiness for the commencement of full academic activities. According to Maiyaki, “Such information when generated across the entire sub-sector will provide the commission with a full picture of the challenges as well as guide policy options by the government”. He further noted that the template also provides for data on physical facilities such as infrastructure digital delivery, lecture theatres, halls and classrooms, laboratories/ workshops/studies and students accommodation. The letter dated July 29 and addressed to all vice chancellor observed that in the midst of all Covid-19 challenges, the federal ministry of education had since developed and circulated guidelines for school and learning facilities to provide the required support for the safe reopening of schools and resumption of academic activities. www.businessday.ng

BusinessDay had earlier reported that amid the disruption in traditional learning occasioned by closure of lecture halls, privatelyowned universities in Nigeria have embraced this “big moment”, but not so for most federal and state universities across the six geo-political zones which are battling the lack of basic infrastructure for online learning, ASUU strike, among other challenges. National Universities Commission (NUC) data show that only 87 of Nigeria’s 170 universities are able to offer up to 24-hour Wi-Fi service which, in the period of online learning, is key. According to the data, universities owned by private entities in Nigeria are the ones able to provide internet access to their staff and students 24 hours daily with 58.6 percent of them able to do so. They are followed by federal universities where 58.1 percent could offer internet service for 24 hours, while only 38.6 percent of state universities are able to offer 24-hour daily internet service. https://www.facebook.com/businessdayng

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The COVID-19 impact on the youth: Analysis, trends and insight

Goke Iyiola

ince the intrusive arrival on earth of the infamous and unwanted visitor – the malevolent Coronavirus, more popularly known as COVID-19; life as lived before has not and certainly can never be the same again. It started in December 2019, as some sort of incident of infection broke out in the city of Wuhan in faraway China. Some theories about what really is happening began to filter out. Conspiracy theories. There was a suggestion that it was an accidental breakout from a science and research laboratory. Another postulated high-level espionage and biological weapons; yet another linked it to advance in communications technology, precisely the superfast 5G-network innovation. However, experts in science and medicine insisted it was an endemic breakout of a new strain of the Coronavirus that had lived with man for ages. Suddenly, what appeared to rest of the world as a localised endemic in a province of China, grew some virulent wings ‘overnight’ and by the first quarter of 2020 had fostered itself on almost all the nations across the face of the known world; mutating in a most fearful manner to a global pandemic. Governments began to react to this state of emergency that had foisted itself so swiftly and without warning. Affected cities were put under total lockdown and infected persons quarantined. There was panic and fear especially as there was no known treatment or one that could be developed quickly in response. In a jiffy, life had come to halt on all continents – government offices, businesses, and workplaces, recreation centres, schools, markets; name it, was

shut down. Life moved, impromptu, into a totally disruptive and full lockdown in days. A new kind of war was on. The youth population, largely from the Gen XYZ appears to have been caught, and heavily so, in the impact of this new phenomena. Gen X refers to those within the ages of 38 -56 years. Gen Y, also known as “millennials”, 24 – 37 and Gen Z, the 16-23 year olds. With family life disrupted and economic pressure mounting due to inability to go to work or carry out business activities; coupled with the uncertainty of when and if life will go back to normal; days rolling into weeks and week into months, a “new normal began to emerge”. Insight Behavioural patterns and lifestyle took on a different shape with Gen XYZ, generally and in more specific ways that are positive and not so positive. Restricted movement The first obvious impact was the severe restriction on the movement of an otherwise very mobile, ‘up and about’ people. Suddenly, you could not as much as step out of your home, at best your street. No visiting or visitors even amongst friends and neighbours. The only excuse to leave home was to get the now scarce food, grocery and household essentials. Initially, it was an opportunity for families to bond and finally spend the ever-elusive time together. However, in some cases, restlessness and irritation began to create tension, as it seemed everyone was cramped into a space for too long. To some, it was like prison. Economic pressure Second is the economic pressure. Business activities and work had literally shut down except for those, whose manner of occupation afforded them the fortune of being able to work from home. Consequently, incomes dropped or in some cases ceased altogether. Savings were depleting fast and for those who had not subscribed to electronic/digital banking, they could not access their funds – banks had also shut their doors. Disruption of educational system Third and very critical is the disruption of the educational calendar and of course the education of those in school.

The unpredictability of when school will resume, brought anxiety to many, leaving them with a sense of stagnation and being cut off from their usual circle of relationship. Some educational institutions initiated online schooling to carry on as much academic work that was possible. Zoom, MS Team and other applications were deployed. According to the United Nations Department of Economic and Social Affairs Youth (UNDESA) “The majority of students in our educational institutions today are from Generation Z, a generation that has grown up in a truly globalised world. This generation, the oldest of whom are now 25 years old, is likely to be reflecting on their education as a result of a truly global pandemic, with many facing cancelled exams, sporting events and even graduation. This generation is denied by technology, where the terms FOBA (Fear of Being Alone) and FOMO (Fear of Missing Out) express their expectation of instant communication and feedback – effected through apps like Instant Messenger, Snapchat and WhatsApp. That includes from parents and educators, something being amplified with the current remote learning.” Parents and guardians are equally bothered as some fees had been paid, in some instance loans, and they are now not sure how that plays out if and when schools resume. Wellness The impact of all highlighted above, on the psyche and mental wellness of the society, is still being studied. A trend that was also observed was an increase in sexual activities and the use of recreational drugs amongst young people. This emanated from the excessive amount of idle time and the resultant boredom. A good number of young adults, either in the upscale-gated residential estates or the densely populated slums, increased their indulgence in these practices in what appears to be a coping mechanism in the face of circumstances the pandemic had thrown up. Volunteering Humans, being versatile and able to adapt, are evolving new ways to live and make the most of the prevalent situation. There are reports of Gen XYZ volunteer-

‘

As the government and people of different nations work together to find solutions, Gen XYZ has an opportunity and indeed the responsibility to seize the moment to shape our “new normal”. The best way to own the future is to create it

ing and collaborating with the government and non-governmental sector on initiatives to support their communities such as distributing food, medicine and supplies to the vulnerable. Some are developing new technological solutions to fight the pandemic. Online behaviour Furthermore, the pandemic scenario shaping the life of Gen XYZ is the area of digital media and general online behaviour. The forced stay at home has resulted in the generation under discourse having more time to consume, create and contribute more content online. According to preliminary studies and observations, overall Internet usage has gone up. Socialising and work are being reshaped as our new normal and primary method for connecting, consuming and commerce is now digital. Meetings, even concerts are held on line. As a fact, engineers at Zoom are reportedly stretched, having to expand capacity rapidly, installing new servers by the minute to accommodate the surge in the demand for their video conferencing service. The young like to entertain themselves by playing games on their mobiles and computers. According to a survey conducted by Visual Capitalist on 4000 people, aged 16 – 64, in the United Kingdom and the United States of America; more than 50 percent of Gen Z are consuming significantly more online video than before COVID-19; 80 percent also consumed more content – broadcast TV and online videos (YouTube and TikTok being primary mediums across generations) Increased interest in news Also reported is the increased interest in news by a generation who ordinarily were more focused on entertainment and necessary academic or income related content. This is fuelled by the need to be informed and gain some measure of certainty and assurance on the situation and the direction it is heading.

Note: the rest of this article continues in the online edition of Business Day @ https://businessday.ng Iyiola is the COO, 7Edge LLC

Trump White House accelerating toward a dollar crisis

s the US economy is heading toward its disastrous 2nd quarter results, the Trump administration is considering the expansion of the trade war to finance, which could destabilise the US dollar and derail the post-pandemic global economy. After its failure in the COVID-19 containment and the expected -53 percent plunge of real GDP growth in the 2nd quarter, President Trump’s reelection campaign is in serious trouble. To deflect the blame, his administration has launched a series of provocative measures against China thereby fuelling elevated bilateral tensions. Worse, the White House is reportedly considering moving from a bilateral trade war to an effort to exclude China from the dollardenominated international payment network. In Beijing, that would be seen as weaponization of the US dollar. Created in Brussels in 1973 – after the rise of US deficits, weaker US dollar and its decoupling from the gold standard – the dollar clearing and settlement system (Society for Worldwide Interbank Financial Telecommunication, SWIFT) is ostensibly a non-profit organisation. Yet, its first CEO was a former executive of American Express and its data centres are in the US, Netherlands and Switzerland. According to critics, the SWIFT’s status changed after 9/11, when the Bush administration, true to its unipolar stance on US security

and defense, seized the payments network as an added tool in “coercive diplomacy.” In the Trump era, coercive diplomacy has been expanded in US economic engagements. The SWIFT itself is said to oppose such measures, which could cost it a huge number of clients. After all, a contract on connecting to SWIFT is signed with each major bank separately, not the country. Trump trade hawks’ dream of Plaza Accord 2.0 In the interdependent global economy, international trade and finance are two sides of the same coin. Cross-border trade transactions rely on an effective international payments system and a robust network of financial institutions issuing credit. That infrastructure remains built around the US dollar, which the Trump administration would like to leverage to contain China’s rise. In the post-war era, the Japanese yen might peak in the mid-1980s, when Tokyo agreed to a managed trade deal in New York City’s midtown Plaza Hotel. The controversial pact led the US, France, West Germany, the UK and Japan to depreciate the US dollar relative to the Japanese yen and Deutsche mark by intervening in the currency markets. It was this exchange-rate manipulation that played a key role in Japan’s subsequent containment, by paving the way to its asset bubble in the

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early 1990s and the subsequent lost decades. But China is not going to follow that path. Diversification away from US treasury bills Through the Trump years, China has resisted protectionism and trade wars. But as a defensive measure, Beijing may now be forced to prepare against the risks of being cut off from the US dollar payment system. Under the US dollar payment system, China remains vulnerable to potential US sanctions. As long as China holds $1.1 trillion in US treasury bills and large investments that remain denominated in US dollars, exposure remains high. Over time, Beijing can diversify away from some of these bills and investments, while internationalisation of the renminbi would reduce reliance on the US dollar. China is preparing for currency swap facilities as part of the Belt and Road Initiative (BRI) and in the Regional Comprehensive Economic Partnership (RCEP) with many Southeast Asian countries. Similarly, according to a recent report, sovereign wealth funds expect China to remain in the economic driving seat, despite the Trump administration’s cold wars. Thanks to the long-term potential of Chinese economy and finance, renminbi’s role as a global reserve currency and its rising attractiveness for international transactions, the time is right for accelerated internationalisation. As China is now the first major economy to defuse the COVID-19

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Dan Steinbock impact and is rebounding, global demand for renminbi assets is rising. Augmenting dollar-based payment systems During the 2008 financial crisis, China’s central bank’s then-chief Zhou Xiochuan revived Keynes’s idea of bancor, an international currency, while several major economies began talks about diversification away from the US dollar.

Note: the rest of this article continues in the online edition of Business Day @https://businessday.ng Dr. Steinbock is an internationally recognised strategist of the multipolar world and the founder of Difference Group. He has served at the India, China and America Institute (USA), Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see https:// www.differencegroup.net/ A version of the commentary was published by China Daily on July 29, 2020

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Tuesday 04 August 2020

BUSINESS DAY

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A prosperous Nigeria is possible… but why unmake your country? (2)

Leadership crisis, predatory behaviours, and weak institutions STRATEGY & POLICY

MA JOHNSON

his columnist appreciates all Nigerians who are honest citizens and wish their country well. Let us be frank with ourselves, angels will not manage Nigeria. Nigerians will administer Nigeria. Certainly, everyone including the political class and other top executives in public and private sectors will be judged individually by the content of their character while serving either in elected or appointed positions. Will critics be right or wrong to say that there is hardly any Nigerian leader even at the highest level of government who gets into office and sees a vision for Nigeria? It depends on what individuals understand as national vision. Most Nigerians are worried because the level of corruption in our country is extraordinary. We have heard on many occasions that Nigeria has enormous potential. Fact! But some researchers and public affairs analysts have stated that corruption is the single greatest obstacle preventing Nigeria from achieving its enormous potential after almost 60 years of independence. Power corrupts absolutely. Corruption has weakened the country’s economy, asphyxiates growth, and decreases the social contract between the government at all levels-local, state, and federal- and millions of its citizens. So, how do we defeat corruption when the hunter is hunted? The acting chairman of the Economic and Financial Crimes Commission (EFCC), Ibrahim Magu has been suspended from office by the Presidency. Ibrahim Magu is secretly facing an investigative panel for allegations of corruption and insubordination. How

do we explain this? Public affairs analysts say that corruption and partisanship have fuelled the unceremonious exit of the czar of the anti-corruption agency. A pity! But amid this corruption pandemic, some politicians are thinking ahead. You cannot beat our brand of politicians. It is in the public domain that the predatory behaviour exhibited by some members of the political class is in preparation for general elections in 2023. Apart from alleged corruption cases at the NDDC, there are allegations of fraud at the Nigeria Social Insurance Trust Fund (NSITF). The NSITF is one of the agencies under Senator Chris Ngige, the Labour and Employment Minister. Senator Ngige is reported to have suspended the NSITF management over the misappropriation of N48 billion. The minister alleged that the management withdrew the amount through fake contracts, proceeds of which were recycled into fake pockets. But the sacked NSITF management team also accused its minister of padding the 2020 Budget with N1.2 billion, 5 SUVs, and installing an ex-lover as new executive director. When Ngige appeared at the probe panel in the House of Representatives he told Honourable Faleke that: “I am your Lagos mentor’s mate, you Mushin boy talking to me, a VI boy, you yap me, I yap you.” It was a session of yap me; I yap you! What a laughable tragedy? NDDC’s case is pathetic. The NDDC, set up by the FG to develop the Niger Delta region is a cesspool of corruption and maleficence. In fact, it has been turned into a house of scandals. Joi Nunieh, former Acting Managing Director of the NDDC accused the minister of Niger Delta of sexual harassment, and that the minister got slapped for harassing her. It is unbelievable! But Godwin Akpabio replied: “I love my wife and daughters, and I have been a champion of women and children.” It was a week of drama. Godwin Akpabio accused NASS members of collecting 60 percent of contracts at the NDDC. After the Reps threatened legal action, Akpabio denied accusing lawmakers of getting 60 percent of NDDC

contracts. Later, the “uncommon” Senator Akpabio released a bombshell by submitting a controversial letter to the Green Chamber of the NASS. According to media reports, those who benefitted from the NDDC contracts include House of Reps members, army, police officers, APC chieftains, ex-governors, and others referred to as “caucus lawmakers.” The venue of the hearing was turned into a movie theatre where ministers and lawmakers yapped and made jest of themselves. The whole corruption issue became a joke before Nigerians. The investigation is still on, but the Senate has demanded for dissolution of the Interim Management Committee (IMC) of the NDDC and that the agency should refund the sum of N4.9 billion. Weak institutions: If we examined most failed nations, they are unsuccessful largely due to weak institutions. In fact, weak institutions enable corruption. What we see today shows that our institutions are weak. Did the NASS conduct its oversight functions over the NDDC and other government agencies effectively? Not quite! If NASS oversight functions were effective, the magnitude of corruption at the NDDC and other agencies of government would not have been this high. Why create an Interim Management Committee instead of a board of directors as expressly stated in the NDDC Act? Those in the government should follow what is contained in the NDDC Act. If there is anything to be changed in the NDDC Act, the NASS should follow due process to changing it. Corruption is a global phenomenon. Corruption in whatever size and shape is hostile to the development of any society. A few Nigerians view their country as one of the world’s most corrupt. One may not accept this view. If we look at most sectors of the economy, one will be disappointed about the level of corruption that has taken roots in them. How do we respond to rising calls by Nigerians for full accountability of the private sector COVID-19 donations? Can we blame those asking questions when they observed that “Ghana’s N2.85 billion COVID-19 hospital dwarfs

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The situation is so pathetic that Nigeria perennially ranks in the bottom quartile of Transparency International’s Corruption Perception Index. Can the nation make it a policy to teach all senior secondary students and those in tertiary institutions about the impact of corruption on economic growth?

Nigeria’s N32 billion isolation tents,” as reported in BusinessDay July 31, 2020 by Hope Ashike et al. The situation is so pathetic that Nigeria perennially ranks in the bottom quartile of Transparency International’s Corruption Perception Index. Can the nation make it a policy to teach all senior secondary students and those in tertiary institutions about the impact of corruption on economic growth? The question may sound comical, but today‘s youths will be leaders tomorrow. The future generation needs to be taught that corruption destroys a nation. A distinguished elder statesman has equally suggested that the anticorruption crusade must start from the top. The people and government of Nigeria must have a desire and determination to eradicate corruption from the society. And the fight against corruption must not be used as a political weapon to attack critics of the government. Until there is a consequence for any proven case of corruption, the sleaze will continue ad infinitum. All said, Nigeria is a work in progress. Corruption will not make democracy work. But where are the noble citizens of our country? Men and women of integrity who will respect citizens who elect them into office. Men and women who in every sense of the word are leaders. We should not doubt what a small group of thoughtful and concerned citizens can bring to the table to change our country positively. Noble citizens will inspire the present generation and thus, strive to leave a legacy for the upcoming generations to build upon. We all have to be instruments of positive change that we eagerly desire. For Africa’s most populous nation to rise above a “giant” on paper requires sound leadership. A leadership that believes it is possible to have a prosperous Nigeria. A belief based on equity, fairness, and justice. It takes a generation of committed leaders to build a nation. Thank you! (Concluded) Johnson is an author and a retired naval engineer who has passion for African development and good governance

Economic cost of Nigerian insecurity

he Boko Haram insurgency started as another insurgency, in the Niger Delta, was thawing following the amnesty programme of the federal government in the same period. A decade after, Nigeria’s numerous internal security crises have intensified. Most notable among the myriad of issues is the Boko Haram insurgency in the North East that has given birth to other challenges in the north such as breakaway Islamist factions such as the Islamic State West Africa Province (ISWAP) and Ansaru; and a pastoral conflict in the North West and North Central, a resource war that is threatening to turn into a full-fledged ethnoreligious war especially in the old Northern capital of Kaduna. In virtually all sections and geopolitical zones of the country are a form of rising violence or another, often challenging the Nigerian state for territorial control. Kidnap for ransom which was once the strategy of Niger Delta militants threatening to cripple the country’s oil-based economy, is now being carried out as a full business venture by youths and other organised armed groups operating in large ungoverned spaces and forests across the country. Sambisa Forest in Borno state which is now used as one of Boko Haram’s key staging areas is a symbol of the tragedy of economic revenue

lost to violence and insecurity. The British colonial administration had gazetted the Sambisa Forest as a reserve in 1958, making it one of the conservation legacies bequeathed to the Nigerian state by the colonial government. In 1977, the area was re-gazetted as a National Game Reserve for the preservation of rare animals and also as a way of generating funds from tourism. The forest, which was home to a variety of wild animals such as bush elephants, leopards, lions, hyenas, baboons, monkeys of various species, and gazelle, as well as about 62 different species of birds is now home to squadrons and battalions of troops from the Multinational Joint Task Force from Nigeria, Chad, Niger and Cameroon, as well as Boko Haram. The earlier violence in the South has left the country’s oil facilities under a shoddy amnesty that preserves an uneasy peace, but the uneasiness of the peace is being felt in hot capacity across Nigeria’s territorial and international waterways in the Gulf of Guinea. According to the International Maritime Bureau, pirates kidnapped 27 crew members in the first half of 2019 alone, and one in four global piracy incidents in 2018 happened within Nigeria’s territorial waters, according to international insurance carrier Allianz Global. About 45 percent of global piracy occurred in the Gulf of www.businessday.ng

Guinea in the first quarter of this year, according to Allianz. There were 47 reported incidents, up from 38 a year ago, mostly targeting container ships and bulk carriers. According to Aljazeera, the economic cost of this piracy in the region in 2017 was $818 million, a notable increase from the $793.7 million it was in 2016. Out of the $818m, a quarter was spent on paying for maritime security in a report from Oceans Beyond Piracy (2017). Previously in 2012, the cost of piracy in the Gulf of Guinea due to stolen goods, security, and insurance was estimated to be about $2 billion. These figures are a totally different discussion about the impact of violence in oil producing areas that somehow affect oil production, leading Nigeria to lose about 400,000 barrels of oil to crude oil theft, which amounted to at least N4.8 billion in 2015. Maintaining the same amount in theft in 2019 when Nigeria became the world’s capital on oil theft, the country lost about N1trillion. In a country squeezed for revenue thus leading to questionable tax policies such as the stamp duty on rent as well an anti-business policy (now suspended) that sought to make NIPOST a competitor to, as well as a regulator in the logistics sector of the economy, we are yet to take into account how rising levels of violence affects our image, which in turn affects

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Cheta Nwanze

the economy. Nigeria has an image problem. The US State Department’s travel advisory for 2019 totally advises its citizens against travelling to at least 24 out of 36 states in Nigeria. When the US embassy announced an immediate indefinite suspension of interview waivers for visa renewals for applicants in Nigeria, the reason given was not just because Nigerians overstay their visa. It was also due to the fact that non-Nigerians were using Nigerian passports to apply for American visas which constitutes a security threat to the US. There are a lot of things Nigeria needs to fix, but if it would seek to command respect globally, it must fix its internal security apparatus. Cheta Nwanze is the lead partner at SBM Intelligence and heads the company’s research desk.

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BUSINESS DAY

Tuesday 04 August 2020

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What is the purpose of knowledge? (2)

Rafiq Raji

Challenge the prevailing narrative n my column of 7th April 2020, I discussed “ The power of narratives” using insights from Nobel laureate Robert Shiller’s 2019 book “Narrative Economics: How stories go viral & drive major economic events” and how to manage them. In the pursuit of knowledge, you find repeatedly that what is deemed to be conventional wisdom is often not wise at all. In their 2020 book “Radical Uncertainty:

Decision-making for an unknowable future”, former Bank of England governor Mervyn King and first dean of Oxford’s Said Business School John Kay highlight a resonant example to make the point. It used to be the conventional wisdom that the build-up of acid in the stomach that supposedly caused ulcers was due to stress and a bad lifestyle. Australian pathologist Robin Warren thought differently, asserting they were caused by bacteria instead. Teaming up with like-minded Barry Marshall, he found that “almost all gastric inflammations and duodenal and gastric ulcers” had one commonality: a bacterium they would call “Helicobacter pylori”. “Eureka!” yes? You wish. What was a source of humongous profits for big pharm was now to be cured with antibiotics that could be procured for pittance? Warren & Marshall were rebuffed. But they did not relent. “It is now accepted that most gastric ulcers are caused by H. pylori, often acquired in early childhood.” The pair won the 2005 Nobel Prize in Medicine. So, what is the purpose of knowledge? It is a rhetorical question at this point. But at the very least, you know enough not to accept the conventional wisdom without doing your own investigations. From the African perspective, using the stomach ulcer ailment as an allegory, there are many who have lost their way in the pursuit of solutions owing to

superstitions and bizarre cultural beliefs. But even if you were one swayed by science, you clearly would have been at your wits end following medical advice considering they did not know any better before the dogged pursuit of truth by Warren & Marshall. Beware of the dominant narrative. Dream awake I also use the faux “Madagascar covid potion” as an allegory of a broader malaise in our cultures. We rely overly much on untested superstitions and herbalism. These beliefs continue to hamper our progress. In days of yore, we believed flights could only be experienced quite literally in our dreams, with our butt cheeks twisting the long handle of a broom. Not until such silly beliefs were relegated as fodder for relaxing fiction did the idea of mechanical flight blossom and eventually triumphed. Now if you want to experience the joy of flight, you do not need to conjure up one in your sleep. You simply buy a plane ticket. And yet, we continue to hold dear many fictions as “culture.” You do not need to wear a leopard skin, with a beaded gourd in hand, and shouting out loud incantations in some deep forest to engineer ostracism, stigma or slander. These are human phenomena that have existed and been used for millennia in war and peace times to various ends. Instead of falling victim to the “if

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So, what is the purpose of knowledge? It is a rhetorical question at this point. But at the very least, you know enough not to accept the conventional wisdom without doing your own investigations

you can’t beat them, join them” faux “wisdom”, we should resort to diligence, focus, hard work and patience. The key insight from Michael Hunter’s 2020 book “The decline of magic: Britain in the enlightenment” is its description of how science prevailed over superstitions. While the details might not be ideal for this page, the long and short of it is that science prevailed over magic because it made clear truth from error. And as Kay & King’s 2020 book “Radical Uncertainty” shows, even science has its biases and constraints owing to the human constant and its proclivities for stories and fantasticism, a dimension amply explored in Shiller’s 2019 book “Narrative Economics”. We have to give up many of our silly beliefs if we desire progress. Evidence of the progress that is possible in the aftermath can be seen in the modern comforts we enjoy today. And not until the people who invented these things jettisoned these fantastic fallacies were they able to concentrate their thoughts towards true magic: aeroplanes, automobiles, mobile phones, satellites, and so on. Things that actually work wonders in the real world and in our lives. Things that do not exist only in our dreamy sleeps. “Dr Raji is chief economist at Macroafricaintel. He was previously an Africa Economist at Standard Chartered Bank, London, UK. (Twitter: @ DrRafiqRaji)”

Sustaining board effectiveness through the crisis

crisis is a major catastrophic event, or a series of escalating events, that threaten an organisation’s strategic objectives, reputation, or viability. Crises can be classified into two - routine and novel. In the case of a novel crisis, there is no experience to draw from to manage the crisis. In the absence of predetermined procedures, novel crises can test the decision-making capacity and strategic-thinking ability of leadership. Covid-19 is a novel virus and what is called a “black swan event”- unpredictable beyond what is normally expected and has potentially severe consequences. Crises can strain even the most highly functioning boards. They can also exacerbate existing Board dysfunction or expose a lack of clear leadership. The COVID-19 pandemic, perhaps more than most crises, challenges Boards to maintain effectiveness despite meeting more often, engaging virtually, and making many material decisions more quickly than they normally would. Few Directors have experience with operating this intensely, potentially making it difficult for Boards to do their work effectively and to maintain their responsibilities as fiduciaries. There is much more work now and some directors find themselves in a very different situation than what they had expected when they joined the Board. While some directors may thrive in a crisis, others may not, leading to potential tensions in the boardroom. This upheaval can impact board dynamics and

exacerbate difficulties that previously sat quietly under the surface (National Association of Company Directors). If they have not already done so, Boards and Management teams should work together outside of traditional Board meetings to ensure that Management provides timely information to the Board to support effective oversight and leadership. More frequent Board meetings are not out of place. However, to ensure that meetings do not place an extra burden on Management and act as distraction, the Board should define the frequency of reporting with respect to specific matters. To help minimise management fatigue, the Chairman should now more than ever act as the link between the Board and the CEO, prioritise Director questions to Management and communicate these to the CEO, rather than having individual directors reach out directly. This can help to focus communication on issues that are most important to the full board, eliminate duplicate requests, and triage questions to ensure that less relevant or urgent questions do not distract Management. Before asking Management for additional information, the Board should consider the opportunity costs when Management gathers information and prepares multiple Board reports. Fatigued Management teams will produce lower-quality information that may be repetitive, inaccurate, or incomplete. The shifting dimensions of crisis place

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a renewed importance on Board agility. Boards should prepare to move beyond rigid and traditional structures to allow for faster decision making and for ensuring that the diversity of skills and experiences in the boardroom are fully exploited. Boards must optimise how they use their time between board meetings to build effective collaboration between Committees.The Board should consider empowering Board Committees to deal with more routine matters to enable the full Board to focus on more strategic and high priority matters. Virtual meetings are likely to be shorter and more frequent than traditional pre–COVID-19 Board meetings. It would not be out of place to have Management reporting and status updates sent as pre-read to maximise Board discussions on the issues that matter most, rather than spend time receiving Management Reports. At this time, it is critical for the Chairman to ensure that that all voices are heard and look for ways to engage all members when nonverbal cues may be more difficult to identify at virtual meetings. This may be especially challenging for directors new to the Board who may struggle to find their voice and contribute as effectively as they might have done in a traditional, inperson setting. The current crisis places a premium on both quick decision making and thoughtful scenario planning. However, this comes with its own set of risks. Boards are in a unique

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Bisi Adeyemi

position to help Management recognise potential blind spots and pressure test critical assumptions that underlie strategic planning. Boards can also look critically at their own work as a means to help inoculate themselves from errors that might arise from both groupthink and cognitive bias. Boards that proceed too quickly can be dominated by loud voices that unintentionally shut out other opinions that could sway a Board majority. They should improve the rigor with which it tests both its own assumptions and those of Management, especially when they are considering COVID-19 recovery scenarios, changing customer preferences, and reopening for business. Further, when reviewing COVID-19 scenarios, Directors should ensure that predictions are clear, time-bound and can be evaluated based on empirical facts. Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comments and reactions to badeyemi@dcsl.com.ng

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Tuesday 04 August 2020

BUSINESS DAY

EDITORIAL Publisher/Editor-in-chief

Cost of corruption in NDDC

Frank Aigbogun editor Patrick Atuanya

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

Bashir Ibrahim Hassan

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

EDITORIAL ADVISORY BOARD

ince the probe of the Niger Delta Development Commission (NDDC) began two weeks ago, politicians and civil servants have entertained Nigerians with beautifully scripted melodramatic scenes. For starters, the NDDC was created by former President, Olusegun Obasanjo in 2000 with the basic mandate of developing the oil-rich Niger Delta region, particularly building shatterproof infrastructures that will support the nine states of region that laid the golden eggs but were muzzled by successive kakistocratic governments. It was the thinking of the government then that this would assuage the plight of the Niger Delta people and reduce youth restiveness in the area. One of the key mandates of the NDDC was to tackle ecological and environmental problems arising from the exploration of oil mineral in the Niger Delta region and advising the Federal Government and the member states on the prevention and control of oil spillages, gas flaring and environmental pollution. However, recent revelations have shown that the commission has long deviated from its core mandates and been turned into a milking cow by politicians, civil servants and contractors. For a region that produces the oil that provides revenue and foreign exchange for which the Nigerian tripod stands, the Niger Delta is littered with abandoned projects and half-baked infrastructures that dilapidate as days

run into months. In Imo State oil-producing communities, for example, the road from Umuokanne in Ohaji to oil producing communities of Obitti, Assa, Awara, among others, is in a terrible state. Many communities in Imo State oil-producing communities today, as BusinessDay’s recent investigation showed, have no health centres, secondary schools, pipe borne water and electricity. Godswill Akpabio, the Minister of the Niger Delta, had, in 2019, said that a total of 1,200 projects were abandoned in the nine states of the Niger Delta. In Akpabio’s words at an NTA interview, “There is no way NDDC roads can last for even two years. I think people were treating the place as an ATM, where you just walk in, pluck money and go away. I don’t think they were looking at it as an interventionist agency.” The cost of these acts of malfeasance playing out in the NDDC over the years has proven to be humongous. The biggest cost is, perhaps, unemployment in the region which has remained far above the national average. According to the National Bureau of Statistics (NBS) 2018 third quarter job data, Nigeria’s unemployment was 23.1 percent. However, Akwa Ibom had the highest unemployment rate of 38 percent, while Rivers State returned 36.4 percent in joblessness. Bayelsa, another major oil-producing state, had an unemployment rate of 32.6 percent, while Delta State had a rate of 25.4 percent. Abia, another oil-producing state, returned a humongous 31.6 percent in

unemployment. Unfortunately, Abia, Akwa Ibom, Rivers and Bayelsa states topped the chart with the insurgencytorn Borno, which has been under the siege of Boko Haram and rebels for over a decade. The list brings a vicarious pain when compared with other non-oil producing zones. While the South-South, which produces over 80 percent of crude oil, returned an average unemployment rate of 32 percent, SouthWest recorded 14 percent. North-West zone, on the other hand, reported 27 percent unemployment rate. The obvious fact from these numbers is that the major actors in the Niger Delta, particularly the NDDC and governors, have failed to empower their people. The NDDC receives taxes from oil companies operating in the Niger Delta, but at no time has the agency accounted for how these humongous taxes were used. Shell paid the NDDC $136.6 million as fees in 2019; $79.6 million in 2018; $79.6 million in 2017, and $125.14 million in 2016. This is just one out of over 15 oil firms operating in the region. The key question is, why has this money not impacted the lives of Niger Deltans? Following from unemployment, youths in the Niger Delta have resorted to running kidnapping cartels, scaring away investors from South-South and South-East regions. The governors in the South-South regions have, at one point or the other, given oil companies whose headquarters are in Lagos marching to relocate their head offices to the region or risk one form of punishment or the other. Good enough threat,

but who will bring all managerial staff to a region notorious for kidnapping and demanding millions in ransom? Also, the NDDC has massively failed in one of its core responsibilities of arresting environmental degradation going on in the Niger Delta region. Many communities in the region cannot go to their farms or fish in their waters, thanks to oil spillage and gas flaring by the ever-denying oil companies. With these failures, it is diametrically despicable for the NDDC to have spent N81 billion in five months on trivial matters such as community relations (N1.3 billion), staffing-related payments (N8.8 billion); public communication (N1.121 billion), among others. We support the forensic audit embarked by Minister Akpabio and we urge President Muhammadu Buhari to make the findings of the audit public. We also adjure Buhari to stand tall and investigate the alleged 60 percent of the projects given to legislators as mentioned by Akpabio. Buhari must also investigate the roles of Akpabio, former managing director Joi Nunieh, acting MD Kemebradikumo Pondei, Interim Management Committee (IMC) and previous managing directors and ministers in charge of the agency. It is our position that Buhari should invite the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices Commision (ICPC) to jointly investigate the mess and bring the perpetrators to book. Otherwise, his corruption rhetoric may not be taken seriously by the local and international communities.

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Tuesday 04 August 2020

BUSINESS DAY

COMPANIES&MARKETS EQUITIES

AVIATION

Foreign investors trade cautiously on Nigerian stocks amid FX uncertainty OLUFIKAYO OWOEYE

oreign investors continued to play on the sidelines of Nigeria’s equity market in June as currency volatility risks discouraged the offshore players from taking advantage of cheap valuations. In the first six months of the year, foreign investors account for a meagre 39.52percent of transactions on the market as against 45.84percent in the first six months of 2019. On the other hand, domestic investors took advantage of the relatively cheap pricing to take position in bellwether stocks thereby accounting for 60.48percent of total transaction in the first six months of the year, compared to 54.16percent in the same period in 2019. A further analysis show that total foreign transactions increased by 59.88percent from N35.24 billion in May to N56.34 billion in June while total domestic transactions decreased by 13.55% from N83.91billion in May to N72.54 billion in June 2020. Speaking on the reduced participation of foreign investors in the equities market, Yinka Ademuwagun, fixed income & equity analyst at United Capital said foreign investors would continue to play on the sideline due to uncertainty in foreign exchange outlook. “There is a lot of opportunities in the market

as most of the stocks are currently underpriced but the fact that the FX uncertainty can wipe off their gains would continue to keep foreign investors on the sidelines, those who are currently in the market are finding it difficult to pull out their funds and this would discourage others from coming,” he said. The Central Bank has continued to maintain capital control policy resulting in illiquidity for current foreign investors to pull out their funds, while manufacturers are finding it difficult to access the greenback to import raw materials. In March, it suspended fx sales to retail currency traders, it also moved the rate for BDC to N380 to the U.S dollar from the previous N360. It subsequently adjusted the

naira’s official rate to N360 weaker than its previous peg of N306, implying a 15percent devaluation. It devalued the official exchange rate earlier this month to N381 per dollar from N360 As at 30 June 2020, total transactions at the nation’s bourse increased by 8.17% from N119.15billion in May 2020 to N128.88billion in June 2020. The performance of June 2020 when compared to the performance in June 2019 (N297.25billion) revealed that total transactions decreased by 56.64%. In June 2020, the total value of transactions executed by Domestic Investors outperformed transactions executed by Foreign Investors by approximately 12% Local institutional investors however outperformed retail Investors by 10%. A

comparison of domestic transactions in June and May 2020 revealed that retail transactions decreased by 23.35% from N42.19 billion in May 2020 to N32.34 billion in June 2020. Whilst the institutional composition of the domestic market also decreased by 3.64% from N41.72 billion in May 2020 to N40.20 billion in June 2020. According to Ademuwagun, the risk appetite of domestic institutional investors such as Pension and insurance companies are not that massive compared to foreign investors. “Retail investors are quick to take profit, once they make 10-11percent increase they are very quick to take out that profit unlike foreign investors who stay longer with big risk appetite because of the volume of fund,” he said.

Unity Bank posts N22.8bn gross earnings in half-year 2020 HOPE MOSES-ASHIKE

nity Bank Plc has d e c l a re d g ro s s earnings of N22.8 billion in the period between January and June 2020, continuing an impressive run it recorded in the 2019 financials when it posted N44.59 billion. According to the retail lender’s unaudited financials submitted to the Nigeria Stock Exchange, the half-year gross earnings rose 11 per cent to N22.87 billion from N20.55 billion in the corresponding period of 2019. Profit before Tax, PBT grew by 7 per cent from N1.05 billion in half-year 2019 to N1.12 billion in the period under review. This is even as the Profit after Tax, PAT, equally rose by 7 per cent to N1.03 billion from N967.51 million in the corresponding period of 2019.

...Records 7% growth in PAT The half year results showed that the lender recorded gross earnings of N11.01 billion, a 5 per cent growth from the N10.50 billion recorded for the same period in 2019. Similarly, the lender’s interest earnings recorded a 15 per cent increase to N19.79 billion within the period, from N17.27 billion in the corresponding period in 2019, while its total operating income also grew by 14 per cent to N12.14 billion from N10.69 billion in the same period in 2019. Earnings per Share stood at 17.64 Kobo for the period ending 30June 2020. The Bank’s half-year report also showed a huge boost in asset, which saw a 48 per cent growth to N445.95 billion from N293.05 billion in the same period in 2019.

This follows the growth of the Bank’s loan book which rose by 53.7 per cent to N131.48 billion from N70.62 billion in Q2, 2019. A further review of the H1 financial statement showed that the agribusiness-focused lender grew its deposit by 19 per cent to N306.47 billion from N257.69 billion as at December 2019. Commenting on the result, Tomi Somefun, managing director/CEO, Unity Bank Plc, said: “Despite the inclement economic conditions occasioned by the global pandemic which almost paused or at best put activities at a slower pace in virtually all sectors of the economy, the Bank has been able to ride the waves to maintain its growth trajectory looking at the key performance indicators. The

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assessment, therefore, is that the repositioning efforts which have taken root before the headwinds are equally able to withstand shocks.” She further stated that the growing health and strength of the Bank’s balance sheet is attributable to the fact that while the Bank remained focused on its niche market, which is Agribusiness, it has also continued to grow its brand franchise in many areas of the retail market by promoting and leveraging its Agriculture value chain businesses as an offshoot. The views of analysts continue to reinforce the gains of the repositioning drive anchored on the agribusiness as the backbone for the steady growth and performance in the half-year 2020. They share optimism for an even more positive outlook in the future, as market confidence continues to improve.

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British Airways pilots accept 20% pay cut amid pandemic impact OLUFIKAYO OWOEYE

he British Airline Pilots Association have announced that British Airways pilots have accepted a deal that will temporarily cut their pay by 20percent and limit job losses to just about 270, as against the initial planned 1,255. This deal has resolved an ongoing bitter dispute between the pilots and the airline, as the carriers attempt to navigate through the global slump in air travel due to COVID-19 The British Airline Pilots’ Association (BALPA), while disclosing that just over one-fifth of the 1,255 initially planned redundancies will be allowed to go, the terms of the agreement suggest that the pilots will accept an initial pay cut of 20%, which will gradually reduce to 8% over a 2-year period and then phase out entirely in a longer-term. The pilot union said that there will not be firing and rehiring of pilots. The UK lawmakers had previously been very critical of British Airways over the alleged usage of furlough fire and rehire scheme, a strategy used by companies to force employees to accept inferior terms. They accused the airline of planning to cut as many as 12,000 jobs and exploiting the coronavirus crisis to reduce staff and weaken the employment terms of those remaining. Airlines have been seriously hit by government

lockdowns and restrictions that are parts of measures to contain the spread of the coronavirus pandemic. The hopes of the airlines recover ing at the tail end of the profitable summer tourism season seem to have been dashed due to disruptions caused by a new wave of the virus outbreak in many countr ies, including France and Spain, with new travel restrictions being placed by them. The International Air Transport Association (IATA), had revealed that a full recovery is unlikely before 2024, which is a year later than it had earlier predicted. The British Airways, while agreeing with this bleak assessment, says that it does not expect the airline to return to preCOVID-19 business level until at least 2023. The IAG Group, holding company for British Airways, said yesterday, “Therefore we need to act now to reshape our company for a very different future.” The company has not received the billions in bailouts that some rival airlines like Air FranceKLM and Deutsche Lufthansa received. The assistance they got was only limited to furlough funds to protect jobs and statebacked loans. Global lockdown imposed to fight the coronavirus pandemic have negatively affected air travel, thereby putting the future of many airlines in serious doubt.

APPOINTMENTS

Nestle announces changes to the Board of Directors

estle Nigeria has announced the appointment of its managing director Mauricio Alarcon as the market head Nestle Central and West Africa comprising 25 countries with head office in Ghana from September 1. According to Nestle, Alarcon will remain on the board of the company as a non-executive director of Nestle Nigeria. Also, Remy Ejel a nonexecutive director who is the current market head Nestle Central and West Africa has been appointed @Businessdayng

a s t h e ma rke t He a d o f Nestle Middle East and North Africa (MENA) from September 1. He would no longer continue to serve on the board as a nonexecutive director. To replace Alarcon as the managing director of the company, Nestle has announced Wassim Elhusseini, the current country manager and sales director of Nestle Middle East & North Africa. Elhusseini joined Nestle Kuwait in 2002 as a channel category sales development manager for coffee and Creamers.

Tuesday 04 August 2020

BUSINESS DAY

COMPANIES&MARKETS

Business Event

OIL & GAS

Malabu Deal: Shell to write down OPL 245 license as production tanked 7% OLUFIKAYO OWOEYE

he world’s largest oil and gas trader, Shell says it would write down its investment in the controversial Malabu OPL 245 offshore field in Nigeria, just as it announced that its upstream segment made a loss of $6.7 billion as production declined by 7percent from a year earlier to 2.415 million barrels of oil equivalent per day. A write down is necessary if the fair market value of an asset is less than the carrying value currently on the books. The amount to be written down is the difference between the book value of the asset and the amount of cash that the business can obtain by disposing of it in the most optimal manner. “The upstream loss included a post-tax impairment charge of $4.7 billion mainly related to unconventional shale assets in North America, assets offshore in Brazil

and Europe, and the OPL 245 block in Nigeria which is at the heart of a bribery court case in Italy,” Shell said. The OPL license has been at the heart of a protracted litigation in Italy after prosecutors alleged corruption. Shell bought the oilfield alongside an Italian company, Eni, in 2011 after paying $1.3 billion. The payment was to a company called Malabu, which was owned by Nigeria’s former Oil Minister Dan Etete. However, Italian prosecutors claim that most of the payments were kickbacks to Nigerian government officials. Prosecutors have, therefore, called for an 8-year prison sentence for former Eni CEO, Paolo Scaroni. Both companies have been fined $1.04 million and prosecutors seek the confiscation of $1.092 billion from the defendants of the case. The Anglo-Dutch company, avoided its first quarterly loss in recent history, buoyed by booming trading business, it however announced nearly

$17 billion in impairment charges reflecting a bleak outlook for oil and gas prices. Shell’s liquefied natural gas (LNG) sales declined by 7% in the quarter. The Integrated Gas division wrote down $8.2 billion, mainly related to the Queensland Curtis LNG and Prelude floating LNG operations in Australia. The upstream loss included a post-tax impairment charge of $4.7 billion mainly related to unconventional shale assets in North America, assets offshore in Brazil and Europe, and the OPL 245 block in Nigeria which is at the heart of a bribery court case in Italy. Shell’s liquefied natural gas (LNG) sales declined by 7% in the quarter. The Integrated Gas division wrote down $8.2 billion, mainly related to the Queensland Curtis LNG and Prelude floating LNG operations in Australia. Shell’s net debt rose to $77.8 billion and its debt-toequity ratio, or gearing, was up by 2.8% to 32.7% following the impairments.

TECHNOLOGY

Tech giant shares see renewed investor interest amid impressive results OLUFIKAYO OWOEYE

hares of Apple, Amazon and Facebook jumped, with Google’s Alphabet also climbing, as quarterly reports from the four Big Tech giants fueled investors’ interest, pushing the Wall Street to a four-month rally. The four tech giants released their reports the same day, with Apple, Amazon and Facebook surging 5percent or more while Alphabet traded up about 0.5percent. The Big Tech quartet account for nearly a fifth of the S&P 500’s stock market value. Index funds tracking the S&P 500 and tech-heavy Nasdaq rose 0.8percent and 1.6percent. Apple printed revenue gains across every category and in every geography as consumers working and learning from home during the COVID-19 pandemic turned to its products and services. Apple’s fiscal third-quarter revenue and profits were $59.69 billion and $2.58 per share, compared with analyst expectations of $52.25 billion and $2.04 per share. Sales in its services segment, which also includes offerings such as iCloud and Apple Music, rose 14.8% to $13.16 billion, compared

with and analyst expectations of $13.18 billion. According to Apple CEO Tim Cook, Apple has 550 million paying subscribers on its platform, up from 515 in the previous quarter. Sales in the wearables segment that includes the Apple Watch rose 16.7% to $6.45 billion, compared with estimates of $6.0 billion. Cook said that after disruptions in April, sales began to pick back up in May and June, helped by what he called a “strong” launch for the $399 iPhone SE introduced in April. The world’s biggest social network, Facebook also out performed analysts’ estimates for quarterly revenue despite an unprecedented boycott and the economic disruption of the coronavirus pandemic. Facebook posted revenue growth of 11%, its slowest ever but still far above analysts’ expectations of 3%. Ad sales, which contribute nearly all of Facebook’s revenue, rose 10% to $18.3 billion in the second quarter as people under lockdown spent more time online and businesses rapidly pivoted to e-commerce. Monthly active users rose to 2.7 billion, ahead of estimates of 2.6 www.businessday.ng

billion. Net income came in at $5.2 billion, or $1.80 per share, in the three months ended June 30. A year earlier it earned $2.6 billion. Jeff Bezos -owned Amazon, printed the biggest profit in its 26-year history as online sales and its lucrative business supporting third-party merchants balloned during the coronavirus pandemic with revenue jumping 40percent from a year earlier to $88.9 billion. Online store sales jumped 48% to $45.9 billion in the second quarter; its cloud services also saw higher demand as companies switched to virtual offices in the pandemic. Revenue from Amazon Web Services (AWS), which sells data storage and computing power in the cloud, rose nearly 29% to $10.81 billion. For Google, the world’s most popular search engine, Alphabet shares were barely changed at $1,552, above their pre-pandemic high, after it said revenue fell 2% in the second quarter, less than analysts’ estimate of a 4% decline. Alphabet, whose ad sales account for about 78% of its revenue, has struggled during past economic slowdowns, as marketing is often the first budget item to get slashed.

L - R: Winston Nkanor, head of HR and CSR at Samsung; Osagie Ehanire; minister for health; Adetunji Taiwo, head of Mobile at Samsung, and Anas Galadima, Senior Manager, Public Affairs, MTN Nigeria at the donation of 500 smartphones with SIM and data for 6 months to Case Managers in Isolation Centres across Nigeria.

L-R: Bola Olowu, chairman, director, public private partnership and diaspora, federal ministry of health; Abike Dabiri-Erewa, chairman , Nigerians in Diaspora Commission, Chikwe Ihekweazu, director-general, Nigeria Centre for Disease Control (NCDC), and Ali Onoja, representing , president of the Nigerian Association of Pharmacists and Pharmaceutical Scientists in the Americas (NAPPSA), during NAPPSA’s donation of COVID-19 diagnostic and other medical equipment to NCDC in Abuja.

Commuters at BRT bus stop displaying their Amber Energy Drink as a ticket to board the bus to Ikorodu, Lagos

L-R: Kelly Danjuma Usman, Banker and Financial Analyst, Prof Jimoh Habibat Isah, Federal Commissioner representing Kogi State, National Population Commission, Mrs Catherine Obalola, Office of Secretary to the State Government, Lokoja, Lawal Itopa Lamidi, The Author , CMS Solutions Management Technique Book, at a public lecture, titled “ State of the Nation: The need for CMS Solutions held at NUJ Conference Hall, Lokoja, Kogi State.

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Tuesday 04 August 2020

BUSINESS DAY

property&lifestyle

Here’s how FMBN’s new approach to mortgage is changing housing fund story CHUKA UROKO

hen the National Housing Fund (NHF) scheme was set up by an Act Act of Parliament—Act No 3 of 1992, it came as a child of necessity, serving as a pool of long-term funds and solution to the poor funding structure of the Nigerian housing finance system. As a housing finance solution, the fund addresses major challenges of cost and tenor of funds. Though it was set up primarily for mortgage lending, the fund has evolved, over the years, to provide other forms of Housing Finance based on customer/market needs such as construction financing, housing micro-financing, rent to ownership, etc. By law, the federal mortgage bank of Nigeria (FMBN), which is the apex mortgage bank in the country, is empowered to collect, manage and administer the NHF scheme. Not until 3 years ago, the 28-year old scheme had remained a fledgling with underperformance in almost all its key performance indicators.

But there had been challenges bordering on non-compliance by institutional investors such as banks and insurance companies, workers coverage such that only five million are registered out of 90 million national working population. However, the relatively new management at FMBN has introduced new innovations in the operations of the fund that are not only addressing the fund’s legacy challenges, but also changing its story. “On assumption of office in 2017, we presented a proposal to Central Bank of Nigeria (CBN) for consideration by Bankers’ Committee for riskbased investment in NHF,” Ahmed Dangiwa, FMBN’s managing director and chief executive said at an international housing show in Abuja recently. Dangiwa disclosed that there are on-going efforts to review the NHF & FMBN Acts, adding that the apex mortgage bank was part of an advocacy for states’ adoption of Model Mortgage and Foreclosure Law (MMFL). “We are part of an advocacy for reduction in property transaction costs; we have created an Internal Records Office (IRO) to bridge delays

in mortgage origination; we have automated our business processes and also improved our operational turnaround time,” the CEO said. Besides the introduction of new innovative products to match various housing finance needs, FMBN has also increased NHF mobilisation and sensitisation to a point where 29 states of the federation have now keyed into the scheme. Dangiwa said they have also introduced a Help Desk and IT platforms for customer relations; hooked on to a wider print and electronic media channels to provide information on their operations/ “We have also embraced backward integration into

financing of housing construction to develop the primary mortgage market, and we are determined to deliver, at least, one housing estate in 36 states of the federation and the federal capital territory, Abuja,” he informed. The result of these efforts, the managing director stressed, is the improvement in operational performance which the fund has seen in the last three years. Dangiwa noted that the housing fund has recorded significant progress over the past three years, pointing out that, among other things, it has increased the number of contributing states by 17 percent to 29, up from five it was before 2017, giving a total of 34 states

REDAN in aggressive push to ease access to finance, land titles CHUKA UROKO

he Real Estate Developers Association of Nigeria (REDAN), South West Zone, says it is on a mission to change the narrative on housing development and delivery in Nigeria which is characterized by constraints and costs that make access to finance and land titles difficult. Besides the quest to be visible and more involved in all that have to do with housing delivery, the association which has just elected its new exco members with Debo Adejana of Realty Point as chairman, also wants to deliver value to its members and teeming clients. “At the zonal level, we have two major areas we have set out to pursue in the remaining 18 months of our tenure,” Adejana said at a press briefing in Lagos which had in attendance Kunle Adeyemi, Secretary and CEO, Sterling Homes; Bamidele Onalaja, Lagos State REDAN chairman and CEO, RevolutionPlus Properties, and Okusanya Oyebola, chairman, Ogun REDAN and CEO, Golden Bricks Realty. According to Adejana, access to finance and titling are their main focus, explaining that funding and title documentation are serious constraints in housing delivery. “We want to ensure that our members have access to funding. You know that there is a

L-R: Bamidele Onalaja, chairman, Lagos chapter; Okusanya Oyebola, chairman, Ogun chapter; Debo Adejana, chairman, South West Zone, and Kunle Adeyemi, Secretary, South West Zone, all of Real Estate Developers Association (REDAN) at a press briefing in Lagos recently.

mismatch in the kind of funding available to developers. Whereas the funds available are short term, our projects are long term,” he explained. Continuing, he said, the major cause of the shortfall we have in housing supply is funding. On the demand side, people can’t afford housing because of high interest rate on mortgage. So, we want to find a way to aid both the demand and supply side of housing and to achieve that, we are already discussing with private sector operators for partnership.” Also as part of their focus in South West Zone, Adeyemi said they would be doing their best to make the association more visible by aggressively embarking on membership www.businessday.ng

drive in order to project the association within the zone, assuring that they were already putting structures in place to make that happen. “There will be membership drive by looking out for all the players to get them involved. We will also be engaging the governments of the six states in the zone on policies that affect operations of the association,” he assured further. Onalaja added that the association would be collaborating with the governments on land titling which, according to him, is a major constraint to housing development. “We want them to shorten the time and reduce the cost of getting titles for our development,” he said, explaining that these two factors affect significantly the

value of projects. Oyebola harped on the need for public private partnership (PPP) so that there should be good programme for the people. He noted that governments all over the world are revatilising their economies through real estate development. “To deliver quality products to the people, and to meet the housing deficit in the country estimated at 20 million units, the government needs the organized private sector to drive it. We are out to partner with the government in order to get title for effective development,” he said. The association plans to have offices in all the states of the federation with a functional website. They also called on older colleagues in the profession to join hands with them in order to make the lot of the members better. Like any other professional body, REDAN is also contending with challenges that slow their operation. According to them, competence and character of labour is a major issue, such that they have to source labour, including artisans, from neighbouring West African countries. “The problem is a society thing and it reflects the getrich-quick syndrome that is affecting the country as a whole. We really need to pay attention to vocational training in the country,” Oyebola advised.

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that have joined the scheme. The number of registered contributors has also increased from 4,539,084 in April 2017 to 5,060,967, meaning that between April 2017 and May 2020, 521,883 new contributors joined the scheme, showing a 12 percent increase in just three years. Similarly, NHF collection grew by 69 percent to N392.6 billion, up from N232.8 billion as at April 2017, meaning that additional collection of N159.70 billion was made between April 2017 and May 2020. From 1992 to April 2017, the scheme refunded contributors a total of N10.83 billion while N23.924 billion was refunded between April 2017 and May 2020, showing about 221 percent increase. Beneficiaries of the refund say it is a new dawn in the apex mortgage bank. Yahaya Ajala Umar of the Federal Ministry of Labour and Employment, Abuja is one of the lucky contributors. Others are Abdullahi Kaoje Mohammed of Federal Ministry of Industry, Trade and Investment, Abuja, and Sulaiman Yahaya of Sir Yahaya Memorial Hospital, Birnin Kebbi, Kebbi State.

“This is the first time contributors are getting a refund without much stress and we thank Architect Dangiwa and his team for the good work they are doing,” Umar said, hoping that this would continue to be the norm going forward. In 25 years, the fund disbursed to contributors N52.453 billion while in three years it disbursed N98.274 billion, showing 64 percent increase that gave a total disbursement of N250.721 billion in 28 years. Based on these improvements in its performance indicators, Dangiwa noted that they were looking at the future of the fund with optimism and are, therefore, encouraged to introduce new products plan for Diaspora mortgage loan and finance student hostel construction. “NHF opportunities to finance housing finance in Nigeria are endless; with compliance by institutional investors, full coverage of the local working population and integration of the Diaspora market, annual collection can total over N400 billion,” he said, adding that this sum could deliver over 53,000 new homes per annum , and also give over 800,000 housing micro-finance loans

Toposyi Realtors opens for business in ultra-modern corporate office

oposyi Realtors Limited, a property development firm committed to providing affordable housing opportunities for Nigerians, has opened for business in its ultra-modern corporate head office located in Eleyele-Poly Road, Eleyele, Ibadan. As a company, Toposyi Realtors understands the importance of strategic partnership and consequently chooses the right partners to work with. One of such partners is Adloyalty Business Network which makes it all the more credible. Through its partnership with Adloyalty Business Network, which is arguably Nigeria’s largest independent real estate network marketing brokerage firm, Toposyi Realtors has continued to experience significant growth, patronage and goodwill from clients and realtors. Toposyi Realtors’ new office was commissioned by Freeman Osonuga, a professional real estate investor who was recently recognized as one of Nigeria’s Top 10 Real Estate Disruptors in 2020. Joining him to commis@Businessdayng

sion the corporate head office was Oluseyi Ibrahim, the Chief Executive Officer of Toposyi Realtor. Others were members of the board of directors and management team, thus officially opening the office for business. In his opening remarks, Osonuga noted that “owning a home is a cornerstone for attaining affluence and emotional security. As we all know, real estate is an imperishable asset and ever-increasing in value which is why when real estate entrepreneurs and investors succeed, there is no such doubt as to their source of wealth.” He noted further that the official launch was not just about the new corporate head office but also about the accomplishment of a vision and purpose, adding that Toposyi Realtors was committed to giving their investors home experience—one that is unequalled in Ibadan and environs. Ibrahim assured both old and prospective clients of the company’s commitment to upholding real estate best practices, integrity, professionalism and excellence in all its transactions.

Tuesday 04 August 2020

BUSINESS DAY

BDTECH

In association with

E-mail: jumoke.akiyode@businessdayonline.com

New survey reveals financial and lifestyle impact of COVID-19 on Gig workers Jumoke Akiyode Lawanson

he COVID-19 pandemic has revealed the struggles and lapses in sectors of different economies globally. Earlier in the year, it seemed like the most impacted where sectors like health, education, sports and entertainment. When countries started to enforce the lockdown/work from home policy, it was widely believed and practical that e-commerce and workers on digital platforms would thrive with very little or no financial strain. However, a new report published by Flourish shows that Gig workers including those who use digital platforms such as e-hailing or delivery apps have been greatly affected by the pandemic. The recent report published by Flourish, a mission-oriented global venture capital firm with portfolio investments throughout Africa, tracks the experience of Gig workers in the South African edition of ‘The Digital Hustle: Gig worker financial lives under pressure.’ Surveying more than 600 South African gig workers, Flourish found that 76 percent experienced a large decrease in income since March 2020. The report also summarises how gig workers are coping with economic dislocation. The survey revealed that approximately four out of five workers now earn less than $240 USD per month,

compared to 16 percent more before the COVID-19 lockdown and 91 percent are very concerned about COVID-19, specifically, how gig workers believe it will affect their ability to earn an income (46 percent) and the risk to their family’s health (26 percent). Also, it was clear that some gig workers are impacted more than others. E-hailing drivers were twice as likely as delivery workers to report a significant decline in quality of life, with 83 percent suffering a large decrease in income. Coping strategies among South African gig workers vary, as some have a financial cushion, but a majority live on the edge like most around other parts of Africa, in-

cluding Nigeria. If they lost their main source of income, 58 percent of respondents reported they could not cover household expenses for a month without borrowing. Most have made sacrifices to cope with the pandemic and accompanying economic dislocation. Over half of gig workers have already reduced their household expenses, almost half borrowed money, and nearly three out of four had to rely on savings. Yet, only one in five are seeking additional income – a low figure possibly driven by the strictly enforced COVID-19 lockdown. As part of the survey questionnaire, gig workers were asked to share anonymous comments to describe how they are faring in the

current conditions. “People are not buying as they used to do,” said a delivery driver. “The number of deliveries has dramatically dropped. It is a big challenge now.” An e-hailing driver said, “We are eating two meals a day. That is what we can afford now.” Future Plans In the next six months, nearly all respondents plan to restart or continue the work they were doing before the lockdown. The majority are concerned about the ability to earn an income, find work, cover day-today work expenses. For four out of five people, health risk associated with returning to work was not a top concern.

Despite recent hardships, Flourish expects continued growth in online platforms and financial tools to support gig workers. In addition to these findings, the South African edition of The Digital Hustle: Gig Worker Financial Lives Under Pressure provides early insights into how platforms and financial services providers can best serve this emerging digital workforce. “Digital platforms have made it possible for workers around the world to participate in the gig economy, providing a degree of formality and stability to their work,” Arjuna Costa, managing partner at Flourish said. “When the coronavirus outbreak caused the global economy to come to a halt in the first quarter of this year, workers were severely impacted. By tracking gig worker experiences in South Africa, and elsewhere, we hope to open conversations about how fintech companies can build lasting solutions for this vulnerable population of citizens,” he said. The South African survey is part of a bigger study in May tracking the experiences of gig workers across the globe. The firm released the Brazil edition in June 2020 and is currently fielding surveys in India, Indonesia, and the U.S. With each of its country-specific studies, Flourish aims to help fintech entrepreneurs connect with the people most in need of aid and better understand their needs.

Kaiglo records 50,000 users, as merchants’ enrolment hits 200% growth rate in one year Jumoke Akiyode Lawanson

aiglo, a marketplace that offers consumer’s favorite market closer to them through online trading, and helps entrepreneurs build brand recognition, now has over 50,000 people on its platform in only one year of operation. Similarly, it recorded over 200 percent growth rate in merchants’ enrolment in the first quarter of this year. Victor Chukwuebuka Eze, cofounder and CEO of Kaiglo, who described the company as an online marketplace with a unique proposition for fashion entrepreneurs, market traders,

and smart gadget dealers, said that Kaiglo remains resolute in its determination to grow local brands and bring people’s favorite market closer to them no matter the location. Kaiglo launched operations in Lagos one year ago and has since recorded over 1000 merchants registered on the platform. “It has been a very busy 12 months for us. In spite of the ups and downs in the economy, we are seeing rays of light. As we mark our first anniversary, we can tell you that new merchant enrolment on Kaiglo rose from 50 percent to 200 percent with happier clients expressing their satisfaction with the plat-

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form so far and how it has helped them boost sales,” Chukwuebuka Eze said. “Currently, we have more than 1000 merchants registered on the platform. Our monthly sales growth increased from 50 percent in fourth quarter of 2019 to 175 percent in the second quarter of this year. Kaiglo has successfully processed and delivered more than 15,000 items in the past one year, with more than 70 percent delivered in Lagos alone where it currently has most of its operation,” he said. The CEO also said that currently, Kaiglo have more than 50,000 users registered on the platform. In the year under review, Kaiglo

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also unveiled KGExpress; a logistics arm focused on pick-up and delivery to reduce the delivery time for its customers and general merchants. According to the CEO, the company predicted an increase in demand for capacity in response to a surge in orders. “KGExpress.ng was launched to cater for the pain of the customers – longer wait times for deliveries can cause depression. The total delivery time includes travel time, loading time, unloading time and waiting time. Today, technology is so advance that the optimisation is being done at every step in order to reduce delivery time”.

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“In other words, we have factored in ‘how to deliver faster’. With this, we are going to rent warehouses that will form hubs for ‘drop-offs and pick-ups’. This is not just about us, rather any business can leverage on KGExpress to meet their delivery needs,” Eze said. The company is currently making plans to launch its Kaiglo mobile app, for Android and iOS users that will allow more Nigerians to sell and/or buy products seamlessly. The app, he said, will use Kaiglo advanced machine learning techniques to deliver unique and newly arrived products to each user, and based on their individual interests.

Tuesday 04 August 2020

BUSINESS DAY

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What Shell writes down of Nigeria’s $1.3 billion oil-field scandal means DIPO OLADEHINDE

ultinational Petroleum oil and gas giant, Royal Dutch Shell, announced that it would write down its investment in the controversial Malabu OPL 245 offshore field in Nigeria, a decision that comes with huge implication for a field at the heart of protracted litigation in Italy. According to Reuters, Shell announced the writedown during its secondquarter 2020 earnings call. The company had recorded losses in its upstream division, including a post-tax impairment charge of $4.7 billion related to writedowns of the Malabu oilfield, and assets sales in North America and Brazil. What does a writedown mean?

A write-down occurs when a business reduces the carrying amount of an asset, other than through normal depreciation and amortization. A write-down is normally done when the market value of an asset declines below its currentcarrying amount.

The above explanation means that OPL 245 purchased for $1.3 billion in 2011, which is one of the biggest sources of untapped oil reserves on the African continent with reserves estimated at 9 billion barrels has depreciated in value.

Higher Value According to Barnaby Pace of Global Witness, a partner at the oil consultancy group Arthur D Little with over 30 years, Stephen Roger’s economic analysis found that the market value of OPL 245 was $3.511 billion in 2011, with $80 per

Nigeria struggles to provide reliable electricity as electric vehicles’ market expands STEPHEN ONYKEWELU Electric vehicles sales have been forecast to make up a third of new cars sold globally in the next ten years as Nigeria struggles to provide reliable electricity for its exploding population. The world is on course to reach annual electric vehicles sales of 31.1 million by 2030, 10 million more than previously forecast, due to changing consumer sentiment and weakening adoption barriers, according to a new analysis by Deloitte, a multinational professional services network. In spite of the disruption caused by the coronavirus pandemic, it still expected total global EV sales to reach 2.5 million in 2020 and, based on a compound annual growth rate of 29 percent, Deloitte estimated that the volume would grow to above 11.2 million in 2025 and 31.1 million by 2030. “At this milestone, fully electric vehicles will account for 81% of all new EVs sold according to the research, outperforming

their plug-in hybrid peers,” it said. EVs, also known as plugin electric vehicles derive their power from electricity supplied the electric grid. They receive electricity by plugging into the grid and store it in batteries. However, Nigeria seems to have other pressing issues to attend to than join in the race to adopt electric cars. On April 10, 2019, Ben Murray-Bruce, a Nigerian senator representing Bayelsa East tweeted “today, I presented two important bills on the floor of the @NGRSenate.” One of the bills was Electric Cars (Introduction) Bill, 2019 (SB.726) – First Reading. The bill aimed to phase out petrol and diesel-fired vehicles by 2035 and replaced by electric vehicles. A corollary objective of the bill was to drive the use of modern technology, deemphasise dependence on crude oil and reduce air pollution. Murray-Bruce lost the argument despite attempting to show it was cheaper to maintain electric cars. The Senate rejected the Electric Car bill days after, www.businessday.ng

at a plenary session, describing it as irrelevant. Nigerians did not spare Murray-Bruce either. In response to his tweet on the matter, Twitter handle, Etukudo Emmanuel said the senator is out of touch with Nigerian realities and probably more attuned to developments in the developed countries. “How on earth can he be talking about electric cars in a country without electricity? Maybe he is doing it for himself because he wants to drive an electric car.” Adebayo Samuel, also a Twitter handle said it does make any sense at all to talk about “electric cars in a country producing less than 10, 000 megawatts of electricity.” There are massive electricity deficits in Nigeria. Africa’s biggest economy has a peak of 5, 500 megawatts of electricity, daily. This is a far cry from the 20, 000 megawatts needed to drive the economy forward, according to people with a deep understanding of Nigeria’s energy sector and needs. “ The public perception is that Nigeria needs

about 60, 000 megawatts of electricity to have a thriving economy. For 200 million people, Nigeria should be targeting 200, 000 megawatts of electricity,” Onyeche Tifase, managing director and CEO, Siemens Nigeria said at BusinessDay’s Digital Dialogue in June. Onyeche outlined some of the challenges facing Nigeria’s Electricity Supply Industry to include an obsolete infrastructure, which needs to be rehabilitated and expanded, poor payment culture and commercial framework. “But we are starting to see efforts from the government to resolve these issues. Our collaboration with the government on the presidential power initiative will start to close the infrastructure gap and meet customer demands,” she said. Despite these electricity challenges, JET Motor Company, a Nigerianbased automobile manufacturer has raised $9 million from foreign investors as it intensifies efforts at delivering electric vehicles in Nigeria.

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barrel of oil which was the terms Shell and Eni bought the block. Eni’s experts had valued the block higher at $4.543 billion. They argued however that despite the valuation, the price paid ($1.3 billion) was reasonable because of various risks. Rogers in his submission criticised their position, saying Eni’s expert’s method is “double-counting the discounts for risk”. Rogers also evaluated the values of gas, which Eni’s expert didn’t include, at $167 million. In the run-up to the deal, Shell and Eni valued the block in 2010 and 2011 respectively at $3.268 billion ($80 per barrel) and $3.540 billion ($70 per barrel). But using an average of price paid per barrel in other deals done in West Africa, Rogers calculated the value of OPL 245 to a range

of $2.623 billion-$3.700 billion but said these are definitely too low as the terms of the 2011 deal are unusually favourable to the companies compared to other deals. The Backstory Shell bought the oilfield alongside an Italian company, Eni, in 2011. Together, they paid $1.3 billion. The payment was to a company called Malabu, which was owned by Nigeria’s former Oil Minister Dan Etete. However, Italian prosecutors claim that most of the payments were kickbacks to Nigerian government officials. Prosecutors have, therefore, called for an 8-year prison sentence for former Eni CEO, Paolo Scaroni. Both companies have been fined $1.04 million and prosecutors seek the confiscation of $1.092 billion from the defendants of the case.

Apple overtakes Aramco as World’s Most Valuable Company ISAAC ANYAOGU

ech giant Apple has over taken oil giant Saudi Aramco as the w o r l d’s m o s t va l u ab l e company, a clear indication of the challenges facing the oil sector. Tech is reveling in the coronavir us, smoothly transitioning workers to remote work and a magnet for those looking to sink money into “stay at home” stocks. Not so for the oil industry, which has struggled on multiple fronts, including an excess of oil and crashing demand. Apple’s stock did well on Friday after a tremendous Q2 report, and its market cap rose to $1.8 trillion. Mea nwh i le, E x xo n ’s earnings report—the second-largest energy company after Aramco--was anything but great, with rumors that Exxon is planning some significant cuts to jobs and spending so it can keep kicking out that @Businessdayng

beloved dividend. Aramco’s Q2 report will not be available until August 9, and it will be a reflection of the overall state of the oil market in Q2—in other words, it isn’t going to be pretty. Aramco’s Q1 profit fell 25%, and that was well before the coronavirus infiltrated the world and created widespread lockdowns. In fact, oil prices were only really low during the last few weeks of Q1. But in March, Aramco lowered its April OSP. In April, it lowered May’s OSP ; each cut another blow to the world’s largest oil producer. It wasn’t until May when Aramco boosted its next-month OSP—the last month of the quarter. This will likely result in Aramco’s Q2 revenue coming in south of $40 billion, compared to $75 billion this time last year. Compare that to Apple’s nearly $60 billion in revenue for the quarter, and you have a new king of the hill.

Tuesday 04 August 2020

BUSINESS DAY

EDUCATION Weekly insight on current and future trends in education

Primary/Secondary

Higher

Human Capital

Private schools await compliance clearance as government releases guidelines on school reopening MARK MAYAH

s the gradual resumption of schools is expected to commence this week, with students preparing to write the West Africa Examination Council ( WASSCE), private schools are to wait for compliance clearance from the office of Education Qualify Assurance, in line with various safety guidelines to be followed with the COVID-19 protocol. Speaking at a press briefing last weekend, director general, Office of Education Quality Assurance, Abiola Seriki-Ayeni, said the government will ensure compliance with the guidelines to

Abiola Seriki-Ayeni, director general, Office of Education Quality Assurance

safeguard learners, teachers, workers and parents during this trying time. To realise this objective, the OEQA’s evaluators will be visiting schools across the state’s six education districts to ensure compliance. Some of the guidelines as enumerated by the director general, includes, thorough fumigation of all schools’ environment including classrooms, chairs and desks, provision of running water and washing hand soap, provision of hand sanitizer,and wearing of nose masks. Others are avoiding close contact with anyone showing symptoms of respiratory illness and maintaining social distance and one meter physical distancing in sitting

arrangement. Seriki-Ayeni reiterated that SS3 students are going back to school for the purpose of revision towards their examinations,which come up on August 17th, 2020. “We issued these guidelines towards readiness for the reopening of schools. Presently, school resumption is limited to SS3 students, as they prepare for final examinations,” she said. Seriki-Ayeni however disclosed that during the reopening exercise,officers from her office would be going round to issue compliance clearance to schools base on compliance level to the guidelines for reopening of schools. She said: “It is of immense importance that the office

monitors strict adherence to the protocol to prevent infection and the spread of COVID-19 among the students.” Since the closure of schools in March, 2020 as a result of the pandemic, the director general recalled that the office of EQA has embarked on massive sensitization to ensure public and private schools adhere strictly to the directive of the Lagos state government with regards to closing down of schools. According to her, in the on-going monitoring exercise, the office successfully visited 121 schools across the six education districts in the state and sealed no fewer than 18 private schools that defied the closure directive of Governor Babajide Olusola Sanwo-Olu.

COVID -19: Needs for TRCN reposition as a 21st century Teachers Regulator for ‘New Normal’ – Experts •Says the future of a nation is determined by the quality of its education system •Teaching profession be improved upon MARK MAYAH

roduction of skilled manpower needed in Nigeria and indeed other countries in the subsaharan region to compact the effect of coronavirus pandemic, may suffer if teachers, teachers trainers and regulators are not adequately and properly equipped. Panelists at Axiom Learning Solutions CSR virtual webinar workshop last week, acknowledged that, saying with the global health crisis, academic processes have changed, disrupting the old normal and throwing a new normal. In their various submission on the themed: “The Teaching profession and Regulation Post COVID-19, The Nigerian perspective’’, they urged the need for positive Public/private partnership to rescue”our education system from imminence collapse.” The purpose of the workshop, according to co-founder, Axiom Learning Solutions, Ani Charles Bassey-Eyo, “ is to gain perspicality into effective tactics to manage innovations and disruptions in the ecosystem, regulating the 21st century teacher using technology to drive strategy

and regulation, building institutional capacity, as well as the role of TRCN as regulator. In his submission he said: ‘’We need to sharpen the knowledge of our regulators to learn what is new normal in their various discipline, compare notes, and understand how to navighate the current challenges which has caused halting schooling in Nigeria due to the pandemic. “This is actually what the Sustainable Development Goal Four. “Ensuring inclusive and equitable quality education and promote lifelong learning opportunities for all” try to achieve”, Bassey-Eyo

Adamu Adamu, education minister www.businessday.ng

said. Speaking at the occasion, Olubukola Adebonojo, observes that the gaps between the tertiary programmes and the requirements of the local and international work environment have also found many Nigerian graduates lacking in competitive skills upon graduation. Adebonojo opines that despite several efforts by both federal and state governments through initiatives and interventions to reposition the Nigerian education system to meet global standards, such initiatives were poorly implemented, while some far-reaching decisions were abandoned resulting in current dilapidated state. “I wish to emphasise that while the regulatory framework at the government level is somewhat clear, there is little clarity regarding education goals and accountability for ensuring that desired outcomes are met”. Reforming education system presupposes public private partnership arrangement as education is both a public and a private concern with responsibilities and benefits for the entire nation,” Adebonojo said. Ella Mokgalane in her comments on the topic, ‘Teaching Profession and Regulation post CO-

VID-19’, said Nigeria needs to refocus the conversation about developing this critical sector by focusing on having an identified national education vision that will drive processes and investment going forward. According to her, it is very imperative that as a nation, Nigeria’s education is tied to what is called a national vision. “Why are primary, secondary and universities going to school? And how will their education impact the economy or the vision of the nation?” she said. Muhammad junaid observed that government, private and non-for-profit organisations over the years have been working in silos, by not pooling resources to achieve a very clear impact, adding that if managers of the economy don’t address this root cause, the country will continue going in cycles. “ Both the public and private sector should liaise positively at rescuing the education system,” Junaid said. Other Panelists at the ocassion includes, Ella Mokgalane, CEO, South Africa Council for Education (SACE), Muhammad Junaid (prof ), former Executive Secretary, National Commission for Colleges of Education and Ade Adekola, founder& director, Bolari Designs Works.

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Kwara polytechnic set to collaborate with NSE SIKIRAT SHEHU, Ilorin

bdul Jimoh Muhammed, Rector of the Kwara State Polytechnic, has pledged to collaborate with the Nigerian Society of Engineers ( NSE), in a bid to improve the standard of Engineers in Nigeria. According to a statement by Ajibola Jimoh, Head of Information; the Rector, who stated this during a courtesy call on him by the NSE, noted that the polytechnic had played significant role in training and re- training of engineers in the polytechnic through its limited resources and Tetfund assistance. He, however, appreciated the society for the visit despite the current situation in the country occasioned by Covid 19, saying that the visit will mark the beginning of good @Businessdayng

relationship between the Polytechnic and the Society. Mohammed informed the visitors that some engineers from the Polytechnic are billed to be trained in Malaysia this year. As NSE member, the Rector said he was committed to upholding the tenets of the society and always ensure that qualified engineers are used whenever their services are required by the Polytechnic. Speaking earlier, Moshood Akanbi the Chairman of the NSE, lauded the Polytechnic Management for the role played by the institution in the fight against Covidsystem the recent fabrication of the pedal operated hand washing machine. Akanbi added that the institution had always been playing significant role in the upbringing of up-coming engineers.

Tuesday 04 August 2020

BUSINESS DAY

EDUCATION Why adequate catch-up strategies will curb impact of school closures on learning KELECHI EWUZIE with agency report

igeria education sector indeed the rest of the world have seen firsthand the effects of the COVID-19 crisis on learning especially at the primary level, as basic competencies are the building blocks for all education and are strong predictors of life opportunities. Analysts opine that if learning losses are inevitable, they can be reduced if the right decisions are made through well-designed system-wide interventions that include teachers, as well as families and caregivers. They argue that the effects of the COVID-19 crisis on learning are particularly worrisome at the primary level because these skills are the easiest to lose when schooling is interrupted, as studies on reading ability losses during vacations show, and the hardest to regain once schooling restarts. Yet, they present a fertile area for improvement as the techniques to acquire foundational skills are bet-

Hamid Bobboyi, executive secretary, Universal basic Education Commission

ter known than those used to augment skills at the secondary education level or in more specialised subjects. According to analysts, learning losses measured soon after the disruption, as a study from South Africa shows, are greater than what actual days of schooling lost suggest. It is unclear whether these losses worsen, stay the same or shrink over time.

However, it is likely that the impacts worsen over time if learning losses are not addressed, as learning is cumulative and children who are left behind will lag even further. Thus, a prudent and reasonable assumption is that such losses will worsen without adequate interventions, such as remedial classes and additional time allotted to complete classes.

Projected figures illustrate the learning gaps and simulate a worst-case scenario for education systems that do not adopt catch-up strategies relative to those that do. They project that learners will sustain education losses during the pandemic due to school days lost. However, education systems that implement remedial strategies will help at least some learners catch-up to the preCOVID trajectory. Those that do not will have to wait until the cohort of students affected by the pandemic has moved on to the secondary education level. This scenario assumes that there will be no new pandemic or health crisis that generates further education interruptions. Epidemiologists, however, have long predicted a COVID-like pandemic and warn that there may be more pandemics on the horizon. Thus, mounting an adequate education response now with the current pandemic will serve at least three purposes. It will help deal with the current impact, improve systems overall, and help prepare us for the next crisis.

Ogun state Govt directed SS3 students in the state to take COVID-19 test before access to Boarding Houses MARK MAYAH

he Ogun state government has directed that Senior secondary school 3 (SS3) students in both public and private schools must take COVID-19 test before being allowed into boarding houses in Ogun state schools. This directive was dished out on Friday night in a statement released by the Special Adviser to the Governor on primary and secondary education, Ronke Soyombo. She said that “The Ogun state Ministry Of Health has made provision for a COVID-19 malaria test for all SS3 boarding students in Ogun state as part of the

conditions for the reopening of schools in the under listed public health care facilities

between Friday 31st July and Monday, August 3rd, 2020.”

Dapo Abiodun, Ogun state governor www.businessday.ng

The statement stated that only students with negative COVID-19 test results will be admitted into the boarding houses. “To this end, all principals are therefore directed to immediately disseminate the directives to all SS3 learners in the state and to ensure that the instructions are strictly adhered to as sanctions will be meted out to any defaulting school.” The state government, Soyombo said has earmarked three centres for the test adding that they are situated at:-Abeokutathe 250 MTR, Okemosan; Ado-Odo-Ota - Ogun state General Hospital, Ota; and Sagamu - Olabisi Onabanjo University Teaching Hospital, Sagamu.

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Nigerian students excel at external examination as 139 receive Cambridge International awards Kelechi Ewuzie

n recognition of their outstanding performances, 139 Nigerian students have been granted the prestigious Outstanding Cambridge Learner Awards in various subjects in Cambridge IGCSE, Cambridge O Level and Cambridge International AS & A Levels. Cambridge Assessment International Education prepares school students for life, helping them develop an informed curiosity and a lasting passion for learning. The award winners include 16 students who have excelled in subjects such as Geography, Mathematics and Business to receive the ‘Top in the World’ honour. Cambridge International also granted 101 ‘Top in Nigeria’ awards to learners who achieved the highest standard mark in their country for a single subject, 64 ‘High Achievement’ awards and 10 ‘Best Across’ awards to students who attained the highest cumulative total standard marks over a set number of subjects. Juan Visser, Cambridge International’s regional director for Sub-Saharan Africa, said: “Well done once again to the Cambridge top achievers in Nigeria. We are delighted that learners in Nigeria produce such fantastic results yearin-and-year-out; this points to the quality of the schools in Nigeria registered to offer Cambridge programmes.’’ Cambridge International operates in partnership with the British Council in Nigeria. Lucy Pearson, Country Director, British Council Nigeria says: ‘At the British Council, we create international opportunities through our work in arts, English Language, education, administering exams and building stronger societies. The exams we administer help people all over the world gain educational and professional development, so they are better positioned for success in life. Education is a key enabler for these opportunities, and we believe in ensuring young learners have access to world-class education and assessments which we have achieved through our partners Cambridge Assessment International Education and the schools in our Partner Schools Global Network (PSGN).’ Marniee Nottingham, Director Examinations, British Council Nigeria added: ‘Through the Partner Schools Global Network (PSGN), the British Council provides pro@Businessdayng

fessional skills development and networking opportunities to enhance school leadership and teaching talent across our portfolio of about 395 schools across Nigeria. We not only celebrate student achievement, we also congratulate the school leaders, teachers and parents in promoting excellence in the future of our young learners. It is great to see the achievements of these students as they embark on their futures in country and worldwide.’ Some of the students who received awards made the following comments about their achievements: Jefferson Iyanuloluwa Joshua from the Lifeforte International High School who received 1 Top in World, 3 Top in Nigeria and a Best across Eight in Cambridge O Levels for the June 2019 examination series said: “I am happy that my hard work and prayers had come to fruition. Initially I found the Cambridge programme a bit challenging because I had to take subjects like Economics and Business Studies which were new to me but the practical, applicationbased, learner focused style of the programme meant that I was soon comfortable with those subjects and my other subjects and able to excel in them.’ He plans to go to Imperial College for a degree in Mechanical engineering. Shreya Jindal from The Regent Secondary School, Abuja who received 1 Top in World, 4 Top in Nigeria and a Best across Eight in Cambridge IGCSE in the June 2019 exam series, said: ‘The Cambridge programme builds a strong foundation for higher education. Even though it requires you to study a specified syllabus, most of what you’re tested on is applied knowledge. This makes sure you really understand what you’re learning. My advice for other students is to firstly find out how you learn. Don’t be afraid of trying different methods until you find what works best for you. The Regent employs various 21st-century learning ideas that have something to offer to everyone. It is also really important to pay attention in class; you’d be surprised how much of the information actually sticks so you don’t have to go home and read everything again. Take advantage of all the resources provided by the school, and work with your teachers to get the best out of the system which offers holistic education.’ Shreya is currently doing her Cambridge International A Levels.

Tuesday 04 August 2020

BUSINESS DAY

The challenge of turning a crisis into an advantage Andi Owen overcame opposition to her Covid-19 response and is now redefining the office furnishings group Andrew Edgecliffe-Johnson

ndi Owen has been back in her office for a few weeks now and says there’s something about the place that working from home just can’t match. “There’s still something we cannot replace about being together in a place that’s designed around your strategy and your culture,” she observes: “It’s been great to have those in-between conversations when you turn around from your desk without having to schedule a Zoom call.” Ms Owen has more reasons than most to rhapsodise about the side benefits of a swivel chair: as chief executive of Herman Miller, office furnishings are the lifeblood of her business. If it was jarring for the world’s desk dwellers to swap the lumbar support of their Aeron and Eames office chairs for their too-hard kitchen stools and too-soft living room couches, the coronavirus posed a more existential challenge to Ms Owen. Herman Miller is both a manufacturer, faced with broken supply chains and the task of safely operating factories from China to England, and a retailer, forced this spring to shut its Design Within Reach and HAY stores. Its like-for-like sales plunged by 35 per cent in the three months to May, erasing a year’s profits in a quarter, and its share price has halved since January. “You’re never prepared” for a crisis like this, Ms Owen says, but “it’s one of those times where you learn what you and your team are made of.” Herman Miller’s headquarters is in Zeeland, a 5,500-soul Michigan town with a disproportionate interest in the question of whether the office buildings that make up larger metropolises will ever fill up again. Close to Grand Rapids, the woodworking hub once known as Furniture City, Zeeland is where Dirk Jan De Pree bought the Star Furniture Company in 1923 and renamed it for the father-in-law who funded the investment. Company lore has it that De Pree responded to the Great Depression by shifting Herman Miller’s focus from the overstuffed period furniture from which it then made its money to a modernism that ended up transforming our homes and offices. The collaborations he and his sons struck with revered design-

ers brought us the Eames and Aeron chairs — and our love-hate relationship with the Action Office cubicle system. One of those sons, Max De Pree, also coined concepts such as “inclusive capitalism” and “servant leadership”. Ms Owen’s challenge is to square that culture with the bottom line, and to prove that Herman Miller can again turn a crisis to its advantage. The 55-year-old Gap veteran joined only two years ago after a stint struggling to turn around the retailer’s Banana Republic chain. Unlike Herman Miller’s founder, she has not only an economic crisis to navigate but Covid-19’s threat to the very idea of inperson office collaboration on which its business now depends. Like most CEOs, she says her first priority was her employees’ safety, but as she closed plants, she encountered pushback on “everything”. “I was called reactionary, crazy,” she says. Even some board members asked “Are you sure you need to be that drastic? It’s just the flu,” she says. Ms Owen ramped up her communication with employees, opening up to all staff the town hall meetings she had previously held infrequently with her top 300 leaders — and making them weekly events. “The frequency with which you have to communicate, it’s like nothing I’ve seen before,” she observes. As the pandemic’s financial toll became clear, though, her communications included the grim news that the company would have to shed more than 400 of its 8,000 people. Ms Owen also cut salaries for most of her www.businessday.ng

workforce by 10 per cent and her own by another 50 per cent. “You have to be willing to make the sacrifices you ask your people to,” she remarks. She also had to balance safety with customers’ needs. Within a week of shutting Herman Miller’s operations in Michigan, Ms Owen worked with the state’s governor and rivals such as Steelcase to bring a third of its manufacturing staff back to make masks, face shields and furnishings for temporary hospitals. Reopening factories required adjusting shift times, spacing out assembly lines and adding features such as no-touch doors, and the company packaged up such safety tips for clients as its team moved to selling via video calls. Ms Owen came to Herman Miller with a strategy of digitisation, localisation, building its direct-to-consumer business and investing in “automation for good”. Her task, she says, has been to stay focused on these priorities. “This too shall pass, and it won’t pass easily but it will pass. You need to balance the really hard reality of where we are now with where we’re headed,” she says, seeing “opportunity in redefinition”. The company has first had to redefine itself for the era of working from home. Companies such as Google have let employees expense home office equipment, and Ms Owen’s team raced to have a “work from home” offering ready for them. But if her early actions gave the business a future to focus on, a second challenge soon compounded the first. The protests that followed George Floyd’s

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killing by police flowed from the streets to the Zoom calls of corporate America, as employees asked hard questions about the lack of diversity in their companies. Herman Miller, like most rivals, is dominated by white designers. Her predecessor, Max De Pree, once said that a leader’s first responsibility is to define reality, she notes, and Ms Owen admits that trying to get on top of all the issues Floyd’s death brought to the surface was “a journey”. “I’ve always considered myself really educated and really awake. But being a white woman I have so much to learn,” she concedes. She had invested in diversity and inclusion initiatives, but knew she needed to go further, setting new goals and working with design schools to bring more nonwhite students into the industry. Did she encounter pushback? “Yes, for sure. Like anything else in our world today things are very polarised . . . I’ve encountered all ends of the spectrum and I feel the need to educate people and bring people along,” she says. But she will not be swayed from her commitments on this issue, she stresses, and these — as much as the priorities she set in response to coronavirus — will position Herman Miller to emerge stronger, she argues. It is too soon to see much evidence of that in its results, but there has been one clear bright spot: shipments of office chairs to residential addresses surged 110 per cent between March and May. Not everyone misses their office as much as Ms Owen did but now, she notes, “we’re all at home sitting on our dining room chairs @Businessdayng

realising how awful they are.” Three questions for Andi Owen What was the first leadership lesson you learnt? My first managerial role was as a department manager in Bloomingdales. I was very young, just out of college and I had a whole crew of very seasoned veteran sales agents. I had to try a variety of things before I eventually found my way to listening and learning. There are so many principles of being a leader. I think the biggest thing for me throughout this entire crisis has been the importance of transparency and letting people know what’s happening when, and what you know and don’t know. I always knew that in my head before but this crisis has made it so much more apparent. Who is your leadership hero? It sounds so corny, but Leadership is an Art [by former Herman Miller CEO Max De Pree] was the first leadership book I read and it changed my life when I was a very young manager. From a philosophical standpoint, that has been life-changing for me. If you were not a CEO, what would you be? I think I’d be a teacher. My mom was a teacher her whole life and I love the creative exchange of ideas and I love going back to school and doing classes. Lately [they’ve been in] crisis management. My business school always offers a tonne of additional educational opportunities and I think it’s a great way of staying fresh.

Tuesday 04 August 2020

BUSINESS DAY

Business schools are reckoning with their poor record on race Following the global Black Lives Matter protests, many institutions are planning big changes Jonathan Moules

he business school at City, University of London, is starting a reckoning with the past. Last month, its governing council voted to remove Sir John Cass from the business school’s name because of the 18th-century English merchant’s role in the Royal African Company, which then held the British monopoly on the transatlantic slave trade. The school’s involvement with Cass only dates back 18 years, when it changed its name after accepting a £5m donation from Sir John Cass’s Foundation, a charitable body the merchant created to support education in London. In the US, higher education institutions are acknowledging past active involvement with slavery. The movement started in theological seminaries — first at Virginia Theological Seminary, which last September created a $1.7m fund to make reparations for having used enslaved people as labour on its campus. Others, including Jesuit-founded Georgetown University, followed with reparation plans. And in the wake of the recent Black Lives Matter protests worldwide, the momentum for change in higher education has sped up. Within the global business school sector, many institutions are working to become more inclusive in their curriculum, hiring and student admissions processes. Days before its name change, Cass, now known as City’s Business School, had hosted a threehour online workshop called “Decolonising the Business School”. The event attracted more than 400 participants from over 300 business schools, who logged on to discuss making their courses and admissions processes more inclusive for all black, Asian and minority ethic students. “This is a pivotal moment for race relations everywhere, and it must go far beyond name changes,” says Bobby Banerjee, a management professor at City, who helped organise the online event in his role as co-founder of the business school’s Centre for Responsible Enterprise. “Black people don’t want to come to business school because they don’t see black faces. We therefore have to change hiring and promotion practices,” Prof

Funmi Adebayo, a graduate of City’s Business School, would like to see an overhaul of staff and student recruitment at the institution © Charlie Bibby/FT

Banerjee says. The number of black students on highly ranked US MBA courses remains low. Harvard Business School, where about 9 per cent of last year’s full-time MBA intake were black, has added two senior roles to encourage more minority applicants. However, Nitin Nohria, Harvard Business School’s dean, wrote in an open letter to staff and students in June that attempts to recruit black students up until now had been “painfully insufficient”. Much the same was true for the recruitment of black professors, he added. Laura Morgan Roberts, professor of practice at the University of Virginia’s Darden School of Business, co-authored a study of black HBS students in 2018, which found significant additional barriers for this group compared with their classmates. “Black students and alumni still face obstacles due to race and other socio-demographic indicators. They experience racism and classism in their classrooms from faculty and peers, in social networking, and with recruiters,” she says. The PhD Project was founded in 1994 to track the numbers of Bame academics in the belief that raising numbers here would make students from such backgrounds feel more accepted on postgraduate management degree programmes. In 2010, it recorded 790 African American faculty, or 2.7 per cent of all US business school professors. But the percentage of black faculty in 2020 has barely risen at 3.2 per cent. www.businessday.ng

Earlier this year, Wharton appointed Erika James as its new dean. Professor James, the first woman and the first AfricanAmerican to lead the school, wrote her PhD thesis on a study of business networks. Racial inequality among academics, she believes is at root caused by a bias towards white candidates by majority white faculty committees — the groups choosing who begins the process towards becoming a tenured professor.

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Black students and alumni still face obstacles due to race and other socio-demographic indicators. They experience racism and classism in their classrooms from faculty and peers, in social networking, and with recruiters

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“It is a long game . . . we have to start 10 years prior to that attracting and promoting research staff,” she says. “That is not all of the issue. There are willing, talented people of colour who are out there but are not visible to schools like Wharton.” Stanford Graduate School of Business last month announced measures to improve inclusion of different ethnicities on its campus, in the heart of California’s Silicon Valley. These include a process to increase black staff representation through active outreach, measures to eliminate biases in its hiring processes and a staff internship programme for talented individuals from disadvantaged backgrounds. In London, City is hoping the efforts to make its curriculum and admissions process more open will encourage more black students on to MBA programmes. It is also reviewing historic sources of its funding to discover whether there are any other links with slavery beyond Sir John Cass, and will publish this report later this month. Sionade Robinson, associate dean for people and culture at the school, who is a member of the commitee conducting the review, says earlier failure to unearth links between Sir John Cass and slavery was embarrassing. “We obviously ask ourselves why we didn’t look deeply enough. But now we have that knowledge, we have to do something with it. We can’t shrug it off,” she says. Funmi Adebayo grew up in Luton, north of London, before coming to City’s Business School to study investment and @Businessdayng

financial risk management as an undergraduate in 2009. She went into a career in investment banking. She would like to see something more meaningful than the “knee jerk” name change, including an overhaul of staff and student recruitment and class discussions about what it is to be from different ethnicities. At City, Mx Adebayo was the only black woman on her degree course and none of the professors who taught her was black. But she recognises she is privileged among peers because she attended a private school, helped by a scholarship. “There is a certain profile that investment banks want and I got a foot in the door by going to a private school, then going to a really good business school like Cass,” she says. The issue of Cass’s name change upsets some teaching staff and students because they think it is a distraction from deeper challenges. Laura Empson, a professor of the management of professional service firms at the business school, says she is opposed to the name change for this reason but adds that curriculum changes are also problematic when they come from a group of largely white teaching staff from a rich nation. “I find the decolonising the curriculum argument very difficult. As far as I am concerned this is just a different kind of imperialism. It is another way of saying that liberal white man knows best,” Prof Empson says. Before City announced its decision to drop the Cass name, about 1,500 students, staff and alumni had signed a petition on Change.org calling for its removal. A day after the announcement, another petition was posted, this time by a US-based masters in real estate graduate, Brian Robb, who believes that the removal of the Cass name devalues his degree because City is far less recognised globally as a higher education brand. A week later, this campaign had gathered 3,200 signatures, including people identifying themselves as current and past students, and professors. “I am all for Black Lives Matter and I am all for racial equality,” Mr Robb says. “I propose that they keep the name and denounce Sir John, coming forward with an apology, that it was a mistake to accept this donation.”

Tuesday 04 August 2020

BUSINESS DAY

Media business Out-of-Home Ad operators appeal to government for debt cancellation to cushion effect of Covid-19 Daniel Obi

perators in Nigeria’s outdoor advertising industry who are burdened by the challenging economic environment worsened by the effects of Covid-19 has passionately appealed to the government for debt cancellation incurred on vacant bill boards as palliative extended to other industries within this period. Despite high operational cost, multiple taxations, insecurity, infrastructure deficit and advertising budget cut by companies, outdoor advertisers are unfortunately charged fees by Lagos State Signage and Advertising Agency (LASAA) on empty billboards. In the spirit of palliatives to other sectors to cushion the effects of Covid-19 on businesses, members of Outdoor Advertising Association of Nigeria (OAAN) pleaded with the authorities to revisit vacant site policy of the government. “This is because a lot of debts

Winners of various Future Creative Leaders Academy were recently at the premises of the Advertising Practioners Council of Nigeria, long time supporter and sponsor of the programme to celebrate their winning. They were received by the Ijedi Iyoha, acting registrar of APCON

that our members are carrying are traceable to bills sent on sites that did not enjoy any display”, Emmanuel Ajufo, the President of the body said at the OAAN 35th yearly meeting recently. This year the meeting was held virtually. He strongly believed that there can be no better time than now to ask for the cancel-

Ariston targets more market share, brings global campaign to Nigeria

riston, the prominent brand in the Ariston Thermo Group, has premiered its global campaign ‘The Ariston Comfort Challenge’ in Nigeria, which highlights its global mission of bringing sustainable comfort, even where it seems impossible to find. The Ariston Comfort Challenge focused on ensuring thermal comfort could reach anywhere in the world. Through this mission, Ariston has donated a warm shelter to a group of scientists from the University of Copenhagen involved in climate change studies in the remote and icy Island of Disko, in Greenland (Arctic). The Ariston Comfort Zone, an innovative modular home, was shipped to and assembled—for the first time— in Disko Island, Greenland. Disko Island is one of the coldest regions in the world and before this time, it proved near impossible for the scientists to stay on the island for more than a few days due to the harsh weather conditions. This unfriendly weather, becomes even more hostile during the winter months and interrupts research work. With the campaign, the group which makes 1.7 billion Euros in sales annually globally is demonstrating its dedication to product quality

and how it continues to meet the demanding expectation set for the company even in the extreme cold conditions. 10 percent of the sales is in Africa. The company with 7,500 employees and 26 production sites in 15 countries is underscoring the importance of warm clean water for showering and cleansing for healthiness. Speaking during a virtual media parley held in Lagos recently, Gaurav Bisaria, the Director, Central Africa, Ariston Thermo Group, explained that a safe and sheltered house, heated and provided with hot water for the maximum comfort even during Polar winters would have not been possible without our commitment to quality. Bisaria noted that the success of the Ariston Comfort Challenge ‘Greenland Mission’ is another proof of the company core value of superior quality of Ariston products, which could be seen in the efficiency of the output of the product even in the extremely weather condition. Bisaria explained that in order for the team of scientists to carry through their mission of collecting and examining samples in Disko Island, they needed an innovative infrastructure to act as a stable base against the icy island. www.businessday.ng

lation of the debts owed as a result of bills on vacant sites. It will be recalled that government recently granted a 60% debt cancellation to broadcasting industry on license fees. Ajufo noted that OAAN members too have not shied away from giving their own form of palliatives which runs into multiples of millions of Nai-

ra. “Recognising that our clients have been badly affected by the Covid-19, we gave a whopping 25% discount on our rates from May to end of September 2020, to the advertisers. On government side, our members have also been displaying Covid-19 messages pro-bono”, he said. The meeting themed, ‘’OOH Business and Emerg-

ing Realities” had heads of key sectoral bodies in attendance, addressed the Covid-19 pandemic-induced challenges bedevilling the industry, and proffered solutions capable of lifting the advertising sub-sector out of its present doldrums. The OAAN boss also decried the state of the advertising industry, citing the prolonged absence of APCON Council as the bane of the sub-sector. “Our industry is like a flock of sheep without a shepherd. This is because APCON has no Council, and this has been going on even before the outbreak of the coronavirus pandemic”. The APCON Acting Registrar, Ijedi Iyoha, during her presentation during the meeting, thanked the OAAN leadership and captains of other sectoral bodies for living up to the billing despite the daunting challenges presented by the pandemic. “I must commend OAAN and all the sectoral bodies for meeting the challenges, posed by the global pandemic, head on.

Hollandia Lactose Free Milk reiterates nutritional benefits to consumers

hi Limited maker of Chivita has reiterated the nutritional benefits of Hollandia Lactose Free Milk to consumers. Over time, there have been conversations around Lactose Intolerance among consumers in Nigeria. It was common for consumers who were aware of the discomfort of lactose intolerance to avoid milk, and miss out on all its nourishing benefits.

Lactose intolerance is simply the inability of the digestive system to completely digest lactose, a naturally occurring sugar in milk, and break it into simple sugars that can be absorbed by the body.

BD Brand Talk

Story telling helps brands engage people Mike Umogun

n the opinion of Chris Ogbechie, Professor of Strategic Management Lagos Business School, in today’s marketing world, the key issue is to create emotional brand attachment in all our marketing communications, therefore, brands need to actively cultivate relationships with customers. A powerful but meaningful way to do this is by good story telling. Storytelling is one of the oldest and most powerful modes of communication. Stories are more easily remembered by peoples because the human memory is story-based. It’s the use of information in a narrative form to motivate potential and prospective targets. In Africa, Nigeria stories are used in teaching simple lessons and for simplifying complicated moral situations.

Not only does the story telling model work every time, the message lasts longer and impact of such stories profound. Abidemi Junaid a communication evaluation specialist at the Kantar Company takes it a step further by saying most complicated messaging are better done by making the core issue simple thus making transmission and comprehension faster and long lasting. Consumers love a good story. Stories are the reason we stay awake late to finish a book, watch a movie or binge watch on Netflix. Stories engage us like little else. So why do we not see more stories used in advertising? If done right, storytelling can make your communications more engaging, more impactful, and more motivating for your brand. A story needs to be a clear narrative arc, one scene needs to influence or build upon

another to tell a story. For the purposes of advertising, however, not any story will do. It takes skill and thought to make a story an effective creative tool for your brand. Kantar’s global neuroscience practice uses facial coding to demonstrate the power of storytelling as a creative tool to engage viewers, to identify whether a story is working for a brand and how it might be improved. Based on testing thousands of ads facial coding confirms what we have previously found in our Link pre-test: stories have huge potential to engage the audience and to motivate them. While most consumers are indifferent toward brands most of the time, stories can help brands engage people and overcome their indifference. The first job of any advertising is to engage the audience, to attract and hold their attention, and story ads do just that.

Story ads typically result in greater enjoyment and engagement than non-story ads, observed in both more expressive facial reactions and stronger ratings on the key Link questions, indicating a greater ability to attract attention and be remembered. Once an ad has attracted attention it must then establish a motivating impression of the brand. Academic research has shown that narrative transportation, or losing oneself in the flow of the story, predicts how well a viewer will recall a story and whether they will act later. Research by Kantar confirms that, if well-crafted, story ads can have more motivational power than non-story ads. The most successful messaging occurs in stories where the brand’s role is necessary, believable, and integral to the plot. Umogun is a brand analyst based in Lagos

Lagos State Government commends Mouka, others on donation for Covid-19 relief

he Lagos State Government led by Governor Babajide Sanwo-Olu has applauded Mouka Limited for the donation of 500 mattresses for the equipment of the State’s coronavirus (COVID-19) isolation centres used for the treatment of infected persons with

the pandemic. Governor Sanwo-Olu in a statement eulogized the frontline Mattresses and Beddings Company, in the list of the second batch of 196 donors to the State for Covid-19 relief. The Governor said the donations were well utilised in the enhancement of the

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COVID-19 isolation centres and that the assistance was necessary as it came at a crucial time when government attention was directed towards boosting the state’s healthcare facilities to eradicate the pandemic. In March this year, a donation of another 200 mattresses @Businessdayng

was made to victims of Abule Ado gas pipeline explosion by Mouka Limited. The Chief Executive Officer of Mouka Limited, Raymond Murphy, said the company sees itself as a partner of the government during a crisis and that the wellbeing of Nigerians is at the core of its mission.

Tuesday 04 August 2020

BUSINESS DAY

Branding Brandzone: Changing branding and design landscape -the making of Nestoil story Daniel Obi

In The Beginning Brandzone came out tops in the selection process among other competitive agencies who had applied for the project with Nestoil. Brandzone won the contract and was commissioned to spearhead the Rebranding of the Nestoil Group. Nestoil, is an indigenous EPCC, construction and Oil servicing firm with operations domiciled within high-rise locations in Nigeria. Nestoil has been a significant contributor in Nigerian Oil & Gas sector with its innovative solution spread across the entire value chain of the industry. In spite of its strategic geographical positioning, Nestoil sought to be recognised in the space which it operates. It desired to carve a niche for itself and create an identity that will position it as not just another indigenous energy company but a company that stands out with its own unique value proposition. Upon completion of the project and application of the recommendations made by the Brandzone team, Nestoil was able to transform itself into an excellently positioned energy company, while strategically promoting its several business units, portfolio, service offerings and its laudable industry milestones.

The process of Rebranding didn’t kick off with an external alteration of the existing Nestoil Brand identity such as a logo change or a website revamp, but instead, work began with an extensive transformation of the Nestoil brand inside-out. This stage of the process was a deeply immersive, intellectual and thought provoking, involving all the stakeholders and key decision makers to collaboratively work on developing the Brand DNA, Brand Story, Brand Positioning and Brand Architecture of the Nestoil Group under the careful guidance of the Brandzone team. It was important to get the stakeholders of the business involved in the recreation process so as to promote brand ownership across all levels of the business upon completion of the project. Creating The Image Unknown to most people, the process of branding and design is a marriage of art and science. This among all other unique methods, is one of the things that has set Brandzone apart in the industry. In recreating the Nestoil Brand, Brandzone moved to the next phase which was the point where science met. This marked the beginning of the Brand audit/Brand research phase carried out by Brandzone. This stage profiled the Nestoil in the industry it operates, and consumer/ client perception of the Nestoil brand. These were consolidated into the unique Nestoil brand strategy which harmonises the history, business model, culture and ethos of the Nestoil group. After careful study of the Nestoil business model, Brandzone developed the brand www.businessday.ng

architecture based on the structure of the business. The architectural model developed for Nestoil adopted the ‘House of Brands’ structure. This positioned the Nestoil group in a manner which the ‘mother brand’ was clearly structured along with the other sub-business units (sister brands) existing within its business structure bearing in mind the business relations and the various levels of market dominance in which these sub-business units operate. Going further in the creation of the rich Nestoil brand existing today, Brandzone began the brand positioning phase through which the core attributes of the brand was reborn and established. This made up the carefully thought out Nestoil

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Brandzone has acted as a catalyst for most brands, so it can see all the possibilities open to them as a brand and make them into the best in their chosen area of play

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randzone has been able to carve a solid niche for itself, not just as an agency proficient in branding and design but as a full-fledged branding, marketing communications and consultancy firm, building and managing successful brands within the last 11 years of its existence, using unique propriety tools. For Brandzone, its unique methodology is not limited to an ordinary logo change, website revamp or social media engagement, it involves an inside-out approach to strategically position the brand, by innovatively integrating strategy, ideas and a well thought through implementation. This methodology has proven successful for Brandzone as it prides itself with the excellent results it has obtained when it applied it on several organisations that are desirous of sustainable growth – not a microwave or ‘flash in a pan’ kind of success. A very good citation of Brandzone’s footprint of success was its approach to branding and design in the ‘Making of the Nestoil story’.

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culture. These core attributes were infused into the corporate philosophy, thereby presenting the vision, mission and core values in a manner which truly conveys the brand’s promise. From these attributes came the uniquely crafted new pay off line; ‘Delivering exceptional value’. Every word in this pay-off line was deliberately chosen to represent the value proposition, mission, vision and corporate ethos of Nestoil. The final phase was creating a unique brand identity beginning with the primary logo of the brand which would embody and speak to the brand essence of Nestoil. The process was not mere graphic redesign of the old Nestoil brand identity but a gradual unbundling of each element of the former logo and the recommendation of a wide range of design routes which ranged from evolutionary (a modification of the existing logo design whilst maintaining its key elements) to the revolutionary design routes (a clear departure from the original logo design). The evolutionary design route was chosen which involved the total refresh of two important features of the existing logo which was its iconography (the symbol itself ) and the typography (the typeface which accompanies the symbol). Combining the update of these two key features without totally departing from the old brand identity, the new and more contemporary logo was created to represent the Nestoil brand. The Adoption Follow ing the re creation of the Nestoil Brand Strategy, @Businessdayng

Brand Positioning and Brand Identity, the Brandzone team took the internal stakeholders of the business through a unique brand adoption session which aimed at promoting brand culture strengthening and brand identity ownership while ensuring brand preservation in a practical manner. At the end of the process, the internal stakeholder sof the business understood their role in promoting the Nestoil culture. They embraced their roles as brand ambassadors and set out supercharged, ready to live out the brand at any level of the business they operate. After 28 years of incorporation, Nestoil was reborn and has full embodied all of its potentials, by objectively allowing Brandzone take her through the process of re-emergence. The Catalyst Brandzone has acted as a catalyst for most brands, so it can see all the possibilities open to them as a brand and make them into the best in their chosen area of play. The ‘ Nestoil story ‘ built and developed by Brandzone is one of the many stories with which Brandzone has established itself . Even presently in the eye of the storm almost submerging businesses with its propriety tools , insights and ability to dig in and know the brand/client, Brandzone has been able to save a lot of businesses from going under and give them the notability and recognition they require and deserve which has in turn given profitability to such businesses.

Tuesday 04 August 2020

BUSINESS DAY

INTERVIEW

‘Child labour education will reduce use of underage domestic staff’ Elizabeth Ajetunmobi is the chief executive officer of Aymie Staffing Solutions and the president of the Association for Household Employee Managers (AHEM) while Emem Nwogwugwu is the vice-president of AHEM. In this interview with Josephine Okojie, they both spoke about AHEM and how the association is helping to end the use of underage domestic help in the country.

Can you tell us about AHEM? lizabeth: The Association for Household Employee Managers (AHEM) was borne out of the need to establish a structure and organisation in the area of human resources and development, specifically for domestic staff. The vision of the association is three- improved capability and welfare for household employees, satisfaction and safety of employers, and the growth and regulation of domestic staffing agencies in the country. The focus of the association is to create a structure and professionalise Nigeria’s domestic labour industry. AHEM is creating structure and standard operating procedures for the industry as a whole while advocating for the rights of domestic workers (especially in terms of abuse) in the country. Can you tell us about Nigeria’s domestic staffing industry? Elizabeth: The domestic staffing industry is an untapped segment because it has not been exploited yet and this is due to lack of structure and poor data collection. Nigeria has a huge human resource reservoir that can fill in this industry if properly harnessed with the right training and system support. Can you tell us the areas the association intends to impact? Emem: The association intends to impact the structural creation and organisation in domestic staffing nationally. We intend to develop a pattern that is civil and safe for both parties (that is employers and employees) - in their rule of engagements. To provide a law that protects both parties and a standard that will be laid out nationally on how domestic staff should be treated and how they should also treat their employers and children. How do you intend to gain support and recognition from the government and other parties? Emem: We intend to let them know the vision and mission and carry them along. Also, we would tell the government-related agencies the importance of supporting the organisation and how we can positively influence the nation at large, families, their domestic workers, and everyone involved in a safe and professional manner. We intend to organize meetings

Elizabeth Ajetunmobi

Emem Nwogwugwu

with the government, come up with policies that would organize all domestic staffing activities in Nigeria, and discuss how we can create new laws that protect the family and domestic staff. This will bring in structure and safety in the nation and professionalism in the industry, just like the hospitality industry. Why is AHEM relevant? Elizabeth: There is a need to create a future for service workers. With the growing prevalence of precarious employment, there is a need to improve outcomes for domestic workers, find new ways of enhancing the creativity content of service jobs through certification, better training, and job designs which in turn increase vocational education to help create a dedicated and professionalized routine-service workforce. Do you think with AHEM, Nigeria’s domestic staffing industry can be regulated and standardized? Elizabeth: Yes, with a formal body comprising of professional players in the industry, there will be improved regulation considering that we all have the interest of domestic workers and employers at heart. How will AHEM address the issue of underage children as domestic www.businessday.ng

help? Elizabeth: AHEM can end the use of underaged children as domestic help firstly by further enhancing knowledge on child labour and its repercussion, then raising awareness and advocacy to transform social attitudes of communities, especially families. Adoption &enforcement of legislative and policy penalties should be taken seriously; also a compliant mechanism should be developed. Tell us about your challenges in the industry and how you have addressed it as an association? Emem: Our challenges have been

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The domestic staffing industry is an untapped segment because it has not been exploited yet and this is due to lack of structure and poor data collection

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people hiring underage workers, sexual abuse of both domestic workers and children who some of these workers abuse. Undermining the domestic workers, theft, underpayment, lack of proper database and professionalism in the rule of engagement from the domestic workers and their employers are some of the critical issues in the industry. We have been able to address them by creating tailored training and advocacy sessions, life coaching services, and emotional healing sessions. We currently have a pool of human resource companies that have helped with the hiring producers and data collection. The association has found a need and come forth with solutions and services that will help us combat these challenges. We still need more hands and support. There are many rural communities that need help with setting up the right law for hiring domestic workers. AHEM Nigeria’s members have provided training, coaching sessions, and consultations. We also have books to help parents stay organized to reduce the burden and stress of their employees. All these services are provided by most of the members of AHEM Nigeria. We have different organizations that provide these services amongst @Businessdayng

us. We want to carry out all these activities at the national level. Is your organisation open for collaborations? Elizabeth: We will reach out for support through partnership because we cannot do this on our own. We will do our best in organizing programs and fulfill the goals of the association and we are very much certain our work will speak for itself and the community and government will recognize us. We believe if we get it right as a country, other countries in Africa will also follow suit. We will be partnering with the Government and other agencies to spread information and help them see the need why they should be part of us. The association will be beneficial to them in terms of national identity that opens access for job opportunities, skill development, protection, and support. What role can technology play? Elizabeth: The world is advancing and at a very high speed, it is left for us to catch up with it. Our passion is driven by our vision to impact lives positively in the domestic industry, and for this to be sustainable we have to work as a team that’s why we have a lot of amazing agencies putting in their all to take this association to the next level.

Tuesday 04 August 2020

BUSINESS DAY

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@Businessdayng

Tuesday 04 August 2020

BUSINESS DAY

news

Kayode Alabi (l), deputy governor and chairman of Kwara State technical committee on COVID-19, presenting ace masks to Bisola Ahmed, commissioner for Education and Human Capital Development, for distribution across schools ahead of resumption of students preparing for Senior Secondary School Certificate Examinations, in Ilorin yesterday. NAN

Foreign reserves decline to $35.92bn as naira gains N1.50k HOPE MOSES-ASHIKE

igeria’s foreign reserves declined by $59.86 million week-todate to $35.92 billion as foreign exchange (FX) outflows continue to surpass inflows. The price of Brent crude has improved to $44.42 per barrel as at August 03, 2020 from as low as around $20 per barrel in March this year. Oil accounts for more than 60 percent of government revenue and about 90 percent of the country’s foreign exchange earnings. Naira gained N1.50k as the dollar was quoted at N388.00k on Monday from N389.50k quoted on Wednesday last week at the Investors and Exporters (I&E) forex window, data

from FMDQ indicated. The market observed lower volume of transaction due to tightened system liquidity. Analysts at FSDH research said most participants maintained bids between N380.00 and N392.50 per dollar. Daily foreign exchange turnover declined further by 8.49 percent to $17.23 million on Monday from $18.83 million recorded on Wednesday last week. Earlier on Monday morning, the market signaled appreciation in the value of Naira with an indicative rate of N388.33k compared to N388.61k opened with on Wednesday before the holiday. The foreign exchange market resumed activity on Monday morning after the two day holiday, with

Nigeria’s currency stable at N474 per dollar on the black market. Dollar was trading as high as N475 in some parts of Lagos where the black market operators are operating. The local currency was also stable at the retail Bureau with the dollar trading at N475, since Tuesday last week. At the money market, the average Nigerian treasury bills yield remained unchanged at 1.75 percent across the curve. The Open Market Operation (OMO) bills market closed on a positive note with average yield across the curve declining by 18 bps to close at 4.05 percent. The Overnight (O/N) rate increased by 12.23 percent to close at 14.33 percent on Monday. The Open Buy

Foreign fund underway for N/Delta region’s development Ignatius Chukwu

development fund to be known as Niger Delta Fund is said to be on the way. Inside sources said the foreign-based initiators have considered various areas of investment, including water-based economic ventures such as fish-trawling and water transportation that will touch the nooks and crannies of the oil region. BusinessDay gathered in Port Harcourt at the weekend that the investment spread would also include manufacturing, with the objective of turning the Niger Delta from consumer region to producer region. Agriculture and cash crops may also be given serious attention from the fund. The scheme is said to be a reflection of and reaction to the failed dreams from previous development agencies to move the oil region to the next economic level, such as the defunct Oil Mineral Pro-

ducing Areas Development Commission (OMPADEC), the Niger Delta Development Commission (NDDC) and the rested BRACED Commission. The fund would also seek to encourage investors to create an aviation hub by linking all the South-South cities by air which would create another investment opportunity in the Niger Delta. Details of the upcoming fund such as the size and application processes have not yet been revealed. A source linked to the project told BusinessDay that the brains behind the scheme wish to bring in a lot of funds from various parts of the world but this time not related to the government. The director-general of Port Harcourt Chamber of Commerce, Industry, Mines and Agriculture, a seasoned technocrat, Erasmus Chukunda, who seems deeply connected with the scheme, confirmed the development in an exclusive interview with BusinessDay. www.businessday.ng

The DG described the move as another investment opportunity in Rivers State and the Niger Delta. He said so far, the development pattern had only encouraged roads and air modes. “There is now a plan to build a sort of Niger Delta aviation hub that would have domestic flights to all the Niger Delta states. The plan is to have a Niger Delta Fund which would facilitate that regional aviation hub to increase flights. “Waterways is one of the transportation modes that has been neglected in the region and in Nigeria. Remember that one of the major points for boundary demarcation in the Niger Delta is waterways. If we can connect all our towns and villages in the region with a water transportation system, that’s a huge investment.” It was gathered that a company has already done a proposal on acquiring fleet of boats of different kinds to establish a water transportation system in Rivers State.

Back (OBB) rate also increased by 11.93 percent to close at 13.33 percent. The CBN held its scheduled Primary Market Auction on July 29, selling NT-Bills worth N265.96 billion across the 91-day (N49.84 billion), 182-day (N54.59 billion), and 364day (N161.52 billion) tenors. The stop rates for the 91day, 182-day, and 364-day tenors cleared at 1.200 percent (-10 bps), 1.500 percent (-30 bps), and 3.400 percent (+5 bps), respectively. The auction was oversubscribed by 76 percent with bid-to-cover ratios settling at 1.89x (91-day), 2.91x (182-day), and 1.33x (364day). The auction witnessed an increased subscription, especially in 182-day bills, due to excess liquidity in the market.

Passengers stranded as union picket Bristow Helicopters ...as Bristow debunks union’s claims IFEOMA OKEKE

assengers who booked to fly with Bristow Helicopters on Monday were stranded across different states in the country as a result of the indefinite strike by the National Association of Aircraft Pilots and Engineers (NAAPE). A visit to the Muritala Muhammed Airport, Lagos, on Monday, showed that some passengers and expatriates who tried to access Bristow facility were barred from entering. Members of NAAPE at the airport told BusinessDay that the strike would continue until Bristow agrees to review some of its discriminatory policies against Nigerian workers and accord them same treatment as their expatriate counterparts. Francis Igwe, public relations officer of NAAPE had explained some of the grievances of the union to include Bristow’s proposal to suspend the conditions of service, negotiations and deliberate subversions of established terms of agreement with NAAPE, insistence on benchmarking salaries of national pilots and engineers to an obsolete rate of N345/$1 coupled with the recent insistence on their proposal to implement N355/$1, a rate which is not obtainable on any foreign exchange window in the world, while still paying to expatriates their full remuneration in US dollar.

Others, Igwe said include failure to train qualified persons in Airline Transport Pilot License (ATPL) and failure to fully reimburse individuals who have successfully completed their ATPL through self-sponsorship, disproportionate matching and capped reimbursement cash figures for self-sponsored pilots on ATPL with an employment bond of N30 million-An obvious unethical and sharp practice. Dukas Yakubu, vice president of NAAPE said after several attempts to reach an agreement with Bristow, the company has failed to review some of its ‘obnoxious policies’ against its indigenous workers. Agnes Funmi Sessi, Lagos State chairperson, Nigerian Labour Congress, (NLC) during the commencement of the strike on Monday said that the NLC was battle-ready for Bristow, stressing that the era of impunity was over. “We want to state that the era of impunity where companies hide behind Covid-19 to unleash terror against workers will no longer be tolerated,” Sessi said. But a statement from by the management of Bristow, explained that contrary to NAAPE’s claim that all negotiations have broken down, it remained willing and prepared to continue dialogue with NAAPE. It noted, however, that NAAPE elected to abandon negotiations to embark on a strike which is both illegal and unwarranted.

PFIs to pay 30% of amount requested from CBN’s N220bn MSMEDF as collateral ...as MFB seeks removal of collateral from intervention funds Hope Moses-Ashike

articipating Finance Institutions (PFIs) are expected to provide 30 percent of the amount to be accessed from N220 billion Micro Small and Medium Enterprise Development Fund (MSMEDF), the Central Bank of Nigeria (CBN) said in its recently released guidelines. But operators in the microfinance sub-sector have called on the CBN to remove the provision of collateral from all intervention funds. As part of its developmental role and mandate of promoting a sound financial system, the CBN launched the MSMEDF on August 15, 2013. This was in recognition of the significant contributions of the Micro, Small and Medium Enterprises (MSME) sub-sector to the economy. The guidelines stated that

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NIFIs playing in the start-up space shall access the MSMEDF facility at rate of return of zero percent for on-financing at 9 percent (all-inclusive) to start-ups as an incentive. The PFIs shall qualify for a 50 percent risk shared on the net outstanding balance in the case of default. NonInterest Microfinance Banks with Portfolio at Risk (PAR) of 10 percent and below are to be exempted from providing financial assets as collateral to access facility under the MSMEDF. PFIs are required to fund start-up projects under the MSMEDF. PFIs are expected to accept charge on fixed and floating assets of the financed projects as collateral for startups. Collateral requirement from start-ups by PFIs (NIFIs) shall be educational certificates such as SSCE, National Diploma (ND), Na@Businessdayng

tional Certificate of Education (NCE), National Business and Technical Examination Board (NABTEB), Higher National Diploma (HND), University degree (NYSC Certificate where applicable) and a guarantor. “CBN should remove the need to provide collateral from all intervention funds and rely on the risk assessment not collateral in granting loans,” said Bunmi Lawson, managing director/CEO, EdFin Microfinance Bank Limited. According to Lawson, it is either that or they define collateral to include letter of comfort personal guarantees and other moveable collateral just as microfinance gets from lending to SMEs. MSMES are unable to access this because they don’t have collateral. So, if CBN is asking for collateral from banks yet banks can’t ask collateral from the final lender, seems unfair.

Tuesday 04 August 2020

BUSINESS DAY

news

What Shoprite exit means for Nigeria’s retail market, property developers CHUKA UROKO & BUNMI BAILEY

he planned exit of Shoprite, arguably Africa’s biggest grocery retailer, from Nigeria has negative implications for the country’s already struggling $105 billion retail industry and also space suppliers, experts have said. The South African retail chain has planned to leave Nigeria, citing Covid-19 pandemic and the group’s reevaluation of its operating model in Nigeria — Africa’s thriving market and the continent’s largest economy. The coming of Shoprite is almost synonymous with the growth of retail market in Nigeria which, at a time, witnessed what could easily be described as a revolution with some foreign investors, at the time, planning to invest $500 million to finance the development of six retail

malls in five major cities. Shoprite is not only strategic an anchor tenant in most of the trail outlets in Nigeria, but also a trade booster to other retailers in a given mall. This is why Cheng Fuller, a retail expert, reasons that apart from the large number of jobs that will be lost, other stores within the same proximity of the store (Shoprite) could suffer further. “When Shoprite came in, they provided a source of tourism or relaxation called shoppers’ tourism. 60 percent of people who went to Shoprite did not just go for their price, but for the tourism and from there, they will be tempted to do impulse buying. And now in this pandemic, their major business model which is large crowds has back up against them,” Fuller said. He explained that other stores close to Shoprite

would suffer more because Shoprite is the anchor tenant for the stores; now that they are leaving, those stores will die a natural death. He added that there is also the problem of unemployment as Shoprite employs about 10,000-13,000 people across the country. The exit of Shoprite would mean that developers or space suppliers would suffer in many ways. Apart from increased vacancy rate in the retail market which averaged 30 percent across cities by the last quarter of 2019, investment in mall development which is already low, will drop further. Interestingly, many of the retail mall or space suppliers are South African developers and investors. Most prominent among these investors is RMB Westport, a joint venture between Rand Merchant Bank (RMB) and

Westport Property Group— a highly skilled real estate investment management company which was reported to be funding about 51 percent of Osapa Mall and 50.5 percent of 30,124 square metre Royal Gardens Mall. Another investor is Resilient Africa, a South African partnership between Resilient Properties, Shoprite and Standard Bank, which developed four of its choice malls in Delta, Benin city, Owerri and Asaba. While these investors would have a lot of empty spaces to contend with, letting agents and facilities managers would also have a bite of the bitter pie. Broll Property Services, also a South African firm, which has been providing both letting and facilities management services to these malls, will suffer some shock in its bottomline.

Winners emerge in Dangote Cement promo

inners have continued to emerge in the on-going Dangote ‘Bag of Goodies Season 2 consumer promo’, carting away millions of naira, goodies bags, recharge cards and other prizes. Last week, the company sent credit alerts of N1 million each to the first three winners to emerge from the Dangote Cement Promo in a ceremony witnessed by the media and family members of the winners. The company in its ongoing “Bag of Goodies: Spell Dangote and win a Million Naira promo, which commenced a few weeks ago, targets to make one thousand people millionaires. Already, lucky winners are carting away, recharge cards and Dangote Cement goodies packs, which contain rice, salt, pasta, sugar and seasoning, which the company says has been initiated to alleviate the negative impacts of the deadly Covid-19 on consumers of Dangote Cement. A bricklayer in Lagos, Adekunle Donald, said he was expecting to win at least N1 million before the end of the promo. “Right now, I am very close to winning. I have some of the letters with me already, just waiting to get two more letters

to complete the word “DA-N-G-O-T-E” and become a millionaire,” he said. Adekunle said he has won recharge cards inside Dangote Cement bags since the promo started. “I work in a block moulding company and we use Dangote Cement on a daily basis. Right now, it is difficult to remember the number of recharge cards that myself and other workers have collected from the promo bags. We are all excited because I know that before the end of the promo period, I will not only win recharge cards, I will also become a millionaire.” Another consumer of Dangote Cement, Nnamdi Okafor, an estate developer, described himself as an addicted user of Dangote Cement. “I am an estate developer. I have been using Dangote Cement since the inception of my company. I can recommend Dangote Cement to anyone who desires a strong foundation in the construction of a building. I have personally used it and I am very convinced that it is the best for those of us who are in the business of estate development. I will recommend Dangote Cement to builders and block moulders due to its rapid setting, especially during the rainy season,” he added.

Elevation Church holds virtual conferences for toddlers, teenagers JOHN SEYI SALAU L-R: Nwamaka Onyemelukwe, public affairs and communications manager, Coca-Cola Nigeria Limited; Bukola Bamiduro, founder, Karis and Eleos Hand of Hope Foundation, Olabisi Onigbanjo, wife of the attorney-general of Lagos State, and Chidie Koldsweat, founder, Donor For Africa, at the launch of Catalyst For Change, a women empowerment initiative, in Lagos.

Students must not exceed 20 per class as Fatality at Expand Global Ibadan schools resume - Lagos commissioner factory regretted ... state to strictly monitor protocol compliance KELECHI EWUZIE

tudents in both public and private schools must not exceed 20 in a class in compliance to physical distancing, Folasade Adefisayo, Lagos State commissioner for education, has said. Adefisayo stated this as she led a monitoring team to assess the process in which the students were received on Monday which showed strict adherence to Covid-19 protocols. Speaking during the tour of some schools in Education District IV which includes Yaba, Surulere and Apapa, Adefisayo expressed satisfaction with the level of preparedness of the schools. She said the state government was concerned about

the safety of students and their teachers, as their wellbeing was important to the state. The commissioner said asides her visit to schools, the permanent secretary in the ministry of education, among other top officials, were also on the field to achieve maximum compliance and coordination. Abosede Adelaja, the permanent secretary, said that the government has provided the students with face masks and sanitisers. She explained that aside from fumigating the schools and ensuring a clean and conducive environment for learning, the government has also provided facilities such as water and basins for washing of hands. www.businessday.ng

REMI FEYISIPO

he fatality at Expand Global Industr ies Limited Ibadan factory premises involving a colleague from an external third-party company, who was fatally injured in an incident that took place recently, is unfortunate, according to Aliyu Jibril, spokesperson/ HR manager, Expand Global Industries Limited. “Our onsite emergency team immediately stopped all operations and promptly informed the relevant authorities of the incident. The local authorities arrived onsite within minutes to carry out the necessary investigations and safely transport the deceased to the morgue, where an autopsy could be conducted,” Jibril said. According to Jibril, the company is shocked and

saddened by this loss and our deepest sympathies go out to the family and friends of the deceased. Representatives of the company met with the family along with representatives from the student council to express our deepest condolences, he said, saying we will continue to engage with the family and provide the necessary support during this difficult time. Expand Global Industries is working closely with the police and Ministry of Labour to ascertain the circumstances leading up to this tragic incident. “Both departments are proceeding with external investigations into this matter and we are conducting our own internal investigation into the safety protocols observed. We understand that there may be queries from concerned stakeholders towards this tragic incident.

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non-denominational Christian ministry, The Elevation Church (TEC), is set to equip teenagers with requisite skills and capacity through its annual teen conference, ‘Navigate’. Themed “STAND,” this year’s conference is free, solely online and kicked off on Saturday, August 1, at 4pm with a pre-conference online party. The main conference, comprising plenaries, issue-based breakout sessions, parents’ breakout sessions and over 18 vocational skills classes such as graphics design, baking, music production, writing, cinematography, French for beginners, web design, animation, entrepreneurship and many more, holds 4pm each day from August, Saturday 8 to Saturday 29, and thereafter culminate on Sunday August 30. Registration and further information can be obtained at www.elevationng.org/navigate. Similarly, children 12 years and younger are not left out as TEC has put together a virtual Vacation Bible School (VBS), which runs from August, Wednesday 5 to 7, from 10am to 1pm daily. This edition @Businessdayng

is themed “Breakout: Escape from Ordinary to Extraordinary” and teaches children solid Christian principles to guide them through life and aims for excellence in everything they do. This is also a free event and parents can register their wards at www.elevationng.org/vbs. According to Godman Akinlabi, lead pastor/founder of TEC, “The global pandemic – COVID-19 – has been a major disruptor for everyone regardless of age. For the younger generation, we have particularly observed disruption in schoolwork, exams and other progressive plans; holidays for some, and work experience opportunities for others.” He points out that the programmes set aside for the Navigate Conference have been specifically designed to manage some of these challenges. “The programmes will help harness their inner strengths, build new skills, stand for positive influence and be change agents in their respective spaces. They are also some of the ways the church has continued to keep alive our commitment to make positive social impact across all demographics, despite the ongoing pandemic,” he says.

Tuesday 04 August 2020

BUSINESS DAY

NEWS Coronavirus through the eyes of 3 Nigerian entrepreneurs Business owners in oil-rich Nigeria are finding it difficult to weather the crushing economic fallout of the deadly coronavirus pandemic and compounded by a plummeting currency that has left the economy in crutches. As the lockdown approached, a mindless dispute between Russia and Saudi Arabia sent the price of petrol tumbling, dragging down the value of the Nigerian currency with it. With the naira still volatile with foreign exchange increasingly hard to get and a partial lockdown still in place, three business owners in the commercial hub of Lagos explain how they are coping in this report by BBC.

Papa Omotayo: MOE+ and A Whitespace Creative Agency Twenty-five full-time staff working from home. Architectural and visual arts projects continue with fewer-thanusual construction workers on site.

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Marifa

Marifa Witte: McKindergarten Opened a private pre-school two months before Lagos went into lockdown. Employs 10 staff.

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e actually closed our doors before the government shut the country. Our first priority was keeping the children safe. “At the time we had only three children, but it started off very well considering that we opened in the middle of a school year. We were scouting for parents. “When the lockdown happened I started panicking, because just before then we had already started seeing the devaluation of the naira. “Today everyone is projecting that it will go up to 500 naira to one US dollar. It would be a disaster - I would need more naira to pay expatriate staff in my establishment. “Being a new school, we only have a certain amount of savings to float us for the first and second year until the school becomes successful. “At the moment our staff - security, cleaners, nannies and administrative staff - are all on full salary. I’ve told them I will cut their salaries by 50% to prepare for the worst, but I expect to cut salaries by around 30%. “There were four more people - a teacher, teaching assistants and a receptionist - whose three-month probation period ended in April. We told them that we would come back to them when the school resumes. If they do, I will have to renegotiate salaries because I can no longer pay them what we agreed. “All the parents who have registered for September still aim to come - that’s four more children. But my biggest fear is that we may not open then. “I’ve thought about closing the school down. If the pandemic goes on for another year the school will not be able to survive. The rent is very expensive here, on one of the prime commercial streets in Lagos. I would not be able to make my rent in the third year if we don’t open in September. “Today, yes the virus is still here, yes everyone is still scared, but people are a little bit more relaxed. The economy is my biggest fear in Nigeria.” www.businessday.ng

he response from my clients has been to put a lot of things on hold. “Everybody’s trying to figure out how it’s going to affect them as individuals and organisations. Hopefully, the majority of projects will come back. “I think that the uncertainty is going to last for quite a while. I’m definitely feeling the difficulties. “[If ] you look at the cost of things now compared to months ago it’s in some cases almost double, so that hardship is going to be felt dramatically. “People’s earnings are going down because a lot of businesses are having to scale back because of the pandemic so it’s tough times. We made the conscious decision not to get rid of staff [to] keep a great team. “But we have to discuss with staff how we can look at off-setting certain expenses and moving them to a later period in the year. “I would say we’re operating [at] 50% productivity at best, but I think that’s also to do with the nature of the type of work that we do. “You can’t just walk over to someone’s desk to check up on what’s going on. “Everybody’s a little bit sick and tired of zoom calls and team calls. We’re definitely not as efficient.”

Papa Omotayo https://www.facebook.com/businessdayng

Ndidi Nwuneli

Ndidi Nwuneli: AACE Foods Employs 80 staff. Processes and distributes spices, seasonings and flour.

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y food business is classed as essential, so when lockdown happened we sent letters of exemption to our staff so they could get to work and transport their

products. “But I have to tell you that it wasn’t easy. Many of them faced harassment by police for the first two days, which we reported to the government authorities. “Some of our staff were even attacked - that was a challenge. The government was very responsive and the challenges eased over time. “To ensure social distancing, we had to reduce the number of people working at any given time. So we split everyone into A and B teams - who worked one week on, one week off. “We had to reduce capacity to about 50%, but also our output, which meant that we could not enjoy the sales. “Many of restaurants reduced or shut down operations during the lockdown, so obviously there was reduced demand. “Curfews also made it difficult for staff to work full days. “Staff members have been on full salary, and we told them we would review the situation as time goes by, but it never got to that. “Now we’re back in full, operational mode with a new layout to ensure social distancing. Customers are also operational and demand has picked back up. “We are seeing an upsurge in retail because the oil shock and Covid-19 have restricted imports, so Nigerians are embracing locally sourced products. “We’re well-aware this is a 12- to 18-month battle and many speculate that Nigeria is about to really get the big blow of coronavirus. “We’re thinking, ‘How can we make sure we survive and thrive during this period?’ “It means thinking through how we can be more costeffective and innovative, and also the way we engage with our customers.” @Businessdayng

Tuesday 04 August 2020

BUSINESS DAY

News More jobs at risk as Shoprite, others pull... Continued from page 4

difficult to get stock into the stores as the company struggles consistently to get money out. “Obviously ever yone gets excited about Nigeria because of its size, but I think they’ve taken an incredible strain with internal problems in the country politically and then there are the issues with their oil,” Mark said. Further investigation showed the problem is just Nigeria as Truworths continued expansion in other African countries like Kenya, Botswana and Ghana; “The stores in countries bordering South Africa are doing well and in Ghana its O.K.,” Mark said. “It’s just Nigeria that’s not profitable and we would go back there if everything changes. This is not a permanent thing, we will see what happens.” Iberia Airline Spanish national carrier, Iberia Airline, withdrew its services from Nigeria in 2016. As sources claimed the decision to withdraw was based on the huge financial difficulties the airline faced based on the Central Bank of Nigeria’s forex policy that prevented airlines from repatriating proceeds made in Nigeria to its parent countries. Iberia Airline left in May 2016, citing “very difficult operating circumstances and dwindling passenger numbers.” Though the national carrier of Spain attributed the decision to the dwindling passenger traffic on the route, findings by BusinessDay indicated that the problem was largely as a result of the foreign exchange scarcity with many foreign airlines unable to repatriate their funds to their home countries. United Airline United Airlines, Chicago-based American airline, pulled out of Nigeria in 2016 over difficulty in recovering monies made from tickets sales, due to Nigeria’s foreign exchange policy. According to United Continental Holdings Inc., operator of the airline, the daily route from Houston to Lagos had not met target for years but was kept alive because of its importance to Texas-based customers. “Since last fall, we have not been able to repatriate revenue sold locally in Nigerian currency and therefore we had to essentially suspend these sales which makes the route unsustainable as about half of the revenue generated by the route comes from Nigeria pointof-sale,” United spokesman

Jonathan Guerin says in a statement to Today in the Sky. Some of the difficulties may include a restriction by the government on the amount of money that can be moved abroad after the global slump in oil prices depleted the government’s U.S. currenc y reser ves. Virgin, Emirates, British airlines reduced their frequency. Etisalat Abu Dhabi’s Etisalat terminated its management agreement with its Nigerian arm as Mubadala Development Company of the United Arab Emirates, the company’s largest shareholder, pulled out its investment and headed out of the country. Mubadala, an Abu Dhabi Government-owned investment and development company, controls about 70 percent of the shares in Etisalat along with Etisalat UAE mobile, with Emerging Markets Telecommunications Services (EMTS, promoted by Hakeem Bello-Osagie, owning the remaining 30 per cent. “All UAE shareholders of Etisalat Nigeria have exited the company and have left the board and management,” then chief executive of Etisalat International Hatem Dowidar told Reuters in an interview. Nigerian regulators intervened to save Etisalat Nigeria from collapse after talks with its lenders to renegotiate a $1.2 billion loan failed. InterContinental Hotel Group In early 2018 news broke out that UK based InterContinental Hotels Group (IHG), operator of InterContinental Hotels brand had withdrawn from Nigeria four years after it opened its first site in Nigeria. Unlike its other hotel business in sub-Saharan Africa such as South Africa, Mauritius and Zambia; its Nigeria business was hit by uncertainties such as West African Ebola health crisis in 2014, the uncertainty of the Nigerian general elections in 2015, the crash in oil price, the eventual Nigerian recession in 2015, as well as the devaluation of the naira and ensuing fiscal crisis. “The UK company’s 358room hotel in Lagos, Nigeria’s commercial capital, will no longer operate as an InterContinental-branded property as of January 18,” IHG’s director of African operations Simon Stamper, said in an emailed statement on January 17. In May 2017, a Nigerian court ordered one of the lenders to the N30 billion www.businessday.ng

L-R; Morenike Olorunosebi, IPMC accountant; Christy Akpa, general manager Medical Services, Nigerian Ports Authority; Adefila Gbenga, IT manager, IPMC, and Samuel Okoko, data executive, during IPMC Health and Safety Equipment Exhibition in Lagos.

($83m) InterContinental hotel, Skye Bank plc, to take over the property from its owner Milan Group over debts of $29.8 million and N3.8 billion. IHG continued to manage the property, which then went into receivership. The receiver for InterContinental Hotel in Lagos, Messrs Kunle Ogunba & Associates said in January, “the hotel’s revenue cannot sustain IHG’s charges of almost N40 million monthly without further borrowings as further borrowings based on the peculiar circumstances of the hotel is foolhardy as the hotel is currently indebted to two banks in excess aggregate of over $100 million.” Over the years, InterContinental Hotels Group PLC has been battling with a backlog of debt. As at June 2017, the group’s long-term debt & capital lease obligation for the quarter that ended in June 2017 was $2,106 Million. These debts have been issued over a period of 3 years. WoolWorths In November 2013, barely one and half years after South African retailer Woolworth expanded into Nigeria it called it quits and pulled out its three stores from the west African country citing high rental costs, duties and complex supply chain processes. The reasons cited by Woolworths were high rental costs, duties and supply chain challenges in Nigeria. “When an investment no longer generates viable returns, difficult decisions have to be made to contain costs,” CEO of Woolworths Ian Moir said in a statement. “The Woolworths clothing and general merchandise business in Nigeria has not been successful, despite several attempts to improve performance.”

Here’s solution to banks illegal stamp... Continued from page 2

trying to save their meagre earnings,” a customer who maintains account with Access Bank and GTBank said. Wole Obayomi, a partner/ head of Tax, Regulatory and People Service (TRPS) practice of KPMG in Nigeria, says customers who are illegally charged stamp duty should ask for a refund. “Customers should complain to FIRS and ask for a refund because it is an error,” he says on phone. When contacted, Uju Ogubunka, president, Bank Customer Association of Nigeria (BCAN), notes that if any bank deducts more than what the law says that is wrong. Such a bank can be made to pay back. “Taxes can be graduated. It is not as if because the amount is heavier therefore you are made to pay higher. For

stamp duty, the more money you generate, the lesser the amount you pay,” Ogubunka says, saying, “We don’t have any Complaints from our end. If we have we will be able to deal with it.” Uche Uwaleke, a professor of capital market at the Nasarawa State University Keffi, explains that Section 54 of the Finance Act, which amended S. 89 of the Principal Act provides for stamp duty of N50 on transfers in excess of N10,000. The justification is the fact that the charge is singular and one-off with N10,000 as the floor. Note that it does not apply to self-transfers or between accounts with same BVN The revenue from stamp duties must have witnessed significant increase since the implementation of the Finance Act. The surprised increase in Federal Allocation Account Committee (FAAC) revenue for the month of June was due

COVID-19: Easing of dine-in restrictions... Continued from page 2 down in April, some restaurants were completely closed while others that opened only offered limited menus. After the lockdown was partially eased, the government directed them to offer only take-out services to their customers. “It is a struggle for us because sales have dropped below 50 percent and because of that, we had to send half of our staff home since we don’t require their services,” Stephine Emeruwa, a manager at Ketchup, an Abuja-based restaurant, says. Emeka Vincent-Eloagu, owner and lead chef at Hélène’s Food Co, an Abujabased gourmet food company, states that business has been very slow as they are not getting enough walk-ins and dine-ins like before and so a lot of revenue is being lost. “We are functioning at most at 5 percent of our usual

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capacity. This means we are not really making ends meet,” he says. The hospitality industry, which restaurants are a part of, recorded the worst half-year performance in history as hoteliers, brand and franchise owners, and destination managers decry that the industry lost over N50 billion in the first half of 2020. “The purpose of Fast Food restaurants and dine-ins are in two folds, a form of meal tourism and essential food services. With the lockdown and restriction of public gathering, the meal tourism aspect of their food has died,” Cheng Fuller, a retail expert, says. “This is almost like 65 percent of their addressable market taken off the table, which is people who just come to relax and enjoy the armoire. So, imagine a business that caters for 100 customers but by default, 65 percent of customers have been taken away. So, the @Businessdayng

more to increase in taxes than crude oil sales. What has become obvious is that a good proportion of previous deductions were not remitted to the coffers of the government, a situation not helped by the bickering between FIRS and NIPOST. Now that the Finance Act has laid to rest the issue of the collecting agency in favour of FIRS, the level of remittances is expected to substantially improve, which explains why the government is banking on revenue from stamp duties to augment dwindling oil revenue. Regarding illegal deductions by banks, customers should take advantage of the complaints mechanism/procedure put in place by the CBN. “I am aware the CBN has been sanctioning banks and recovering illegal deductions in respect of cases escalated to the central bank,” Uwaleke states. potential for revenue earning is just from 35 percent of customers doing takeaways,” he says. Some relief is coming for the restaurants as over the weekend, the Lagos State government said they can now operate dine-in services from August 14 on the condition that they maintain 50 percent capacity. But even with the reopening of dine-in services, experts are of the opinion that it is still nigh-impossible for restaurants to make a profit at reduced dine-in capacity. “There is a difference between 100 and 50 percent capacity. If they operate at 50 percent, they will not have the same client base they used to have before and also, they may not even get the 50 percent capacity of people due to lack of confidence of people to eat out,” Ayorinde Akinloye, a consumer analyst at CSL Stockbrokers, says. “So, the best they can do is rationing their cost and boost their online delivery platforms.”

Tuesday 04 August 2020

BUSINESS DAY

EXPERT PROGNOSIS OF NIGERIA’s ECONOMY

How Nigeria faces COVID-19 economic shock with major indicators worse-off MERCY AYODELE

he economic shock triggered by the COVID-19 pandemic and lower oil prices have done little favours for an economy that was already on the decline with key macroeconomic indicators in worse shape compared to previous economic shocks. David Cowan, Citibank’s Chief Economist for Africa said this time, Nigeria has “limped into the oil price shock” as he pointed to GDP growth below population growth for the fifth year running in 2019. “When Nigeria went into the last oil price crash that started in late 2014, the country had been like an economy on steroids. The $100 oil price in the prior four years meant that Nigeria was like a Mercedes-Benz rolling down the Lekki-Epe express way at 100 kilometres per hour,” Cowan said. In comparison to the last crisis, Cowan said the economy wasn’t on a super FX fuelled boom this time, but was optimistic that the crisis may not lead to the same sort of abrupt collapse seen in 2016. The International Monetary Fund (IMF) expects Africa’s largest economy to decline by 5.4 percent this year, the worst contraction in three decades, as the COVID-19 pandemic takes a toll on the economy. The IMF also suggests that it could take three years before Nigeria returns to its

Source: World Development Indicators, CBN statistical Bulletin and Debt Management Organisation

pre-crisis level of 2 percent growth. “It’s actually going to take three years in our baseline projection for real GDP to come back to the 2019 level and this is in line with what happened during the last crisis, it took about three years for real GDP to come back to pre-crisis level,’’ Jesmin Rahman, the IMF’s Mission Chief and Senior Representative in Nigeria, said.

Rahman also believes the limited fiscal and monetary response to the ravaging COVID-19 pandemic could translate to a slower recovery for the economy. The Nigerian economy also had to weather storms in 2008 during the global recession and the more recent economic recession in 2016. The economy fared differently in these periods which influenced how they were

affected during the crisis. The global recession of 2008-2009 was one major crisis which struck the global economy. Nigeria was however able to withstand the crisis thanks to the buffers in the form of external reserves worth $53 million in 2007. The economy recorded a single digit inflation rate of 6.6 percent and a GDP growth of 6.69 percent in 2007 setting the economic

Source: World Development Indicators and CBN statistical Bulletin

in a good shape to prevent a recession. The next crisis Nigeria experienced is the recession of 2016 as a result of the lengthy oil price crash that started mid-2014. Oil price crashed from $100.85 per barrel in 2014 to $52.95 in 2015. Nigeria being a major oil exporter, the impact of the shock was severe on the economy. The crash plunged the economy into negative region with GDP growth falling to a 25-year low of -1.61 percent in 2016. The inflation rate also skyrocketed to 18.5 percent in 2016 from 9 percent in 2015. The recession of 2016 met the Nigerian economy unprepared as external reserves had plummeted from $53 billion in 2007 to $28 billion in 2015. Therefore, the economy was hit hard by the recession. Before the current COVID-19 crisis, the growth rate of Nigeria in 2019 was still recovering from the shock of 2016 as growth rate stood at 2.20 percent which means it was not in the best shape to cushion the crisis.

Oil price averaged $60 dollars in 2019, lower than the $100 per barrel in 2014 before the crash. A glance at the pre-crisis periods (2007, 2015 and 2019) show that the Nigeria was in a better shape to buffer shocks in 2007 than it was in 2015 and 2019 respectively. Inflation stood at 6.6 percent and GDP was a high as 6.59 percent in 2007. By 2015, GDP fell to 2.7 percent as a result of the oil price crash of 2014 and inflation rose to 9.55 percent. In 2019, the economy was still recovering from the impact of the recession of 2016, with inflation at a doubledigit rate of 11.40 percent and a low GDP of 2.20 percent. This is low when compared to the other pre-crisis periods. The external debt profile of the economy also shows that Nigeria stood a better chance to cushion the economy from unexpected events in 2007 than the other periods. External debt outstanding stood at $3.65 billion in 2007, it rose to $10.7 billion in 2015 and as at 2019 it stood at an all-time high level of $27 billion in 2019. The external reserve was $51 billion as at 2007 declining to $28 billion in 2015 but recovering to $38 billion in 2019. This shows Nigeria was in a better shape to absorb shocks in 2007 than in 2015 and 2019. The Nigerian economy is clearly not as strong to weather an economic shock in 2020 as it was during previous years of shocks.

How Nigeria’s monetary, fiscal response to COVID-19 compares with peers Continued from front page

and monetary stimulus to prop up businesses hit by lockdowns and provide a safety net for the swelling ranks of the unemployed, a lack of fiscal ammunition has restricted the Nigerian government from providing similar relief. As a percentage of gross domestic product, Africa’s biggest economy is spending roughly 3 percent as both monetary and fiscal stimulus, to heal its over 200 million populace and businesses currently reeling from the impact of the pandemic, according to World Bank data. That compares with a stimulus worth 7 percent of GDP in South Africa; 9 percent in Poland, and 16.6 percent in Brazil. In advanced countries,

like in the US, Canada and Japan, fiscal and monetary stimulus aimed at addressing the pandemic stood at 15 percent, 12 percent and 42 percent GDP, respectively. “As much as the fiscal policy in Nigeria is, it is not as high as what is seen in other countries due to the country’s limited space,” Jasmin Rahman, International Monetary Fund’s (IMF) mission chief to Nigeria, says. Rahman, who facilitated the $3.4 billion Rapid Financial Instruments Nigeria borrowed from the IMF after it suffered the shock of a huge drop in oil prices, states that Nigeria entered the crisis in a weak position with real GDP growth of 2 percent, roughly half the growth in peer countries; and inflation that was www.businessday.ng

three times more than what was seen in peer countries. Nigeria was also faced with fiscal and current account deficits much worse than before the contraction in 2016, when a crash in oil prices triggered 5-quarters of negative growth. “The average Nigerian was experiencing both falling real per capita income and a high cost of living before the pandemic, hence, Nigeria entered the crisis with low policy stance and risky financing structure, not surprised the country has been hit hard,” Rahman states at a webinar hosted by the American Business Council and CitiBank. The IMF expects the economy to contract by 5.4 percent this year, the worst contraction in almost three decades. The government says rev-

enues from oil, which contributes over 50 percent of government revenue, could fall by as much as 80 percent this year. To cushion the effect of the health and economic impact of the pandemic and avert any further impending crisis on its economy, Nigeria is spending as much as N5.8 trillion as both fiscal and policy measures. This comprises a N2.3 trillion fiscal packages embedded in its Economic Sustainability Plan (ESP), in which the government aims to support small and medium enterprises, and create 774,000 informal jobs for its teeming population. The government believes that with strict implementation of the ESP, the country

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might enter a shallow recession with a negative growth of -0.59 percent by year-end, but come out of it in Q1 2021, according to Zainab Ahmed, minister of finance and budget and national planning, during an interview with BusinessDay in her Abuja office. “The National Bureau of Statistics (NBS) has already done an initial assessment that the economy could go into recession to as much as 4.2 percent by 2020, but if we are fully able to deploy this N2.3 trillion, we might end up in -0.59 percent. That is a bit fair,” Ahmed said. “Meaning that by the end of Q1 2021, we should have been out of the recession and back to steady growth. So, the implementation of the ESP is very important,” the minister @Businessdayng

said. The Central Bank of Nigeria (CBN) governor, Godwin Emefiele, has sounded similar optimism with a forecast of a -1.03 percent contraction in GDP for the second quarter of 2020; even though many economists say a deeper recession is more likely. Nigeria also has a monetary stimulus package worth N3.5 trillion. The fund, provided by the CBN for SMEs, households, pharmaceutical companies and domestic manufacturers, is supposed to help soften the blow of the pandemic on businesses and households. The CBN joined other of its counterparts around the world in employing various orthodox policies including cutting benchmark interest

Tuesday 04 August 2020

BUSINESS DAY

EXPERT PROGNOSIS OF NIGERIA’s ECONOMY spending. Nigeria had reported 43,841 cases of the virus as of August 3, including 20,308 recoveries and 888 deaths, according to data from the Nigerian Centre for Disease Control (NCDC). But for the low testing, the numbers could have been more. The country has succeeded in doing about 1,312

tests per one million of its population, data from Worldometer show. Like elsewhere, strict five weeks of economic lockdowns have stripped many Nigerians of their livelihoods. More than 50 percent of the country’s population toils in the informal sector, according to NBS data. The weighty economic impact of the virus is already

being felt in businesses. Fastmoving consumer goods giants, including Unilever, Cadbury both recorded a huge drop in revenues. Revenue of beer manufacturing company, International Breweries, dropped by more than 11.68 percent to N60.61 billion in the first half of 2020 from N68.63 billion in H1 2019.

Views on Nigeria and economic impact of COVID-19 David Cowan, Citibank’s chief economist for Africa t’s important to stress that there are some similarities and differences between the oil price crashes that we have seen. When Nigeria went into the last oil price crash that started in late 2014, the country had been like an economy on steroids. The $100 oil price in the prior four years meant that Nigeria was like a Mercedes-Benz rolling down the Lekki-Epe express way at 100 kilometres per hour. This time, Nigeria limped into the oil price shock. GDP growth managed to get to 2.5 percent in the last quarter of 2019. The economy wasn’t on this super FX fuelled boom, but even though the impact is also not good, it’s not the same sort of abrupt collapse we saw in 2015-16.

rates by 100 basis points to 12.5 percent, reduced interest on loans given to smallholder farmers and businesses from nine to five, and introduced regulatory forbearance for Covid-19 affected businesses. Irrespective, the economic shock could still be devastating on a country that is home to the highest number world’s poor. The argument is that, if in other climes where the government is spending more as fiscal stimulus, yet the economy is not spared from the effect of the pandemic, how much more Nigeria, that is spending less.

For example, the US economy recorded its biggest economic contraction since the great depression, shrinking at an annual rate of 32.9 percent, according to the Bureau of Economic Analysis (BEA), the agency that publishes the data, while personal consumption declined by 34.6 percent. Some 1.43 million additional US citizens have also filed for jobless claims, pushing unemployment figures in the country up. A similar decline in output was seen in Germany after the Western European country’s www.businessday.ng

GDP shrank by 10 percent in Q2. “Nigeria’s fiscal and monetary policy response has been modest by the standards of comparable countries, making it harder for the country to avoid recession,” the World Bank said in the report titled ‘Nigeria in Times of COVID-19: Laying Foundations for a Strong Recovery’. Years of poor fiscal discipline have made the Nigerian economy even more vulnerable to the crisis. Even before the pandemic, rising interest costs were crowding out crucial social and health

Jesmin Rahman, IMF mission chief to Nigeria igeria entered this crisis in a weak position. If we look at average real GDP growth in the last three years prior to the crisis, it was at 2%, roughly half the growth in peer countries and firmly below population growth. Inflation at 12% was roughly three times the average in peer countries. Let’s look at a couple of key macro balances; I have here consolidated fiscal deficit and current account deficit. When we compare these levels to how they were in 2014 which was the last time before Nigeria experienced a commodity shock, these balances were much worse last year. And what is more worrisome is how these deficits were financed. For example fiscal deficit was to a great degree financed through monitization or central bank borrowing, while current account deficit was financed was significantly finances through short term portfolio flows. In other words, Nigeria entered this crisis with low policy space as well as risky financing structure. So not surprisingly Nigeria has been hit-hard.

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Tuesday 04 August 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Monday 03 August, 2020

Top Gainers/Losers as at Monday 03 August, 2020 LOSERS

GAINERS Company

Company

Opening

Closing

Change

FLOURMILL

N17.05

N18.75

1.7

UACN

BUACEMENT

N39.4

N40.2

0.8

DANGSUGAR

GLAXOSMITH

N4.9

N5.3

0.4

CUSTODIAN

N22.5

N22.85

0.35

NEM

N1.5

N1.65

0.15

AIICO

GUARANTY NEIMETH

ASI (Points)

Opening

Closing

Change

N6.3

-0.7

N11.95

N11.5

-0.45

N5.5

N5.1

-0.4

VOLUME (Numbers)

N1.9

-0.1

VALUE (N billion)

N0.94

N0.85

-0.09

DEALS (Numbers)

MARKET CAP (N Trn)

24,766.12 4,718.00 86,481,739.00 1.309 12.919

Nigeria stock market gains 0.29% to start new week Soties by Iheanyi Nwachukwu

ig er ia’s stock market opened the new trading week on a positive note, gaining 0.29 percent or N32billion on Monday August 3. The rally was aided by Flour Mills (+9.97percent), BUA Cement (+2.03percent), GSK (+8.16percent), GTBank (+1.56percent), and Neimeth (+10percent). Market watchers had expected the outcome of more half-year (H1) 2020 results of listed companies to continue to spur market reactions. Flour Mills of Nigeria Plc, Nigeria’s leading integrated food business and agro-allied Group, which led the gainers list had announced its audited 2019/20 financial results, showing remarkable growths in all three key segments of Food, Agro-Allied and Sugar. Its proposed final dividend represents increase

of 17percent to N1.40 for every ordinary share of 50 kobo. The Nigerian Stock Exchange (NSE) All Share Index (ASI) and Market Capitalisation appreciated from 24,693.73 points and N12.882 trillion respectively to 24,766.12 points

and N12.919trillion. The negative year-to-date (Ytd) return moderated to -7.73percent. “We expect the market to continue to react to some of the earnings results that will be posted by other bellwether stocks in the coming

week”, Vetiva analysts had said in their August 3 note. In 4,718 deals, investors exchanged 186,481,739 units valued at N1.309billion. Transcorp, Custodian, GTBank, FBN Holdings and UBA were actively traded stocks.

Nigerian Breweries reports H1 revenue drop to N151bn …also profit dips to N5.7bn

he Board of Directors of Nigerian Breweries Plc released the Company’s results for the half-year (H1) period ended June 30, 2020. According to the brewer’s unaudited and provisional results filed with The Nigerian Stock Exchange (NSE), the Company revenue decreased to N152 billion for the period under review from a high of N170.2billion in H1 of 2019. Also, its Profit After Tax (PAT) of N5.7 billion in H1’20 decreased from N13.3billion in H1’19. The half-year results for

the 2020 financial year show a strong balance sheet for the Company despite several factors that negatively impacted on the Company’s operations – such as an increase in Excise Duty, a rise in inflation, an increase in VAT from 5percent to 7.5percent, as well as the impact of the coronavirus (Covid-19) pandemic on businesses worldwide. Despite these challenges, the Company’s financial position shows stability and sustained profitability. To support the fight against the Covid-19 pandemic, the Company, durwww.businessday.ng

ing the period under review, made various donations in cash and kind valued at about N531 million out of a phased commitment of N600 million to the Federal and State Governments’ Covid-19 Relief Funds. The Board of Directors commended the Company’s Management for its efforts

to mitigate the impact of the pandemic on the business, as well as the prudent management of its resources as reflected in a 7percent reduction in expenses incurred on marketing, distribution, and administration. The Board expressed confidence that the Company is well-positioned to continue to deliver return on investment to Shareholders. According to the Board, the Company’s priority during this period “remains ensuring the health, safety and welfare of employees, customers and partners.”

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Global market indicators FTSE 100 Index 6,032.85GBP +135.09+2.29%

Nikkei 225 22,195.38JPY +485.38+2.24%

S&P 500 Index 3,297.92USD +26.80+0.82%

Deutsche Boerse AG German Stock Index DAX 12,646.98EUR +333.62+2.71%

Generic 1st ‘DM’ Future 26,577.00USD +258.00+0.98%

Shanghai Stock Exchange Composite Index 3,367.97CNY +57.96+1.75%

Flour Mills finishes year strong with record 184% profit growth

lour Mills of Nigeria Plc, Nigeria’s leading integrated food business and agroallied Group, on Monday August 3 announced its audited 2019/20 financial results, showing remarkable growths in all three key segments of Food, Agro-Allied and Sugar. The results The Group’s revenues grew by 9 percent year-on-year (YoY) to N574 billion. Profit Before Tax (PBT) increased by 72percent (YoY) to N17.5 billion, whereas Profit After Tax increased by 184percent (YoY) to N11.4 billion. Key highlights of the result showed Group Revenues was N574 billion, compared to N527 billion in 2018/19 Full year (9percent YoY growth); Profit Before Tax was N17.5 billion, compared to N10.2 billion in 2018/2019 (72percent YoY growth); Profit After Tax was N11.4 billion with a 184percent YoY growth. Proposed final dividend represents increase of 17percent to N1.40 for every ordinary share of 50 kobo. This is subject to shareholders’ approval at the company’s AGM. Operational review Despite prevailing economic headwinds and the

difficult operating terrain of Apapa, the Group had a prosperous and successful year. In line with management’s strategy to continue to stimulate organic growth in all segments of the business, Agro-Allied division reached profitability in 2019/20 behind the consistent and focused investments that have been made in this locally sourced segment over the last few years. The Agroallied segments saw strong profit growth in Oils and Fats and Proteins with Gross Profits more than doubling in both segments on an annual basis. Our Food business recorded accelerated growths within the business-to-consumer (B2C) segments in line with projections, as our focus to improve customer experience saw the introduction of a range of new products and our strategic marketing and promotional activities to win over new market segments yielded the desired result. Management speaks Commenting on the result, Paul Gbededo, the Group Managing Director, said: “The 2019/20 financial year was a remarkable year for our Group and I am really pleased with the result.

Notore grows revenue by 6% as operating income rises to N3.8bn

eading fertilizer and agro-allied company in Africa, Notore Chemical Industries Plc, has posted a 6 percent revenue growth, showing gross revenue of N17.4 billion and operating income of N3.8 billion for the nine months ended June 30, 2020. The company disclosed this in its unaudited third-quarter (Q3) 2020 financial results. In a statement, it said, “There has been good progress with the on-going Turn Around Maintenance (TAM) programme on the existing plant. Significant increases in production outputs and revenues are projected after TAM is completed at the end of December 2020 as expected.” Giving further breakdown of its results, the company said, “The gross revenue stands at N17.42 billion, compared to N16.49 billion in Q3 2019 [6 percent year-on-year (YoY) growth], representing a mod@Businessdayng

est increase in production output and sales, while operating income is N3.79 billion, compared to N3.34 billion in Q3 2019 (an increase by 13 percent YoY) driven largely by increases in other income. It noted that its debt service cost stood at N11.89 billion, compared to N10.45 billion in Q3 2019 (14percent YoY growth), due to additional term borrowing to finance the TAM programme and the impact of Naira devaluation on foreign currency denominated loans. It continued: “Notore’s gradual revenue growth is attributable to some improvements in Plant reliability derived from the on-going Turn-Around Maintenance (TAM) programme, which has begun to impact positively on Plant operations, resulting in some modest increases in production volumes and production on-stream days during the period.

BUSINESS DAY

Tuesday 04 August 2020

POLITICS & POLICY Edo 2020: Igarra Kingdom monarch predicts victory for Obaseki …As Otaru of Auchi tasks Ize-Iyamu on fulfillment of electoral promises IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

ba Emmanuel Saik i, the traditional ruler of Igarra Kingdom in Akoko-Edo Local Government Area of Edo State, has said the chances of Governor Obaseki winning the September 19 election were high. The Oba made the remark on Monday when the governor led other members of the PDP campaign team on a courtesy visit to the traditional rulers from the various clans at Igarra, the administrative headquarter of Akoko-Edo Local Government Area. Oba Saiki, who expressed concern over electoral violence, urged politicians to eschew violence and ensure a peaceful election. “We know that you will win. We have said no to electoral violence. We wish to advise our politicians to shun electoral violence because it does not pay,” he said. He however, lauded the governor for taking proactive steps in curtailing the spread of coronavirus (Covid-19) pandemic. Earlier, Obaseki had solicited support and prayers to emerge victorious in the election in order to build on numerous achievements. “Your prayers since the past four years Your Highnesses, brought about radical revolution in my administration. You will not be disappointed. I want to assure you that we will always be there for you,” he said.

Godwin Obaseki

Osagie Ize-Iyamu

Meanwhile, the Otaru of Auchi, Aliru Momoh Ikelebe III has advised the All Progressives Congress (APC) governorship candidate, Osagie Ize-Iyamu to keep to his promises to the people of the state if he emerges victorious in the September 19 governorship election. Otaru gave the advice when the governorship candidate, his running mate, Gani Audu and other leaders of the APC paid the traditional ruler homage as part of the Eidel-Kabir celebrations and officially deliver

copies of his SIMPLE agenda manifesto at the weekend in Auchi. The Auchi monarch who is also the Vice-Chairman of the Edo State Council of Traditional Rulers noted that truth and justice are important values that leaders must display to bring peace and development to his people. While commending the APC candidate and his running mate for the documentation of his promises in the SIMPLE agenda manifesto, however, recounted some of

the contributions of Gani Audu, as Local Council Chairman. He therefore, offered prayers and blessings for the candidate. Earlier, the APC governorship candidate, Osagie Ize-Iyamu described the Otaru as a forward-thinking ruler with great love for his people. Ize-Iyamu said as one of the foremost Islamic traditional rulers in the country, the Otaru of Auchi holds an important position in Edo State, hence his visit to felicitate with him during Sallah and formally inform him of his governorship bid. The governorship candidate, who officially delivered copies of his SIMPLE agenda manifesto to the monarch, however, lamented the state government’s failure to take maximum advantage of the solid minerals deposited in Auchi, and control rising insecurity that has scared away investments. He assured the ruler that if elected as governor, he will tackle the challenge of security and the erosion problems in Auchi kingdom. The Otaru was joined by other traditional rulers which include Ali Suleiman, the Ogeagah of Three Ibies and prominent Islamic leaders such as the Sadiq of Auchi, Saliu Ahmed, and Sani Jimoh, Chairman of the Muslim support group for the APC Campaign. APC leaders on Ize-Iyamu’s entourage include, Lawrence Okah, Patrick Obahiagbon, Lucky James, Olusola Oke (SAN), and former trade union leader, Peter Esele.

AAC candidate - INEC Edo 2020: Ize-Iyamu destroys his campaign with Ondo 2020:We didn’t substitute (G) series, signed by the National Chairman and National Secretary of the Political Party, declaration to follow Oshiomhole steps - PDP JAMES KWEN, Abuja are uploaded to the Commission’s prescribed JAMES KWEN, Abuja

he People’s Democratic Party National Campaign Council (PDPNCC) for Edo Governorship Election said the declaration by the All Progressives Congress (APC) Candidate, Osagie Ize-Iyamu that he will follow the footprint of the sacked APC National Chairman, Adams Oshiomhole has destroyed his own campaign in his pipe dream of becoming the governor of Edo State. The Campaign Council asserted that such comment is a direct insult to the sensibilities of the people of Edo State, who suffered untold deprivation from the massive treasury looting, trampling of human rights, disrespect for traditional institution and suppression of dissenting voices that characterised Oshiomhole’s eight-year rule as governor of Edo State. Kola Ologbondiyan, PDP National Publicity Secretary and Secretary of Publicity SubCommittee, PDP National Campaign Council for Edo Governorship Election made this assertion at press conference in Abuja on Monday. Ologbondiyan said it was laughable that after much orchestration, Ize-Iyamu has abandoned his plagiarised SIMPLE Agenda, (which, in any case, he had no capacity to execute) to follow Oshiomhole’s detestable “go and die” policy and agenda of falsehood, treasury looting, injecting of confusion and disregard for values, welfare and sensibilities of the people. According to him, Edo people already understood Oshiomhole’s footprint as the antics of a self-confessed liar, who has admitted that he had no scruples spreading falsehood in the public to achieve selfish objectives.

He stated that Oshiomhole’s footprint as the governor of Edo State includes intimidation of widows, alleged suppression of personal freedom of citizens, entrenchment of corruption and unbridled treasury looting, for which the Edo people have been demanding his prosecution by the Economic and Financial Crimes Commission (EFCC). The APC Spokesman said, that is the footprint Ize-Iyamu said he would be following; the style of an individual who is always associated with engendering confusion, quarreling, disagreements and disunity. “Nigerians can recall how Oshiomhole’s National Chairmanship of the APC destroyed the party as well as how his leadership of the Nigeria Labour Congress (NLC) led to bitter disagreements and divisions in the labour front. “Our party’s national campaign is however not amazed that Ize-iyamu, having become overburdened by reputation issues, surrendered the APC candidacy to another discredited individual, who was suspended by his kinsmen at his ward and disgracefully kicked out as the National Chairman of his party. “Given this sad declaration to continue where Oshiomhole stopped, Ize-Iyamu has shown to the people of Edo state and Nigerians in general that he has no credible principles but only seeks to hijack governance for selfish purposes. “With a character like Oshiomhole as the face of election campaign for Ize-Iyamu, who had also been exposed by the former APC leader as a treasury looter, acid bather and person of questionable character, it is clear that men of goodwill in Edo State have deserted the APC and its candidate.

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he Independent National Electoral Commission (INEC) Monday said contrary to some speculations, the Commission did not substitute the name of any aspirant or candidate, particularly that of the African Action Congress (AAC) in the October 10 Ondo governorship election. Festus Okoye, INEC National Commissioner and Chairman, Information and Voter Education Committee in a statement said the Commission received only one submission from the AAC through its dedicated online portal for candidate nomination. According to Okoye, there was no human interface and the names uploaded on the portal by the political parties were the same names published, adding that the Commission only received the names of candidates and running mates from the National Headquarters of Political Parties, duly signed by both the National Chairman and National Secretary. He explained that by the Supplementary Regulations and Guidelines for Activities of Political Parties issued by the Commission on 9th June 2020, the National Chairmen and National Secretaries of Political Parties as contained in the Commission’s records shall be issued access codes for the electronic submission, withdrawal and substitution of names and particulars of their candidates as elected at party primaries monitored by the Commission. “The political parties shall use the Access Codes provided by the Commission to upload the names and particulars of their candidates based on the prescribed Forms EC9 (formerly EC CF 001) and the appropriate Form EC9 (A) – (G) series (formerly CF 002) as provided on the Commission’s website. “The Completed forms EC9 and EC9 (A) –

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portal along with the relevant covering letter addressed to the Chairman of the Commission. “The Commission does not deal directly with aspirants, candidates or State Branches of Political Parties in matters relating to the nomination, submission and substitution of candidates of political parties as that is the exclusive preserve of the Political Parties as represented by the National Chairman and National Secretary. The Commission duly published the names of the Governorship and Deputy Governorship candidates as submitted by the National Chairman and Secretary of the African Action Congress (AAC). “Aspirants, candidates and State Branches of Political Parties with issues or challenges relating to their nominated candidates should approach and resolve such issues with the National Chairmen and Secretaries of their respective political parties,” Okoye instructed. The INEC Chief Spokesman also stated that: “On Friday 31st July 2020, the Independent National Electoral Commission (INEC) published the Provisional List of Candidates for the Ondo State Governorship Election scheduled for 10th October 2020 in its State Office in Akure and also uploaded same to its website and social media platforms. “The list contains the names of the Governorship and Deputy Governorship candidates submitted by 17 political parties, including the African Action Congress (AAC) at the close of nomination on 28th July 2020. However, one of the aspirants in the primaries of the party accused the Commission of substituting his name as the rightful Governorship candidate of the party, while another aspirant also claimed that the Commission substituted his Deputy Governorship candidate”.

@Businessdayng

Tuesday 04 August 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Microsoft to press on with TikTok deal talks after call with Donald Trump

Tech group says potential takeover would include app’s US, Canadian and Australian operations Hannah Murphy in San Francisco and Yuan Yang in Beijing

icrosoft has said it will press ahead with talks to buy TikTok’s US operations from the video app’s Chinese owner ByteDance despite the reservations of Donald Trump, following a conversation between chief executive Satya Nadella and the US president. The US technology group also revealed that the potential transaction would include TikTok’s business in Canada and its Australia and New Zealand operations, amid growing scrutiny of the app globally including by Australian officials. Zhang Yiming, founder of ByteDance, confirmed it was in “preliminary discussions” with a tech company in an internal letter to staff on Monday, but did not identify the suitor and said the “end solution” was unclear. Mr Zhang also confirmed that the Committee on Foreign Investment in the United States, the US Treasuryled body that would have to approve a deal, had ordered ByteDance to sell TikTok’s US operations. Microsoft said in a statement on Sunday that it was “committed to acquiring TikTok subject to a complete security review”. It added it “fully appreciates the importance of addressing” Mr Trump’s concerns. The president said on Friday that he intended to ban the app on national security grounds and that a purchase by any US company, including Microsoft, would not be

Satya Nadella, Microsoft chief executive, spoke with Donald Trump after the US president said he did not want the company to acquire TikTok © AP

allowed. The Trump administration has repeatedly raised concerns that Chinese ownership of TikTok could put the personal information of 100m American users into the hands of the Chinese government. The statement, the first by Microsoft since it emerged the company has been in discussions with ByteDance, indicated that Mr Trump may hold off banning the app while the talks continue. Microsoft added it would “move quickly to pursue discussions” with a view to completing them by September 15 at the latest. It said it would ensure that “all

private data of TikTok’s American users is transferred to and remains in the United States”, and would make sure the data are deleted from servers outside the country after being transferred. Microsoft said it had already notified Cfius of its interest in buying the TikTok service. American investors may be able to take minority stakes as part of the deal, it said. It was unclear how exactly TikTok would divest its US arm from its other European and Asian operations. Canada, Australia and New Zealand are part of TikTok’s US business unit, according to two people with knowledge of the situation.

Last month, Scott Morrison, Australia’s prime minister, said the government was closely monitoring TikTok given concerns over its data gathering and security. China’s foreign ministry said on Monday the US decision “exposes the US’s typical double standards in protecting fairness and freedom, and violates the WTO principles of openness, transparency and nondiscrimination”. A Microsoft-TikTok tie-up would allow the US tech company, which has a limited presence in social media, to enter a new market dominated by rivals such as Facebook, Google’s YouTube and Twitter.

The two sides have been discussing a transaction over the past few weeks, according to multiple people involved, with Microsoft president Brad Smith visiting officials in Washington to see if a takeover would assuage the US government’s concerns. But the talks were thrown into uncertainty on Friday after Mr Trump vowed to ban the app, saying: “We are not an M&A country.” Some, including ByteDance executives, have said they believe Mr Trump’s intervention was a negotiating tactic intended to compel the Chinese group to sell the US business to Microsoft at a lower price than it had been hoping for. Meanwhile, several Republican senators have come out publicly in favour of an acquisition, including Marco Rubio, the Republican chairman of the Senate intelligence committee and a known China hawk. Mr Rubio said on Twitter on Sunday that if the company and its data were bought and “secured by a trusted US company”, that would be a “positive [and] acceptable outcome”. ByteDance did not comment on the Microsoft deal but took a swipe at Facebook, accusing the company of “plagiarism and smears” against it. In a statement posted on Sunday night on its news aggregator app Jinri Toutiao, ByteDance said it would “not stop increasing our investment into all our global markets”. TikTok, the White House and the US Treasury did not respond to requests for comment. Additional reporting by Aime Williams in Washington DC, Miles Kruppa in San Francisco and Jamie Smyth in Sydney

US economy in peril as unemployment payments expire Talks on stimulus package to resume on Monday with political parties still far apart James Politi and Aime Williams in Washington

S lawmakers are facing increasingly shrill warnings over the dangers to the economy as Congress and the White House struggle to reach a deal on a new fiscal stimulus package, leaving millions of Americans without vital safety net payments and risking not just the US but also the global recovery. Mark Meadows, White House chief of staff, on Sunday said the two sides were still far apart, despite progress over the weekend following the expiry of emergency unemployment benefits. The impasse on Capitol Hill has echoes of other US budgetary stand-offs in the past, which were also marked by moments of political brinkmanship, but with much higher stakes given the recession triggered by the coronavirus pandemic. “We still have a long ways to go,” Mr Meadows said on CBS’s Face the Nation. Mr Meadows, who has

The failure to reach a compromise by July 31 has left more than 25m Americans facing sudden austerity, after the expiration of benefits worth $600 a week © Stefani Reynolds/Bloomberg

been leading talks on the Trump administration side with Steven Mnuchin, Treasury secretary, said a session on Saturday had gone well but he was “not optimistic” that there would be an agreement “in the very near term”. The failure to reach a compromise by July 31 has left more than 25m people in the world’s largest economy grappling with sudden www.businessday.ng

austerity, after the expiration of benefits worth $600 a week. Democrats have wanted to renew them at the same level until early 2021, but Republicans have resisted, initially arguing that new stimulus was not necessary and then pushing for much smaller payments, making it one of the biggest and most economically consequential sticking points in the talks.

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The current stand-off stands in sharp contrast to March and April, when the White House and Congress rapidly converged on $3tn in fiscal support to sustain the economy during the first lockdowns, helping prop up US and global markets. Now the lack of a deal has caused anxiety at the Federal Reserve, whose chair, Jay Powell, has repeatedly nudged Congress to offer more support for the economy. The median forecast of top US central bank officials is for the US economy to shrink by 6.5 per cent this year, but the downturn could be deeper if stimulus is withdrawn. A stunted US recovery would also negatively affect the global economy, which is expected to shrink by 4.9 per cent this year according to the IMF. “Globally, other economies have benefited from their own regional and domestic fiscal and monetary policies more than from spillovers from the US,” said Douglas Rediker, a former senior Treasury official in the Obama administration but “US aggressive leadership was important as a signal, as much as it was @Businessdayng

to provide indirect global stimulus”. US economists have warned that unless a deal is reached on unemployment benefits, there could be additional job losses at businesses hit by a drop in consumer spending, further widening the human suffering. “People are going to get evicted, they are going to be unable to feed their families,” said Martha Gimbel, the manager of economic research at Schmidt Futures. “Think about the massive amount of money that has been sucked out of this economy, the government should desperately be trying to put it back in,” she added. On Sunday, Mr Mnuchin said he remained hopeful for a deal, with a new round of negotiations expected on Monday. “The president wants us to get a deal done quickly because this is important to the American people,” he told ABC’s This Week. “Across both parties, there are different things that are very contentious,” he added, although he said there were also areas of agreement, such as on extending an aid programme for small businesses.

Tuesday 04 August 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Dollar starts August on high note after worst month since 2010 Global stocks rise after upbeat earnings reports and positive economic data Philip Stafford and Harry Dempsey in London and Hudson Lockett in Hong Kong

he US dollar climbed from its lowest level in two years and global stocks rose after upbeat economic reports bolstered market sentiment, along with signs that the corporate earnings season was not as bleak as forecast. The dollar index , which measures the currency against six peers, rose 0.4 per cent on Monday, after tumbling 4 per cent in July in its worst monthly fall since 2010. L ee Hardman, cur renc y analyst at MUFG, said factors that had pressured the dollar last month were still at play but that the intensity of the recent moves meant investors would need to reassess whether it was fairly priced against its major peers. The pound and euro fell 0.5 per cent to $1.305 and 0.6 per cent to $1.175, respectively. “The ongoing fall in US real yields and rising US political uncertainty have played a role in helping to weaken the US dollar,” he said. “While those fundamental developments remain negative for the US dollar, we have to take into account that it has already moved a long way in short period of time.”

A small rebound for the US currency came as equity investors took heart from a slew of better-than-feared corporate earnings. The S&P 500 was up 0.7 per cent at lunchtime in New York and European indices rallied on improving economic data from Europe and China. The FTSE 100 index rose 2.3 per cent while the Dax 30 in Frankfurt climbed 2.7 per cent and the CAC 40 index rose 1.9 per cent in Paris. “Nearly 80 per cent of companies are beating expecta-

tions, with the median company beating by 16 per cent,” compared with the usual average of 3 per cent, said Mark Haefele, chief investment officer at UBS Global Wealth Management. Flare-ups of the epidemic in some regions did not hurt the improving trend of the [Chinese] manufacturing economy Wang Zhe, Caixin Insight Group The strong gains for the export-orientated Dax came as the Caixin purchasing managers’ index, a private gauge of

operating conditions in China’s manufacturing sector, showed the biggest improvement in almost a decade. Firmer customer demand for China’s manufacturing products also buoyed equities there, with the CSI 300 of Shanghai and Shenzhen-listed stocks adding 1.6 per cent. “Overall, flare-ups of the epidemic in some regions did not hurt the improving trend of the manufacturing economy, which continued to recover as more epidemic control measures were lifted,” said Wang

Zhe, senior economist at Caixin Insight Group. A separate survey by IHS Markit showed activity in Spain’s and Italy’s manufacturing sectors resumed growing last month. Indications of rising demand helped boost crude oil prices. Futures on Brent, the international benchmark, rose 1.7 per cent to $44.23 while WTI, the US marker, rose 2.1 per cent to $41.11 Other stock exchanges in the Asia-Pacific region were mixed. Japan’s benchmark Topix index closed up 1.8 per cent, while Australia’s S&P/ASX 200 was little changed. Hong Kong ’s Hang Seng index fell 0.6 per cent in its first trading session since the territory’s leader, Carrie Lam, on Friday postponed elections for the city’s legislature, drawing condemnation from Washington. A sharp increase in loan-loss provisions and a plunge in second-quarter profit at HSBC, whose Hong Konglisted shares dropped more than 4 per cent, also weighed on the benchmark. The price of gold briefly rose as much as 0.7 per cent to a fresh record high of $1,984.66 per troy ounce on Monday morning but pulled back to be down 0.4 per cent on the day.

China tech stocks rally as investors bet on decoupling with US Washington’s threat to ban Chinese apps prompts traders to focus on domestic names Hudson Lockett in Hong Kong

hinese tech stocks jumped despite Washington’s threat to ban apps including TikTok, as traders instead focused on buying up names that could benefit from a decoupling of the world’s two biggest economies. Shenzhen’s tech-focused ChiNext index rose 2.6 per cent on Monday while the Star 50 index of start-ups listed on Shanghai’s Star board soared 7.3 per cent. Those indices’ gains were well above the 1.6 per cent rise for the broader CSI 300 of largecap stocks listed in both cities. The bullish hue in China’s markets came even as Mike Pompeo, US secretary of state, warned on Sunday that President Donald Trump would take action in the coming days against Chinese apps. Those include ByteDance’s TikTok and Tencent’s WeChat, which the US claims are “feeding data

directly to the Chinese Communist party, their national security apparatus”. US software group Microsoft is in talks to buy the American operations of TikTok, despite Mr Trump’s reservations. Brokers said Chinese traders were lining up bets on local companies that they believe would enjoy greater support from Beijing if the US and China www.businessday.ng

continued down a path of economic decoupling. Expectations of beneficial policies and other forms of official backing in response to US pressure had been a “shot in the arm” for Chinese tech stocks, said Louis Tse, managing director of VC Brokerage in Hong Kong. Strategists added that these hopes had been fuelled by Chi-

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nese president Xi Jinping’s recent announcement of a new policy drive known as “dual circulation”. The policy focuses on making domestic consumption China’s economic growth engine as well as securing supply chains in important industries such as technology. “Markets see the opportunity of the domestic market and that’s why they think even though China-US tensions will remain in the long term . . . the Chinese economy can still manage,” said Ken Cheung, a strategist with Mizuho Bank. The assumption here is that there’s going to be dislocation in the tech part of the supply chain Shanghai-based stock broker Mr Xi’s policy drive is partly to counter vulnerabilities in the export sector due to tariffs imposed on Chinese goods by the Trump administration. Analysts point out that efforts to reorient the Chinese economy around domestic consumption are also likely to result in lower @Businessdayng

demand for imported goods. “You must contract imports if you are going to see lower exports and still want to maintain a trade surplus,” said Michael Every, global strategist at Rabobank. The Star 50 index tracking Shanghai’s tech-oriented Star board, which launched last year, has added more than 60 per cent in 2020 so far. Among its top gainers on Monday were Raytron and Beijing Piesat, makers of electronic circuits and satellite imaging software, respectively. Both closed the day up more than 15 per cent. “The assumption here is that there’s going to be dislocation in the tech part of the supply chain,” said a director at one Shanghai-based broker, who added that Chinese state media’s use of “dual circulation” had picked up visibly in the last week. Local companies, he said, “will have funding and the products will have demand because the policy is clearly to limit dependence on foreign companies”.

Thebigread

President Emmanuel Macron of France has pledged to bring home the manufacture of paracetamol within three years © Amit Dave/Reuters.

BUSINESS DAY Tuesday 04 August 2020 www.businessday.ng

Countries that appeared to have halted the virus, such as Japan, are now having to deal with a second wave © Eugene Hoshiko/AP.

Pandemic puts countries’ A dangerous moment for resilience to the test the world economy

he pandemic has forced companies and governments to relearn some basic lessons. In this case, the three “Rs” are resilience, reshoring and repurposing. Institutions everywhere are examining how prepared they are for the worst. The answer for all has been: not very. The early scramble for national supplies of personal protective equipment as governments realised they did not have enough to cope with the scale of the health emergency was followed by fears over a shortage of critical medicines and key ingredients. The current focus is on securing access to a potential vaccine, with the US government on Friday agreeing a $2.1bn deal with Sanofi and GlaxoSmithKline to buy 100m doses. More than any other health or economic crisis in recent years, coronavirus has exposed the developed world’s reliance on imports and the fragility of long global supply chains. Self-sufficiency is the new mantra. The UK government has launched Project Defend to ensure the country retains access to critical goods while diversifying its trading relationships. In France, President Emmanuel Macron is exploring bringing home the manufacture of key medicines and has pledged to reshore paracetamol within three years. The EU’s €750bn recovery fund includes a requirement for national plans to reinforce the bloc’s economic and social resilience. Companies, too, are having to reconsider their supply chains and are look-

”

Companies, too, are having to reconsider their supply chains and are looking to shift their models from “just in time” to “just in case”

ing to shift their models from “just in time” to “just in case”. These responses are understandable. There is nothing wrong with governments wanting to ensure that they have the ability to protect their citizens in a national emergency. Long-term resilience planning, including the monitoring of supply chains and inventories, is a legitimate ambition for governments, as well as companies. Healthcare is a case in point. As the manufacture of the active pharmaceutical ingredients (APIs) for many drugs has shifted to lower-cost Asian countries, so Europe’s dependency on imports has increased. Recent estimates suggest anywhere from 50 to 80 per cent of APIs for so-called small molecule drugs in Europe were sourced from India and China. In the UK, academics have called on the government to re-evaluate the case to encourage greater domestic manufacture of critical medicines. Policymakers, however, should tread with caution. While it makes sense for a government to ensure it has the capacity to produce critical medicines or goods, or the ability to source them quickly from allies, this should not be at the greater price of globalisation. The risk is that countries’ responses to the pandemic lead to a rush towards protectionism. There are reasons to be sceptical of the merits of Mr Macron’s proposal to reshore paracetamol production to France. This is a commodity that is produced more cheaply in Asia. To make the plan succeed, the government would have to offer subsidies to domestic companies to manufacture the drug’s APIs in France. Sanofi and UPSA, which sell about 90 per cent of the paracetamol in the country, currently source their APIs from the US, China and India. Governments should be wary of adopting self-sufficiency as the overarching aim of new policies. Even domestic supply chains are at risk of disruption. Businesses, too, require the economies of scale provided by global markets to help generate the capital needed to invest in innovation. True resilience will only come from true diversification. This is something policymakers should bear in mind as they seek to rebuild their economies after the pandemic.

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...Governments must resist the urge towards protectionism

...Rise in European cases shows there is no respite from the pandemic

he world economy is in a dangerous place. Attempts to restart activity, premature or not, have led to a rise in coronavirus cases, particularly in Europe where the pandemic previously looked under control. Relief from a potential vaccine, if any works, seems months away. Meanwhile, central banks have little capacity to respond to a further downturn. Governments are already fretting about the debt they incurred by keeping economies in deep freeze through the outbreak’s first stage. Whether in Hong Kong, Australia, Japan, Israel or Germany, countries that appeared to have halted the spread of the virus are now having to deal with either a second wave nationally or sporadic regional outbreaks. Only the relatively isolated archipelago of New Zealand, which has managed to suppress the virus internally and cut itself off from the rest of the world, has reached something approaching full normality. This was the week when hopes for a short lockdown followed by a swift resumption of economic activity were dashed once and for all. The damage done already has been substantial. US growth figures released on Thursday pointed to the highest recorded decline in activity in the world’s largest economy. The 32.9 per cent annualised fall in national income in the second quarter was three times the previous postwar record. In a possible attempt at a distraction, President Donald Trump chose that moment to tweet that the US may have to delay November’s presidential election because of unreliable postal ballots. Europe is suffering, too. Its biggest economy, Germany, reported a 10.1 per cent fall in gross domestic product (not annualised) during the same period — the fastest since the Federal Republic started keeping records in 1970. Spain and France fared even worse, according to figures on Friday. As the Federal Reserve’s open market committee observed in its interest rate decision on Wednesday, the prognosis for the economy now depends on progress against the virus. Even where countries attempt to reopen economies, the new normal will still involve social distancing measures and cautious consumers. Cheap money will do little to stimulate consumption and investment when the prospect of further restrictions being imposed at any time contributes to the uncertainty facing businesses and

Lessons have been learnt in how to treat the virus and shield the most vulnerable. The current rise in cases in Europe has been mostly attributed to the young who are more comfortable with travelling and enjoying their freedoms but are less susceptible to Covid-19’s worst effects shoppers alike. This suggests governments will have to keep borrowing and spending. A second bout of lockdowns will, hopefully, be less damaging than the first, but will still need financial support. The virus struggles to spread outside and many companies have better worked out ways to keep operating while maintaining enhanced precautions. City centres in Europe still look like ghost towns but shops in many outlying districts, closer to where people live, are thriving without causing an exponential surge in cases. Lessons have been learnt in how to treat the virus and shield the most vulnerable. The current rise in cases in Europe has been mostly attributed to the young who are more comfortable with travelling and enjoying their freedoms but are less susceptible to Covid-19’s worst effects. While the pandemic has not been beaten, the healthcare response is making progress. Lockdowns, however, have slowed but not stopped coronavirus. A vaccine or other medical breakthroughs will be necessary before economies can fully recover. Until then, governments will face pressure to fund the incomes of those who isolate and help companies that have seen revenues collapse through no fault of their own. The fight against coronavirus is debilitating but it is far from over.

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