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EXPOSED: The sleazy face of N306/$

Inside Nigeria’s FX racket where faceless agents pocket over N32bn annually

LOLADE AKINMURELE usinessDay has unravelled what could very well be the biggest FX racket since the days of military dictator Sani Abacha.

Investigations reveal that faceless agents in Nigeria are exploiting the country’s multiple exchange rates to devastating effect and they allegedly have the backing of regulators. BusinessDay has learnt

that these agents, handpicked by the Central Bank for oil and non-oil exporters who need naira to settle domestic administrative obligations from workers’ salaries to overhead costs, could be making exchange rate gains of over N32 bil-

lion annually. Here’s how the racket plays out. When an exporter notifies the CBN of intentions to buy naira, the regulator recommends an agent who will manage Continues on page 45

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NGUS DEC 24 2019 366.24

Inside 19 Experts on 2019

As the 2019 elections approach, BusinessDay brings you ‘19 for 2019’, where 19 experts tackle issues that will shape Nigeria for the next generation. Today, Higo Aigboje shares his outlook for the stock market in 2019 See Page 2

GAC resolves rift between Ambode, Lagos lawmakers P. A3 Atiku hails endorsement by Northern elders, Middle Belt Forum, others P. A8

New minimum wage means more woes for cash-strapped Nigerian states DAVID IBIDAPO

ith the newly approved national minimum wage of N27,000, eight Nigerian states could be devoting their entire internally generated revenue to the payment of workers’ salaries alone.

The Federal Government of Nigeria approved the new minimum wage for state governments, which is 50 percent higher than the previous N18,000, in response to the agitation of the labour union since 2018, but said it would pay its workers Continues on page 45

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Outlook for the stock market in 2019 L-R: Ahmed Bobboi, CEO, PEF; representative of Babatunde Fowler, chairman, FIRS; Mohammed Sani Omolori, clerk to the National Assembly represented by Umar Mohammed, PS Human Resources, House of Reps; Isa Ibrahim, DG, NITDA, represented by Usman Abdullahi, director IT Infrastructure Solution, NITDA; Umaru Abdul Mutallab, former chairman, First Bank plc; Mary Uduk, DG, SEC; Umaru Kwairanga, special guest of honour; Yakubu Dogara, speaker House of Reps, represented by Pally Iriase, deputy chief whip; Usman Gur Mohammed, MD/CEO, TCN; Frank Aigbogun, publisher/CEO, BusinessDay Media Limited; Ahmed Lawan Kuru, MD/ CEO, AMCON, represented by Jude Nwauzor, head, corporate communications, and Yusuf Kazaure, MD/CEO, Galaxy Backbone, at the BusinessDay Excellence in Public Service Awards 2018 held at Yar’Adua Centre in Abuja. Pic by Tunde Adeniyi

Regulation allowing direct purchase of electricity from producers flounders 2 years on ... investments into 248MW of power supply stall ISAAC ANYAOGU

y May this year, it will be two years since Babatunde Fashola, minister of Power, Works and Housing, declared the eligible customer regulation which allows consumers of electricity above 2MW to buy power directly from generation companies, but many customers are yet to benefit

from the regulation. The sector regulator, the Nigerian Electricity Regulatory Commission (NERC), said in its latest quarterly report it received three new applications in the third quarter of 2018, apart from the 11 existing applications which were under ‘technical evaluation’. BusinessDay analysis shows that investments into a total of 248MW new capacity have stalled. This is half the

power Ikeja DisCo receives daily to power its franchise areas in parts of Lagos including Abule Egba, Akowonjo, Ikeja, Ikorodu, Oshodi and Shomolu. AccordingtoNERC,applications have stalled because applicants did not produce evidence of excess capacity that the plant can sell to the eligible customer beyond the already contracted

Continues on page 45

Inside details of alleged contract breach that might cost Nigeria 20.6% of foreign reserves DIPO OLADEHINDE

ess than 16 days from now, a British engineering company called Process and Industrial Developments Limited (P&ID) will be expecting to get a final order from a UK court to enforce an $8.9 billion arbitration award against Nigeria over a breach of contract. The award is roughly 20.6 percent of Nigeria’s entire foreign reserves currently standing at $43.2 billion. BusinessDay on June 7 last year reported how a United States District Court issued a default judgment affirming a $6.59 billion arbitral award against Nigerian government, plus $2.3 billion in interest, in a dispute that arose over a natural gas supply and processing agreement between it and Process and Industrial Developments Limited (P&ID). Recent development showed P&ID has now gone to a court in UK and may be seeking similar orders in other European countries to substantiate its claim. P&ID, represented by Marcus J. Green, Michael S. Kim and Josef M. Klazen of New York-based litigation boutique Kobre & Kim in Washington, on March 16,

2018 asked the District Court in the United States to enter an order pursuant to 9 U.S. Code Section 207, 9 U.S.C. & 207, confirming the final award and enter a judgment in its favour and against Nigeria and the Ministry of Petroleum Resources, including interest. P&ID sought costs and post-judgment compound interest, which was granted, and an order allowing the District Court retain jurisdiction over the case for any future proceedings that could be necessary to enforce the award or judgments that it could obtain in Nigeria. P&ID’s arguments P&ID submits that it entered a gas supply and processing agreement with Nigeria’s Ministry of Petroleum Resources in January 2010. Pursuant to the agreement, P&ID claims that it would build the necessary facilities and then refine natural gas into nonassociated natural gas for a period of 20 years. The natural gas would be used by Nigeria to power its electrical grid. The firm was to strip away heavy hydrocarbons known as Natural Gas Liquids (NGLs) in which P&ID would retain the NGLs as payment under the agreement. It said Nigeria was

to make sure that all necessary pipelines and related infrastructure were installed and that arrangements were made with agencies and third parties to make sure the supply of gas was met pursuant to the agreement. P&ID alleges that Nigeria failed to secure the agreed-upon quantity of gas and failed to complete the construction of the infrastructure. It alleges that as a result of Nigeria’s failure to comply with the agreement, it suffered a loss of 20 years’ worth of profits from the potential sale of NGLs. After series of failed negotiation attempts, P&ID commenced arbitration against Nigeria and the Ministry of Petroleum Resources in London. Nigerian government’s arguments Reacting to the US court ruling, the Attorney General of the Federation (AGF), Abubakar Malami, denied allegation of a $6.59 billion default judgment against Nigeria in the enforcement proceedings by P&ID. The AGF, however, said a foreign solicitor, Messrs Curtis Maller-Prevost, Colt & Mosle LLP, engaged by the Federal Government of Nigeria had filed processes in a United

Continues on page 45

HIGO AIGBOJE Aigboje is managing director at Capital Bancorp. With over 25 years in the financial service industry, Aigboje is a seasoned investment banker, stock broker and pension fund manager.

Aigboje spoke to BusinessDay about his outlook for the stock market and what to expect from the “big movers” post election. The outlook in a nutshell f the elections go well (and by well I mean, a successful and peaceful handover on May 29th, regardless of who comes in to power), it will reflect positively in the market somewhere in the second or third quarter this year. If whoever comes in can put in place policies that tackle our biggest issues, for example fuel subsidies and electricity tariffs, and if there is some traction, that is some positive, sustained movement in the right direction, then the market will do a lot better. If the incumbent wins, the stock market will do well because of political stability. I also suspect the incumbent will be forced to move on some issues that he has not moved on, such as fuel subsidies and electricity tariffs, among others. He

If the incumbent wins, the stock market will do well because of political stability may, to a large extent, start the process of eliminating subsidies, and addressing electricity tariffs so that the power sector can takeoff. He may also begin to look more aggressively at the issues around our ports. We could begin to see creative solutions to the bottleneck in Apapa. All this grounds my optimism. Provided of course that the oil price stays at a decent $50-$70 range or higher, the market

will do well this year. The big movers For most of the “big movers” (Dangote Cement, Guaranty Trust Bank, Access Bank, etc), it should be positive year, again, if we have smooth elections and the government can go about the business of infrastructure spend. In the last three years, the government didn’t have the money, the little they had was used to pay salaries. I anticipate they will focus more on infrastructure in the coming years. We know of several projects in the works like the second Niger Bridge, the Lagos-Ibadan rail, LagosIbadan express, and a few others. Of course, much of the money will come from continued borrowing. Currently, Nigeria’s reserves are $US 43billion, I’m also assuming that the incumbent wins, he will want to leave a legacy behind. To do this he is likely to run down the reserves. For example, he could take five billion dollars to put in infrastructure for a few signature projects. Some might argue that there is no point in having $43 bil-

I’m also assuming that the incumbent wins, he will want to leave a legacy behind. To do this he is likely to run down the reserves lion in reserve when your people are suffering, there’s no employment, etc. “Why not see what you can do to alleviate those problems?” People might say. Because part of what is suring up the reserves are the Eurobond borrowings, the current administration if re-elected, is likely to spend that money and leave someone else to worry about the consequences later on. Urgent reforms Fuel Subsidies and Electricity tariffs come to mind immediately when thinking about urgent reforms, and these are very difficult things to do. Perhaps even more utopian is the need to cut down the cost of governance. We also need to sell some of the assets that are wasting to help raise cash. If you have assets that are non performing, sell them! We are already doing some good work in the agricul-

The system is opaque. People buy at N305 and sell at N360. A convergence may lead to an initial devaluation but it will settle down tural sector and we need to continue. Lastly, let’s have a rate convergence. At N305/1USD, the Central bank converts for states and “special projects”. The system is opaque. People buy at N305 and sell at N360. A convergence may lead to an initial devaluation but it will settle down. We will be able to raise more money, pay salaries, and do more infrastructure projects. A convergence will give confidence to foreign investors. What’s happening in the United States It’s unlikely that the Federal Reserve will stick to its initial plan to hike rates three times this year because of concerns about domestic and global growth. Clearly this may slow down inflows to Nigeria. The funds that are Africa or emerging markets focused will have no choice but to come here. If our economic fundamentals and policies are improving then they will come. This year you will also see a renewed interest from PFAs, in other words local investors will start taking positions. So hopefully that kind of activity will help pick up some of the slack. Taking stock positions This is the time to take positions in the market. The market can still go down and it can also go up, but this is the time. That said, if you want to buy 1 million shares of Guaranty Trust Bank, buy it over time. Don’t buy it all at once. Some of the stocks that I’m positive about are Guaranty Trust Bank, Zenith Bank, United Bank for Africa, Access Bank, First Bank Holdings of Nigeria, Dangote Cement, Cement Company of Northern Nigeria, Nigerian Breweries, Guinness, and Nestlé. I think there’ll be some positive movement on these stocks this year.

Next on Wednesday Dr. Nonso Obikili, Chief Economist at BusinessDay writes on The Fiscal Challenge.

Monday 04 February 2019

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Monday 04 February 2019

BUSINESS DAY

Monday 04 February 2019

BUSINESS DAY

8 BUSINESS DAY NEWS Concern as NSC introduces annual registration fee for service providers at ports AMAKA ANAGOR-EWUZIE

he Nigerian Shippers’ Council (NSC) says it has perfected arrangement to commence registration of all service providers operating in the nation’s seaport with the aim of stepping up its regulatory functions. According to the Council, the registration, which is aimed at regulating the activities of the service providers, will ensure quality service delivery and eradication of quackery in the maritime industry, and will come at a fee. These service providers include shipping lines, freight forwarders and clearing agents, cargo consolidators, dry port operators, and inland container depot operators, haulage firms, off dock and seaport terminal operators, stevedoring companies and others. A breakdown of the registration fee released by NSC showed that shipping line agencies are expected to pay a registration fee of N100,000 per annum; cargo consolidators N20,000; dry port operators N50, 000; freight forwarders and clearing agents N10,000; haulage firms N10,000; inland container depot operators N50,000; off dock terminal operators N20,000; seaport terminal operators N100,000; shippers N1,000; shippers associations N5,000; stevedoring companies N20,000, and warehouse operators N20,000. Speaking at a day sensitisation workshop organised by the NSC in Lagos last week, tagged, ‘Registration of Port Service Providers: A Panacea for an Efficient Port System,’ Samuel Vontau, director, Legal Services of NSC, said the essence was to ensure the availability of adequate and standard services in the industry as well as ensuring reasonable profit for service providers. Vontau said the move would also enable the regulator to sufficiently protect indigenous operators from dominating Nigerian port business by foreign service providers. He said the exercise would help to address the presence of unauthorised individuals, and also assist government in its economic planning as it would help in making projections with some degree of certainty. “With this, financial projections will be made easily, as experts would easily know what the sector can generate from the types and numbers of businesses. Government will not only benefit financially, but security of lives and property will also be better managed as those entering and leaving the ports premises would already be known to security agencies,” he explained.

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Bauchi, Sokoto, three others led in Q3 2018 IGR growth BUNMI BAILEY

ut of Nigeria’s 36 states, Bauchi, Sokoto, Imo, Akwa Ibom and Ondo recorded the highest growth in Internally Generated Revenue (IGR) (year-on-year) in the third quarter of 2018, a BusinessDay analysis shows. Data from the National Bureau of Statistics (NBS) show that Bauchi, Sokoto, Imo, Akwa Ibom and Ondo achieved growth rates of 406.5 percent, 191.9 percent, 172.4 percent, 91.2 percent and 85 percent, respectively.

Conversely, the states with the biggest declines were Kano, Adamawa, Bayelsa, Kogi, Enugu with -54.7 percent, -44.9 percent, -25.9 percent, -20 percent, and -12.9 percent, respectively. Gbolahan Ologunro, an equity research analyst at Lagos-based CSL Stockbrokers, said the states with the fastest growth in IGR might have ensured that companies that don’t remit enough taxes had now been able to give exact or accurate tax returns though the use of technology. “They may have also

broadened their tax net by bringing in those that had been excluded from paying taxes before,” he said. He explained that more states now seek to grow their revenue internally rather than relying on financial assistance from the government,” Ologunro said on phone. States use IGR to provide social amenities such as provision of public schools, public health, public infrastructure, reducing poverty, and generating employment. Many of Nigeria’s states lack fiscal viability because they are unable to generate

enough financial resources to sustain their requirements. This makes such states perpetually dependent on allocations from the Federal Government. However, on a quarter– on-quarter basis, Sokoto, Kwara, Yobe, Akwa Ibom and Zamafara had the highest growth rates with 123.5 percent, 63.4 percent,60.4 percent, 34.7 percent and 33.8 percent, respectively. Ayodeji Ebo, MD, Afrinvest Securities Limited believes that the various tax awareness programmes in the country may have in-

creased states’ IGR and reduced their dependence on the Federation Account Allocation Committee (FAAC). “Also the use of technology has reduced the leakages in tax collection and maybe there have been some form of investments in those states that are attracting businesses there,” said Ebo. States with the lowest revenue growth rates were Cross River, Niger, Kano, Adamawa, Kaduna, Abia with -46.3 percent, -35.6 percent, -23.4 percent, -22.6 percent, -16.3 percent and -15.7 percent, respectively.

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A tribute to Professor Olufemi Williams Bashorun J.K Randle

or me the death of Professor Olufemi Williams was a huge shock. I was invited by phone on a Saturday morning: “Please come and see Prof urgently” only to be confronted by his lifeless corpse. He must have passed away during the night. In life as in death, he was a genius and an enigma. Or to be more precise, he was an enigma wrapped in a puzzle. Almost eighteen months after his demise, it is now time to accord him the decent burial to which he is entitled. Regardless, the puzzle lingers on. By his own admission, he was a late developer. It was not until he had

left CMS Grammar School, Lagos (1951/1952 set) and gained admission into University of Dublin, that he not only flourished, he soared like an eagle. Perhaps, as the youngest amongst his classmates he was overwhelmed by the calibre of: i.) Professor AdemolaSegun (Decd) ii.) Professor Osoba (Decd) iii.) Professor TunjiAdeleye iv.) Professor NosiruOjikutu (Decd) v.) Professor GboyegaJadesimi (Decd) vi.) Dr. SanyaSonuga vii.) Dr. AdebolaOyemade (Decd) viii.) Dr. OluyemisiKuforiji ix.) HRH Eze (Engr.) Benson Maduakoh (Decd) x.) Professor Gbajumo (Decd) xi.) Dr. Tunji Doherty (Decd) xii.) Chief Simeon Ojuri (Society Photographer) xiii.) Justice Sola Thomas (C.Judge Lagos State) (Decd) xiv.) Dr. B. Ayorinde xv.) Engr. OlawaleAyorinde xvi.) Prince (Engr.) Adenuga (Decd) After graduating from University of Dublin with distinction, he was rewarded with rare academic acco-

lades and superlative achievements in medicine and research, especially in pathology. On his first visit to apartheid South Africa he was designated “White”in the column for race in his entry visa! In the United States of America, he was a resident scholar at the prestigious National Institute of Health, Bethesda, Maryland. Professor Williams’ vast knowledge and arsenal of talents were not confined to medicine. When he ventured into business and investments, he did so with commendable gusto which earned him a bountiful harvest. Also, as the Executive Secretary of OAU (African Union), he performed brilliantly as a diplomat and administrator. Equally, as the Pioneer Provost of the Medical School, University of Calabar, he left behind a robust legacy of commitment to excellence which has remained untarnished. He was also a very brave man. A case in point was his diagnosis of the ailing President Muhammadu Buhari without the privilege of physical examination of the patient. His prognosis was as grave as it was forthright.

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On his first visit to apartheid South Africa he was designated “White”in the column for race in his entry visa!

Ironically, Professor Williams is gone and President Buhari is very much alive. Indeed, he is standing for re-election in two weeks’ time. Till the very end, Professor Williams would engage me in matters that involved deep knowledge of philosophy. His favourite topic was “U and Non–U” (You and Non – You) which he broke down into a digestible thesis that would translate into evidencebased theory – as human beings, we are irresistibly attracted to the very things we reject and abhor. I remain convinced that death was never an item on that agenda. In our discussions, no matter how intense, he never gave a hint that death was imminent especially as he had only just returned from the United States of America where his doctors had given him a clean bill of health and the encouragement to pursue with fresh vigour his dream to build the African Cancer Centre, in Lagos – as the first of its kind. The dream must not perish. May his soul rest in peace. Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

The Nigeria auto industry part I - The genesis

BAMBO A. ADEBOWALE

he global automotive industry is 130 years old. In 2017, some 73.5 million cars and 23.7m commercial vehicles were produced by 40 countries worldwide. About a billion vehicles are in use worldwide and total annual output of the industry is over $2 trillion. In Africa, the automotive industry plays a strategic and catalytic role in economic development. In South Africa, the auto industry contributes 7% of GDP and 14% of its foreign earnings. In Morocco, a new factory with assembly capability of nearly 410,000 vehicles annually was opened by Renault in 2012. Another factory by PSA Peugeot-Citroën, is expected to start production this year, with a starting capacity of 90 000 cars/year and a 200 000 cars/year in future. In the 25 years since restarting its automotive industry, the Egyptian automotive assembly business has grown from just three plants relying on imported components, to 16 businesses with 26 assembly lines, manufacturing nearly 100,000 units of passenger cars, light commercial vehicles, trucks, and buses annually- supported by 300 factories that produce most automotive components. In Nigeria, where 80% of the transport of goods, passengers and petroleum products are done by road vehicles, there is currently no local manufacture of vehicles, though there are 11.5million vehicles on Nigerian roads according to the National Bureau of Statistics (NBS)–a 61/’000 per capita ratios and great scope for any serious OEM in a country of 193million people. Statistics from the NBS give the vehicle break down (pardon the pun) as follows - 6.7m commercial vehicles, 4.7m registered as privately owned, 135,000 registered as government owned and 5,834 registered for diplomats. Another way to look at this is in the realities - 6m vehicles needing proper repair/maintenance/ parts from trained technicians/dealers, 3mvehicles needing replacement, 2million vehicles

needing scrappage as irreparable, unsafe or environmentally unhealthy. Yet, there was a third way to dimension the numbers - the opportunities that abound within the Nigerian economy - 500,000 technicians (mechanics, vulcanisers etc.) that are required to repair/ service 11m vehicles, 200,000 spare part dealers to supply parts to 6m requiring repairs, 21,000 car dealers to buy/sell 3million vehicles needing replacement, 30 banks – to finance vehicle acquisition and 29 insurance companies to insure the 11m vehicles. The used vehicle dilemma With a weak Naira, restricted access to forex and poor infrastructure, assembly plants will struggle to set up and compete. Invariably, the vehicles being assembled will be unaffordable. On the other hand, used cars are outselling new ones 35:1 - a result of lower duty, porous borders and an insane regulation that allows vehicles aged 15yrs to be imported. There are 42m used vehicles in use in Africa (OICA 2014) and Nigeria alone has more than 10m of them. The National automotive policy was relaunched in 2013 to support and grow the local auto market, save needed forex and drive local content in component manufacture and technical expertise. A plan for implementation – the National Automotive Industrial Development Plan (NAIDP) was launched with fiscal guidelines and programs to run initially for 10 years with periodic reviews. Expectations of the policy included N650billion ($3.35bn) in saved import duty, 410, 000 newer and safer vehicles to be introduced, 10% contribution to GDP, employment for up to 70,000 skilled workers and additional 200,000 workers from value chain enterprises that would support the assembly plants. At a stage, a N1.5million car was touted. At the 16th Abuja Motor Show in 2014, the then NAC (now NADDC) DG claimed that the policy will eventually create an additional 700,000 jobs and boost both petrochemical and tyre sectors. Even the House of Representatives Committee on Industry commended the Federal Government on the introduction of the automotive policy, saying that the new measures would help transform the automotive sector, attract new investments into the sector, protect local automotive manufacturers and create employment (not surprising, the legislators were going to soon receive new cars tagged: ‘utility/committee’ and acquired under a payment scheme.

So, what’s the issue? In the last couple of years, I have had the opportunity to engage with a number of players across the entire auto value chain. My current thoughts (as they might change) are that the plan of revival of the auto industry being proposed by the government are not sufficiently thoughtful and the implementation not robustly thought through, so when the Hon Minister of trade admitted during a Lagos Chamber of Commerce dialogue that the implementation of the auto policy was poor, many industry stakeholders heave a sigh of relief – that finally, after 5 years of the policy’s first announcement, the government had started to listen. The government’s approach to the development of the auto industry has been driven mainly by the belief that the auto policy will be the catalyst for developing the auto industry. The idea itself wasn’t so bad on paper, but was basic in concept and hadn’t taken economic realities into account. Timelines were not measurable or not measured, expectations were not monitored appropriately and in one or two instances, gaps in the processes ignored.Take a look the current auto policy, then go to any of Nigeria’s highways, motor parks, dealer showrooms or mechanic’s workshops and you will immediately see the disconnect between the policy and the realities - income levels, vehicle costs , proliferation of refurbished/fake parts and unrealistic regulation, to the extent that 17% of the 10,000+ road accidents recorded by the FRSC in 2018 were as a result of defective vehicles that should have been curtailed by the policy and a problem that needs to be addressed in synch or in sequence with the development of the auto industry. The various policies and pronouncements affecting the auto industry have over the years, been good, bad and out rightly unspeakable, some deployed in isolation of the realities and only good as an academicdiscourse. A look at the more recent pronouncements for instance: • Circular BD.12237/S.403/VOL.1/206dated Nov 19, 2010and signed by the then Finance Minister, partly read “… extension of the age of used motor vehicles to be imported into the country from 10 years to 15 years from the year of manufacture…” • CBN letter TED/FEM/FPC/GEN/01/003 dated Jan 20, 2014 drawn up to relaunch the auto industry, including a Credit Purchase Scheme and patronage by government**. • Ministry of Finance letter BD/FP/

DO/09/1/224 of Feb 28,Feb 2014 announcing revised fiscal policy measures for the automotive industry - 35% duty + 35% levy for cars, 35% duty for commercial vehicles, 20% duty on tyres, 0% duty on CKD parts etc. • CBN letter TED/FEM/FPC/GEN/01/010 of 23 Jun 2015 restrictingrubber and plastic products (key components in the manufacture of vehicles and Tyres) from accessing the CBN forex rate. *Interestingly, if the Bureau of Statistics is to be believed, the Nigerian government’s 150,000 registered vehicles, isn’t enough to consider “patronage by government” a catalyst for the auto industry. A much more influential buyer is the National Association of Transport Owners, who should be on the NADDC implementation committee of the auto policy. There will be arguments from some quarters that the government is trying its best. I don’t doubt that. What I doubt is whether there has been sufficient consideration of the industry variables, before decisions aremade. Currently we have 54 assembly plant licences issued for a total capacity of 400,000 combustion engine vehicles; a long list of barely recognisable OEMs and brands; limited support for the existing auto businesses in terms of finance and infrastructure and the curious result of supporting the industry and attacking it at the same time, going as far as authorising the Customs Department (not the motor dealer), to publish the prices of vehicles. This is compounded by the myriad of port and terminal charges - documentation charges, administrative charges, MOWCA Levy, Indirect Import Delivery Charges, NIMASA Sea Protection Levy, Terminal Handling Charges (and that’s just for the Port). Then there are the “inspection” agencies – NIMASA, NN, NIS, NDLEA, SON, STOAN, NAFDAC etc. Officially, clearing goods through Nigerian ports should take 2 days, but if you make it in 2 weeks its considered good. In fact, a report by the Organised Private Sector, supported by the Centre for International Private Enterprise, showed that “Trading Across Border”, a World Bank indicator that measures the efficiency of ports, ranked Nigeria 183rd out of 185 countries in 2017.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Adebowale is chair of the automobile section of the Lagos Chamber of Commerce and Industry

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Flashback: Examining Nigeria’s best path to prosperity Patrick Atuanya

he private sector remains the best path to prosperity globally, as can be seen in the stark differences in outcomes between the economic policies of South Korea and North Korea or Chile and Venezuela. The forthcoming Presidential elections present a choice to Nigerians of either continuing with a private sector led economic expansion or going backwards to big government, an unproductive public sector and the slowdown of reforms that are currently taking place that should have been enacted decades ago. The Presidential candidate of the All Progressive Congress (APC), General Muhammadu Buhari gave inkling into his thoughts on economic management during a town hall meeting in Kano. Mr Buhari complained about the lack of a National carrier (Nigerian airways), and suggested that due to Nigeria’s current level of development, he would rather that privatisation be slowed down or halted while the government should be made to play a bigger role in managing the economy. I am afraid that such an argument lacks merit given the abysmal history of failure of the public sector in Nigeria (recall NITEL and NEPA).

Public ownership of companies often encourages the misallocation of scarce resources. In most cases globally ( for example the U.S postal service is insolvent and needs bailing out), public company staff strength is usually over bloated, productivity low, and efficiency and innovation near zero. Anyone aspiring to be at the helm of Nigeria’s economy needs to understand the challenges the nation faces in a changing global environment. The next 5 – 10 years will be the age of disruption by technology (as the U.S shale boom is showing us); while old dinosaurs like big oil will gradually fade away. Productivity growth will mean that the middle class will be stretched while many of the new jobs created will be high end skilled specialist jobs and low end services jobs. To compete in this future Nigeria does not need more government owned enterprises but instead should be investing in funding research, education and healthcare. Historical data shows us the folly of increasing government’s role in the Nigerian economy. In 1980 the size of the Nigerian economy, measured by nominal GDP was equivalent to $64.2 billion. By the year 2000, after 20 years of disastrous military rule that included a nearly 2 year stint by Mr Buhari, the size of the economy had plummeted by 38 percent to $46.3 billion, despite a near doubling in population, according to World Bank data. It is no surprise that this period (1980 – 2000) coincided with the largest emigration of Nigerian professionals

ever, with disastrous consequences for the economy. While the governments of the time had to deal with plunging oil prices the contraction of the economy was accelerated by bad policies. The private sector was muzzled; government determined what was to be imported by labelling some products essential commodity, Nigerians queued up in long lines for goods at the stores, while a few connected individuals cleaned up like bandits. Today, the government of the day is also facing the challenge of falling oil prices and a currency adjusting versus the dollar. However Nigeria’s economy will still expand by average of 4 percent in 2015, while sensible policies are attracting private capital to the Agriculture value chain, the power sector, refining and petrochemicals, ICT/ Broadband, Hotels and services, as well as some infrastructure such as the Lekki port and 2nd Niger bridge toll road. A Sovereign Wealth Fund (SWF) that should have been established 30years ago was finally set up in 2011 (with $1.5 billion in seed capital) which should safe-guard future oil earnings, even if it means the FG going it alone in terms of future funding. Inflation is currently in single digits as robust Agric production helps to stem food inflation, total debt as a percentage of GDP is below 30 percent, while the current account and budget deficits will print well below the 3 percent mark this year despite slumping oil prices. Meanwhile Nigeria’s poverty rate has actually fallen to 30 percent in 2013, from over 60 percent in 2010 (World Bank data).

‘

The private sector thrives when the macro – space is stable enough for them to deploy capital long term

The private sector thrives when the macro – space is stable enough for them to deploy capital long term. The trouble with the economics of the APC presidential candidate is the stunning lack of details on how proposed social and populist programmes will be funded. While this writer feels no personal illfeeling towards Mr Buhari, there is a concern about the economic rhetoric that is beginning to remind one of another ex military man preaching change that however ended badly for his country. Venezuela’s Hugo Chavez was a former paratrooper who led a failed 1992 coup but was elected as president six years later in 1998. Chavez socialist policies were dedicated to changing the country’s political system, which he viewed as corrupt and impervious to growing social problems. He nationalized more than 1,000 companies or their assets and began to pour money into social programs. He also froze gasoline and electricity tariffs by installing currency controls and price ceilings on basic goods such as corn meal, beef and milk. His nationalization drive that would give the state majority control of almost every industry has sparked shortages of basic goods such as toilet paper and inflation of more than 60 percent. Today Venezuela is an economic basket case. This is a path Nigeria must not embark upon. • This Op-ed was first published in February 2015. Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

Nigerian VAT Act, non-resident companies (NRCs) and multiple location entities (MLEs): The unsettled matter of imported services (Part 2)

Glenn Ubohmhe

o put the argument in context, would a consultantin a firm based in Scotland who proffered solution to a business need while in the course of playing golf at St Andrew’s Golf Course in Scotland with an executive of a bank operating in Nigeria for which the firm was handsomely paid, be deemed to have carried on business in Nigeria? Clearly, the consultant has carried on business with a Nigerian company but has not carried on business in Nigeria. From a strict constructionist lens, such a consultant cannot be seen in the eyes of section 10 (1) as carrying on business in Nigeria. Even though we all have a good idea what the intent of the Act is all about, intentions are intentions, and should not be equated with the law. In the absence of a clear definition, the plain English meaning should therefore apply. Section 42 as amended, on the definition of imported service, constitutes a further complication as to whether, in the above scenario, the payment for service rendered by the firm

of consultants is VAT deductible. The section defines imported service as service rendered in Nigeria (emphasis mine) by a non-resident person to a person inside Nigeria. Since the service rendered by the firm was rendered in Scotland, it is perhaps safe to conclude that it is not VATable in Nigeria. This writer however concedes that the meaning of “rendered in Nigeria” may be different in certain circumstances under the scope of imported service as in the case of FIRS Vs Vodacom.To resolve this, more clarity could be brought into that clause by substituting the word “carries on business in Nigeria”with“has business agreement with or renders service(s) to an entity in Nigeria”. On the second issue whether a Nigerian company has an obligation to ensure that a non-resident company is registered for VAT in Nigeria based on the same section 10(1), it is very doubtful if the law contemplates a thirdparty obligation with respect to registration for VAT otherwise the law would have expressly stated the role of a Nigerian Company in meeting this obligation; “A non-resident company that carries on business in Nigeria shall register for the tax with the Board, using the address of the person with whom it has subsisting contract, as its address for purposes of correspondence relating to the tax” Again, to the strict constructionists, nothing can be more explicit - the above section of the VAT Act indeed suggests that the duty to ensure that a non-resident company is registered for VAT is that of the non-resident alone, using the address of the Nigerian company only for the purpose of correspondence without any vicarious or contributory liability on the part of the Nigerian Company. But

contrary to its strict construction argument on section 2, the FIRS took a purposive view of this section and was upheld by the Court by imputing the intendment of the law. In my view, to extend this obligation to a resident company by inputting the intendment of the law is to mischievously assume that the draughtsman is unable to clearly express his thoughts, just because he is nowhere near to affirm that his thoughts are as expressed.While the dilemma of tax evasion and avoidance confronting tax administration in enforcing VAT registration requirement by a non-resident company due to absence of legal or physical presence is understandable and may therefore be compelled to seek other measures to enforce compliance, should the tax administration impose an obligation where the draughtsman has not? Unless expressly stated otherwise, it stands to reason that the duty to register for VAT is solely that of non-resident companies and not that of a Nigerian entity if one is to invoke Rowlett J in the English case ofCape Brandy Syndicate v Inland Revenue Commissioners, who stated that “in a taxing Act, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One has to look fairly at the language used.”Therefore, in interpreting a tax statute, the court must not overly stretch itself to assist the tax collector achieve his goal. Now to the third and most substantive issue which borders on the duty of a Nigerian company to deduct and remit VAT even when an invoice from a non-resident does not reflect the VAT element. Based on section

10(3) of the Act; a non-resident company shall include the tax in its invoiceand the person to whom the goods or services are supplied in Nigeria shall remit the tax in the currency of the transaction”. Again, this sub-section seems to indicate that the inclusion of VAT in an invoice by a non-resident company is a necessary condition for the deduction and remittance of VAT by the person to whom the goods or services are supplied – a Nigerian company. To endorse this view is particularly appealing especially if we agree that the “and” in-between the obligation to invoice and the obligation to remit is a truth-functional connective which presupposes that the fulfilment of the second condition is hinged on the first. Put differently, there is a causal sequence between the obligation to issue VAT invoice and the duty to remit. Based on FIRS’ inconsistency in its convenient adoption of different rules to construe the meaning of Revenue Acts, it not only took a purposive view of section 10(3) of the VAT Act, the Revenue authority also referenced the International VAT Guideline to argue that the Act imposes a duty on a resident company to ensure deduction of VAT even when an NRC fails to invoice the VATable element on crossborder supplies. While FIRS is at liberty to reference the International VAT/GST Guideline and to take a position based on either the strict construction or purposive approach in the interpretation of tax statutes, the point is, there should be consistency of approach. • To be continued Glenn is a tax practitioner.

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Monday 04 February 2019

Nigeria’s declining investment in education

enturies ago, Plato wrote that “If a man neglects education, he walks lame to the end of his life.” That statement is true today as it was then. The venerable Nelson Mandela lays credence to Plato’s statement by saying that “education is the most powerful weapon which you can use to change the world.” In today’s world when every nation has shifted attention to education and investing heavily on it as the bedrock for development, Nigeria continues to pay lip services to the education of her citizens. On this page, and on several pages of BusinessDay, we had aired stories where we called government’s attention to the dilapidated form of the nation’s education. On September 14, 2018, we published a story where we demonstrated that “Nigeria lags behind in articulating a clear strategy for the fast emerging era of the fourth industrial revolution when knowledge will be the main resource that drives economic growth,” as against some African countries such

as Ghana, Rwanda, etc. who are making practical efforts in giving its populace a headstart in preparing them for the competition ahead in the global knowledge economy. When economist Jim O’Neill coined the acronym, MINT (Mexico, Indonesia, Nigeria and Turkey) as the next emerging economies of the world after BRIC (Brazil, Russia, India and China), he had projected that by 2050 Nigeria would be a super power in the world economic circle. Analysts had projected that if Nigeria gets its act together, she could match Chinesestyle double-digit growth rate in the nearest future. Research shows, however, that while other MINT members are working towards their economic prosperity, Nigeria remains backwards in its quest to achieve economic prosperity, one of which is its lackadaisical attitude towards the education of its future generations. For example, while Indonesia, Turkey and Mexico budgeted 17.2%, 18% and 14% of their respective 2018 budget to education, Nigeria’s government earmarked a degrading 7% to education. The Finance

Minister of Turkey, NaciAgbal, even announced that “the lion’s share of the 2018 budget will be for education expenditure.” According to the available data, at the moment over 60 percent of children of school age are out of school in Nigeria. This is not accidental. Study shows that since 2010, the three years of the Buhari administration have witnessed both reduction and decline in budgetary allocations to education, the least being 2018 budget with 7.04% allocation to education. It wasn’t surprising that the World Bank recently ranked Nigeria 171 out of 195 for its investments in education, health and human capital development, even below Democratic Republic of Congo and just ahead of Zambia. Already, Nigeria has been designated the poverty capital of the world with approximately six people being through into extreme poverty every minute and eight thousand every day. Nigeria’s 2016 171 ranking represents a drop from its 1990 ranking of 155th. Like the authors of the study said, there is a close association between invest-

ments in education and health and improved human capital and GDP- which policy makers often ignore at their own peril. The implication is clear: Nigeria does not prioritise education and does not see it as the key to economic growth and prosperity. Education is at the heart of all development and growth in every society. It makes every human development possible, from advancement in health technology, agricultural innovations, manufacturing equipment to efficient public/private efficient administration. Any society or nation that ignores investments in education jeopardises its future, its long-term development and even the emancipation of its people. If the Nigerian government does not have a rethink and reset its thinking on education, our teeming population will continue to walk lame and aimlessly while other countries empower their citizens to take charge of their lives, be competitive globally and also develop their countries. Like the World Bank advises, we need to invest early and invest smartly so that we do not miss out altogether.

Bashir Ibrahim Hassan

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In Association With

Down the smack track

Too many challengers In search of lost time (and money)

Africa is heroin’s new highway to the West

The trade is poisoning politics and fuelling addiction on the continent

LIZEA SMIT sits on a plastic crate in front of her fruit and vegetable stand in Wynberg, Cape Town. It is a convenient spot. There is brisk custom for her oranges and avocados. And her heroin dealer is on the corner, just a few metres away. Ms Smit (not her real name) has used the drug for six years, buying three or four pellets a day at 30 rand ($2.21) each. If she does not sell enough fresh produce to feed her habit, she works as a prostitute in the evening. “Heroin is the worst,” she says. “It’s the first drug I’ve taken that you can’t escape.” Until recently heroin addicts were rare in Africa. In the 1980s and 1990s users could be found largely in tourist spots, such as Zanzibar, or in enclaves of white hipsterdom in cities like Johannesburg. Since 2006, however, heroin consumption has increased faster in Africa than in any other continent, according to the UN Office on Drugs and Crime (UNODC). The trade in the drug is having ruinous effects, not just on public health, but on politics, too. A nasty side effect Outdated drug policies leave millions of Africans in agony The war on drugs has hurt patients who need painkillers ANNA HAS just hit puberty and she can barely move. She has late-stage cancer and a tumour protrudes from her neck. As a nurse walks in, Anna (not her real name) slowly covers her face with a veil. She is dying in agony in Dantec, one of Senegal’s main hospitals. But the doctors don’t have enough morphine to give her. In west Africa there are just 52 palliative-care centres such as hospices for about 360m people.

Monday 04 February 2019

Many of these do not have enough drugs. In Senegal the average patient who needs it gets 13mg of morphine a year, compared with 55,704mg in America. Across sub-Saharan Africa nine-tenths of cancer sufferers in moderate or severe pain die without the relief granted by opioids. Providing palliative care without morphine is like “driving a car without fuel”, says Emmanuel Luyirika, of the Kampala-based African Palliative Care Association in Uganda. It is also unnecessary, because opioids are cheap. Providing pain relief for their populations can cost governments as little as $2-16 per person each year, according to a study commissioned by the Lancet. The morphine shortage stems from bad policies. In the 1980s and 1990s, as part of its “war

on drugs”, America cut aid and imposed sanctions on countries that were not tough enough on trafficking. It listed Nigeria as unco-operative from 1994 to 1998 (during a criminal dictatorship), suspended military aid and blocked loans. There is little threat of being penalised today. But taboos about opioid use, restrictions on prescriptions and import barriers are still in place across much of Africa, says Barbara Goedde at the Global Commission on Drug Policy. In 2012, although some 200,000 Nigerians died of AIDSrelated causes, often in severe pain, the country imported no morphine and said there was no need for it. Yet much of this pain can be eased. Consider Uganda. Fourfifths of its districts have at least

one palliative-care service. Over 200 hospitals have in-patient palliative-care units. In 2015 the Economist Intelligence Unit, a sister company of The Economist, ranked palliative-care systems on measures including training and access to drugs. Uganda scored higher than richer countries such as Malaysia and Hungary. There are several reasons for Uganda’s success. The first is its adoption of oral morphine, a cheap and effective painkiller. This was brought to the country in 1993 by Hospice Africa, a nonprofit outfit. For 17 years its staff mixed the solution “at the kitchen sink”, says Anne Merriman, the British doctor behind it. She met scepticism at first; some senior doctors said she was promoting euthanasia. Morphine still runs short; only 11% of need is met but its use has become normal. One cancer patient in Kampala keeps his bottle by the stove, next to the hot chocolate. The second reason for Uganda’s success is that nurses are allowed to prescribe morphine. That is crucial because there is just one doctor for every 11,000 people. And the third reason is government support. Officials see morphine as a useful painkiller rather than a shameful recreational drug. Since 2011 the government and Hospice Africa have produced oral morphine in a public-private partnership. Patients get it free. The solution, dyed to show different strengths, is too diluted to interest addicts. Esther Akongo lives with her sister in a gloomy single-room house in Kampala. Both have cancer. Since getting morphine, says Ms Akongo, she can at last get a good night’s sleep. But the happiest times are the regular trips to the hospice, where she can talk to other patients. Morphine brings respite; friendship brings joy.

America’s government shutdown took a toll Some Republicans would prefer a national emergency to a repeat performance

ERRIBLE TRAFFIC, packed Metro cars, full restaurants: Washington returned to work this week after the longest-ever government shutdown ended, at least for now. Despite vowing not to reopen government without the $5.7bn he demanded for his border wall, Donald Trump did just that, signing a spending bill that funds the government through February 15th and creates a bipartisan, bicameral commission to develop a border-security proposal. Ann Coulter, a far-right commentator and supporter of Mr

Trump, called him “the biggest wimp ever to serve as President of the United States.” A headline on the Daily Caller, a conservative website, blared “TRUMP CAVES”. Polls showed that more Americans blamed Mr Trump for the shutdown than blamed House Democrats—perhaps because, 11 days before it began, he boasted that he would be “proud to shut down the government” if Congress failed to give him exactly what he wanted. When it was over, the nonpartisan Congressional Budget Office (CBO) released a report on the shutdown’s economic effects. It estimated that American GDP was $3bn lower in the last quarter of 2018 and will be $8bn lower in the first quarter of 2019 than it would have been without the shutdown. That pain was not evenly distributed; federal workers and businesses Continues on page 15

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The anointing of Juan Guaidó

The battle for Venezuela’s future

The world’s democracies are right to seek change in Latin America’s worst-governed country

Continued from page 14

F PROTESTS ALONE could oust a president, Nicolás Maduro would already be on a plane to Cuba. On January 23rd at least 1m Venezuelans from across the country took to the streets demanding Mr Maduro step down. They were answering the call of Juan Guaidó, who last week proclaimed himself the rightful head of state. Mr Guaidó has won the backing of most of Latin America, as well as the United States and Europe. Protests planned for February 2nd promise to be even bigger. But Mr Maduro is supported by the army as well as Russia, China and Turkey. As The Economist went to press, he was still holding on to power. Much is at stake. Most important is the fate of 32m Venezuelans made wretched by six years under Mr Maduro. Polls suggest that 80% of them are sick of him. Other countries are also hurt by Venezuela’s failure. The region is struggling with the exodus of over 3m of its people fleeing hunger, repression and the socialist dystopia created by the late Hugo Chávez. Europe and the United States suffer from Venezuela’s pervasive corruption, which enhances its role as a conduit for narcotics. And as world leaders pile in for Mr Maduro or against him, they are battling over an important idea which has lately fallen out of favour: that when a leader pillages his state, oppresses his people and subverts the rule of law, it is everybody’s business. The scale of the disaster Mr Maduro has brought down upon Venezuela is hard to comprehend. In the past five years GDP has fallen by half. Annual inflation is reckoned to be 1.7m per cent (the government no longer publishes the numbers), which means that bolívar savings worth $10,000 at the start of the year dwindle to 59 cents by the end. Venezuela has vast reserves of oil and gas, but the state oil company has been plundered and put under one of the country’s 2,000 generals, who has watched production tumble to 1.1m barrels a day. People are malnourished and lack simple medicines, including antibiotics. Hospitals have become death traps for want of power and equipment. Blaming his troubles on foreign conspiracies, Mr Maduro has rejected

America’s government shutdown...

most offers of humanitarian aid. Despite this litany of suffering many outsiders, especially on the left, argue that the world should leave Venezuelans to sort out their differences. Some adopt Mr Maduro’s view that Mr Guaidó’s claim to the presidency, recognised immediately by the United States, is really a coup. Russia, which has worked hard to discredit the idea that Western intervention can ever be benign or constructive, is reported to have sent 400 troops from a private military contractor, also spotted in Syria, Ukraine and parts of Africa, to protect either the regime or Russian assets. Abandoning Venezuela to the malevolent rule of Mr Maduro would be wrong. If anyone has launched a coup it is he. He was inaugurated on January 10th for a second term having stolen last year’s election. In his first term, won in 2013 in another dubious vote, he eroded democracy by silencing critical media and eviscerating the constitution. He packed the electoral commission and the supreme court with puppets and neutered the national assembly, which the opposition controls. By contrast, Mr Guaidó has a good claim to legitimacy. As head of the national assembly, he serves as acting president if the office is vacant—which, because Mr Maduro is not a legitimate occupant, it is. The question is not whether the world should help Mr Guaidó, but how (see article). This week the United States, still Venezuela’s main trading partner, imposed what amounts to sanctions on oil exports

and on imports of the diluents needed to market its heavy oil. By ordering that payments for Venezuelan oil must be put in bank accounts reserved for Mr Guaidó’s government, the United States aims to asphyxiate the regime, in the hope that the armed forces will switch to Mr Guaidó. One danger is that Mr Maduro digs in and orders the security forces and the colectivos, organised thugs at the regime’s service, to impose terror. Another is that the United States overplays its hand. Just now it is working with the Lima group of regional governments. But its sanctions could hurt the people more than the regime. If, bent on regime change, it acts unthinkingly, it could come to be seen once again in Latin America as imperialist and overbearing. Russia is portraying the United States’s intervention as an attempt to dominate its backyard. Its media are already saying that Vladimir Putin’s interest in Ukraine is no different. The situation is a test of President Donald Trump and his foreign-policy team, including the hawkish national security adviser, John Bolton. This week Mr Bolton hinted at the use of American troops. Barring state violence against American citizens, that would be a mistake. Mr Guaidó’s backers have ways to help without resorting to force or dirty tricks. These fall into two categories. The first includes incentives for Venezuelans to demand change, for the army to abandon the regime and for Mr Maduro to go. Now that Mr Guaidó has been rec-

ognised as interim president, he stands to control billions of dollars of Venezuela’s foreign assets if power shifts. The national assembly has passed a law offering an amnesty to soldiers and civilians who work to re-institute democracy. Mr Maduro is being promised the chance to flee the country. The second way to help is to let Venezuelans know that the world is ready if Mr Guaidó takes power. The lesson from the Arab spring is that even a leader who starts by sweeping away a tyrant must bring improvements rapidly or risk losing support. The immediate priorities will be food and health care. The very fact of a new government will help stop hyperinflation (see article), but Venezuela will also need real money from abroad—international lenders, including the IMF, should be generous. The to-do list is long: Venezuela will need to remove price controls and other distortions and build a social safety-net. It must restart the oil industry, which will entail welcoming foreign investment. Its debt will need restructuring—including the debt to Russia and China which is due to be paid in oil. And amid all this, Mr Guaidó’s caretaker government must hold elections. A generation ago, Venezuela was a functioning state. It can be again. It is blessed with oil and fertile land. It has an educated population at home and in the diaspora that fled. And in Mr Guaidó it has a leader who, at last, seems to be able to unite the fractious opposition. But first it must get rid of Mr Maduro.

that rely on them felt the effects more strongly than the economy as a whole. Though much of that activity should eventually be recovered, the CBO forecast that around $3bn—or 0.02% of projected annual GDP—has been permanently lost. Businesses that could not receive permits or loans because the relevant agency was closed probably delayed hiring and investment. Unpaid workers who had to take out loans will see their future spending constrained by debt servicing. A lack of published economic data increased economic uncertainty, while funding gaps probably began “to reduce the credibility of the federal government,” making it harder to attract talent and more expensive to make contracts with private business. And though the 800,000 furloughed or unpaid federal workers will receive back wages, private-sector workers that depend on government—suppliers, contractors, restaurants near government offices and the like—may not. Nor is America out of the woods. Mr Trump threatened to force another shutdown if the commission fails to come up with a recommendation that he likes. Bills to prevent the effects of a shutdown through “automatic continuing resolutions”—meaning that funding will continue at current levels if lawmakers fail to agree on spending levels—have been floated in both houses of Congress, by members of both parties. Mr Trump also threatened to declare a national emergency, a prospect some congressional Republicans find more appealing than another shutdown.

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Monday 04 February 2019 In Association With

Above the law

Nigeria’s president sacks the chief justice weeks before an election Critics say it is to remove a judge who may have ruled against him

HE WHEELS of justice turn slowly in Nigeria. On the rare occasions when corruption cases are brought against prominent people, petitions can take years to resolve. It was therefore unusual that on January 25th President Muhammadu Buhari suspended Nigeria’s Chief Justice, Walter Onnoghen, a mere 15 days after allegations of impropriety were lodged against the most senior judge in the country. This was the first time that Nigeria’s head of state had sacked a chief justice since 1975, when the country was under military rule. Mr Buhari’s move was not merely unusual. It was also unlawful. Nigeria’s constitution seeks to balance the executive, legislative and judicial branches of government; a power play by one part against a second needs the consent of the third. Mr Buhari did not seek support

from the Senate, where he lacks the two-thirds majority needed to oust the chief justice, so his act is widely viewed as being against the law. It has also injected a dose of fury into a previously placid election campaign. Earlier this week Nigerian lawyers took to the streets of Abuja, the capital, in protest (see picture). Some stopped work for two days. Atiku Abubakar, Mr Buhari’s main rival in the presidential

race that takes place on February 16th, has called the move “a brazen act of dictatorship”. On January 26th America, Britain and the EU issued statements expressing concern. Few observers doubt that Mr Onnoghen has a case to answer. Under Nigerian law, officials have to disclose their assets every four years and upon taking a new job. He has not done so since his promotion in March 2017. Nigeria’s judiciary, like

many of the country’s institutions, is widely seen as corrupt. Yet due process has not been followed, notes Aminu Gamawa, a member of Nigeria’s bar association. There are probably two reasons why Mr Buhari sacked him, critics say. Both are political. First, the Supreme Court is due to hear appeals lodged by the All Progressives Congress (APC), Mr Buhari’s party, against decisions by the Independent National Electoral Commission, which barred it from running candidates in two of Nigeria’s 36 states. Mr Onnoghen is viewed by the APC as being close to Mr Abubakar’s People’s Democratic Party. Second, the chief justice would have to preside over any litigation arising from a disputed election result. This matters in a country with a history of electoral shenanigans, preceded and followed by deadly

violence. On January 29th the Senate asked Mr Buhari to reinstate Mr Onnoghen. But the president shows no sign of backing down. He has already sworn in a new chief justice, Ibrahim Tanko Muhammad. (Technically Mr Tanko is the “acting” chief justice, but temporary appointments have a way of becoming permanent.) It is not obvious that Mr Buhari would need to cheat to win re-election. His anti-corruption tirades appeal to voters. His opponent, Mr Abubakar, though he likens himself to Bill Gates, Steve Jobs and Lee Kuan Yew, is seen as less tough on graft. Yet Mr Buhari seems to think that the benefits of removing the top judge are worth the costs. Thus he has reminded Nigerians that since his election in 2015 he has done little to strengthen institutions, which is what Nigeria needs most of all.

Pilgrims in the Gulf

The Pope’s historic visit to the Arabian peninsula

It will shine a light on the ways in which the UAE is growing more liberal—and where it is not

HRISTIAN PILGRIMS are not often seen in the Arabian peninsula, where Islam was born. But they are flocking to one of its emirates, Abu Dhabi, for its first papal mass on February 5th. More than 100,000 are preparing to pack the Zayed stadium, adorned with a big cross, to celebrate the Eucharist with Pope Francis. Hotels are full of pilgrims chanting hosannas. Some hold standards bearing the Christian dove of peace tweaked with wings the colours of the United Arab Emirates (UAE) flag. The pope is “a symbol of peace, tolerance and the promotion of brotherhood”, says Muhammad bin Zayed, the crown prince, de facto ruler and papal host. Such hospitality is remarkable for the region. Further north in Syria and Iraq jihadists have uprooted ancient Christian communities and torched their churches. Neighbouring Saudi Arabia still bans churches and Christmas trees. “Two religions shall not co-exist in the Arabian peninsula,” snap the Koranbashers, quoting a saying of the Prophet. Prince Muhammad, by contrast, has turned his emirate into an oasis of inter-faith dialogue. Grand muftis and prelates hug

for the cameras. Under his tenure, the UAE has offered fleeing Arab Christians a haven. It has a new cathedral, 16 new churches and some 700 congregations. Remarkably, in 2013 the UAE ranked third among countries with the fastest-growing Christian populations. At home and abroad, the prince is also promoting a strand of Islam that encourages its followers to obey their rulers. It opposes the political Islamism—notably the Muslim Brotherhood—which harnesses religion as a force for social and political change. This is sponsored by the UAE’s Gulf rival, Qatar. Pope Francis appears to pre-

fer Prince Muhammad’s strand of the faith. In an interview in 2016 he warned against the export of an “overly Western model of democracy” to the Middle East. Unlike his predecessor, Benedict XVI (who upset Muslims with a quote about the Prophet Muhammad’s propagation of the faith by the sword), Pope Francis has reached out to Muslims who seem to be tolerant. A quarter of all his papal visits have been to Muslimmajority countries, but he has rarely spoken out against their autocrats. Some Catholics question whether the pope is right to take sides in intra-Muslim tussles.

Others ask whether a peacemaker should be visiting just one party to a regional conflict (the UAE and not Qatar). In other instances he has visited both sides, such as when he went to Israel and Palestinian areas. In a region of despots, Prince Muhammad is one of the more feared. Although tolerant of religious minorities, he withholds political freedoms from the Muslim majority, particularly Islamists, who he fears might overthrow him. Parties are banned. Those who ask questions are jailed. Migrants—Christians included—have no prospect of citizenship. They remain foreigners no matter how many generations are born in the UAE. “If the pope really cared about humanity, he would speak about human rights,” says Muhammad Saqer al-Zaabi, an Emirati Islamist, exiled in London. The prince has bankrolled a regional campaign against Islamists, supporting the overthrow in 2013 of Egypt’s democratically elected Islamist president, Muhammad Morsi. He also meddles in civil wars, whether in Libya or Somalia. For almost four years, he and Muhammad bin Salman, the crown prince of Saudi Arabia, have bombed and

besieged Yemen, after its government was pushed out by Houthi rebels. The war has killed tens of thousands, driven millions to the brink of starvation and drawn accusations of war crimes. “It’s a horrible state and the pope’s visit lends credibility to that government,” says Khaled Abou el Fadl of the University of California in Los Angeles. “I’m worried about the moral message he’s sending.”

Monday 04 February 2019

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Monday 04 February 2019

Mechanic bags 6 months for stealing car battery

Cross-section of participants, during the `Walk for Peace Massive Turnout’ ahead of the 2019 General Elections organised by European Centre for Electoral Support (ECES), in Abuja on Friday. NAN

How Ayade’s security aides, ‘Okada’ riders clashed MIKE ABANG, CALABAR ngry and fearless commercial motorcycles ( Okada) riders at the weekend invaded the Cross River State Governor’s Office, attacked some security personnel on duty and smashed glass doors, windows in protest against the death of one of their own. The state governor, Ben Ayade and some members of his cabinet were said to be away in Bakassi local government area of the state for a political campaign when the rampaging okada riders stormed the Government House. The angry okada riders were said to have dragged along to the Government House the corpse of their member allegedly killed Friday by the state task force on special services attached to Ani Esin who is the special security adviser to the Governor Ayade for

the southern senatorial district. The okada riders alleged that the deceased was beaten to a comma by members of the task force. The incident was said to have happened in Ikot Ansa, close to the popular St. Patrick College. The victim reportedly died while being taken by his colleagues to a health facility, causing the okada riders to go on rampage. The protesting okada riders were said to have arrived at the governor’s office and effortlessly overpowered three unsuspecting security personnel including an officer of the National Security and Civil Defence Corps (NSCDC) and two policemen. They reportedly damaged the security paraphernalia at the main gate, tore the official security registers, went for the main entrance (reception) and smashed

the glass doors as well as the office of the protocol officer, who also joined Ayade at his campaign. As they became more violent, reinforcements of armed soldiers from 13 Brigade of Nigerian Army and policemen from the nearby police command arrived. They had shot several times into the air to scare and disperse the stubborn crowd of okada riders and onlookers but a couple of the okada riders were not so lucky as the combined team of soldiers and policemen arrested and thoroughly beat them up. Reacting to the development, spokesperson of the police in Cross River, Irene Ugbo explained that the victim fell from his motorcycle and died when the task force team wanted to arrest him for violating government’s ban on okada plying major road.

Security: A’Ibom donates 10 new vehicles to police ANIEFIOK UDONQUAK, Uyo

kwa Ibom government has donated ten new vehicles to the police to enhance their operations in the state. The vehicles are the latest edition of Volvo Wagon and fully equipped with modern communication gadgets. At the presentation of the vehicles, Governor Udom Emmanuel ordered their immediate distribution to police divisions within Uyo in the first phase. Speaking earlier during an interaction with journalists, Musa Kimo, the Commissioner of Police, Akwa Ibom

command, thanked the government for the support to the police and other security agencies towards reducing crime to the barest minimum in the state. Meanwhile, in an effort to improve education infrastructure and learning environment, the management of Akwa Ibom State University (AKSU) has taken delivery of 100 Apple iMac Core i5 computers. The ICT revolution recently also saw the acquisition of 200 units of all-in-one computer core i5 systems. According to the vice chancellor, Eno Ibanga, the university is commit-

ted to taking the lead in ICT. “Over time, AKSU intends to phase out use of HP systems and replace them with Apple products which are far more robust, reliable and have a longer lifespan”, Ibanga said. Recall that the university also last week got three of its programmes (Mass Communication, History and International Studies and Marine Eng i n e e r i ng / Nava l A rc h i t e c tu re ) accredited by the National Universities Commission (NUC). The development means all 38 programmes offered by the university are fully accredited.

2-year mechanic identified as Abubakar Mohammed has been sentence to six months imprisonment by a Lugbe Magistrate Court, Abuja, for stealing a car battery. Mohammed, who resides at Apo Mechanic Village, Abuja, had pleaded guilty to a one-count charge bothering on theft. The magistrate, Idharhi Samuel, who delivered his judgment on Friday, however, gave the convict an option of N5, 000 fine. Samuel warned the convict to be of good behaviour and to desist from crimes after serving out his punishment. Earlier, the prosecutor, Ukoha Ndidi, had informed the court that the convict stole a car battery belonging to the complaint, Bola Abimbola, of 304 Phase, 2 Block industry, Lugbe, Abuja, on January 22. Ndidi told the court that the convict and one other person known as Major, now at large, forced the complainant’s car open and stole the battery valued at N25, 000. The prosecutor said the convict was caught and brought to Lugbe police station but his partner escaped with the battery to an unknown destination.

Man charged with kidnapping

magistrate court in Minna, Niger State, has ordered the remand in prison of one Mohammed Aliyu over alleged kidnapping. Aliyu was docked on a two-count charge of criminal conspiracy and kidnapping, contrary to Sections 3(1) and 2(2) of Niger State kidnapping and cattle rustling law, 2016. The prosecutor, Aliyu Yakubu, told the court that the complainant, Jibrin Sani, of Ebbo village in Lapai local government area, reported the matter at the police station on December 28, 2018. Yakubu said that the complainant had employed the accused to assist his son, Mohammed Sani, in rearing his cattle. He said Aliyu and Sani had gone to the bush for grazing only for Aliyu to conspire with two other persons, now at large, to kidnap the complainant’s son. According to him, the accused person and his accomplices were said to have reached out to the complainant demanding a ransom of N7 million but later settled for N200,000.

Gombe: NDLEA nabs 11 per-

he Gombe command of the National Drugs Law Enforcement Agency (NDLEA) has arrested a total of 11 suspects dealing in prohibited drugs weighing 9.3 kg. Aliyu Adolescent, the commander of the agency in Gombe, said at the weekend that 113 tablets of psychotropic substances were also recovered. The suspects, according to Adolescent, the arrested suspects comprised of a female and 10 males. “Within 30 days, we were able to arrest 11 suspects, 10 males and one female and removed from circulation, 9.3 kg of cannabis and 113 tablets of psychotropic substances,” he said. According to him, the psychotropic substances are the major drugs of abuse in the state. Adole said the agency had resorted to targeting ‘black-sport’ in the state and arresting major dealers in an effort to reduce the rate of abuse.

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Odunayo Oyasiji

By Perchstone & Graeys’ private client’s

Prenuptial agreements: wise planning for a happy marriage?

A Scenario

hmed Musa is the first son of Alhaji Bamako Dogoyaro, one of Africa’s wealthiest entrepreneurs. He met Jumoke Smith at Shoprite Plaza sometime in November 2017 during her shift as a sales attendant in the mall. Ahmed shortly ‘fell in love’ with her and their love grew in leaps and bounds after that. As they carried on with their relationship, they had the good sense to discuss some of the issues which were likely to arise as a result of their ‘peculiar’ situation. The issues were to do with the obvious differences in their social status, their divergent religious worldviews and the possible resistance from their respective family members who would likely be apprehensive of their relationship for the same reasons. Ahmed sought legal counsel and was advised that a contract could be drawn up to protect the rights and interests of both parties and to allay at least some of their concerns. After a slightly awkward conversation about the prospect of a prenuptial agreement, they decided to get married if they could sign a contract setting out terms to govern their marital and postmarital relationship (in the unlikely event of a divorce). A pre-marital contract is often referred to as a ‘prenuptial agreement’ or a ‘prenup’. It is an agreement between two persons (whilst they are still of a cooperative mindset) setting out their rights and obligations in marriage or in the unlikely event of a divorce. Naturally, cultural beliefs, especially in a country like Nigeria, will influence people’s views of agreements of this nature. However, a prenup should not be viewed as a contract made because the parties are contemplating or anticipating divorce. Culture and predisposition There is no doubt that, if not properly understood and utilized, prenups can breed distrust and either leave a spouse financially vulnerable or coerce a spouse into giving up on what they would

have otherwise been entitled to benefit from. Cultural influences have particularly shaped the status of parties to marriage in Nigeria. Many Nigerian cultures still view marriage as a union between a woman or women and her/ their benefactor. However, with globalization, there has been a marked, if gradual, paradigm shift in this view of marriage as a union between two or more unequal partners. The old stereotypes of the dominant husband and the subservient wife are giving way to a more modern view of marital union that values and protects the respective rights and obligations of parties thereto. It is in this modernized context of marriage that prenuptial contracts can and are likely to begin to thrive in Nigeria. Prenup 101 Any class of persons may choose to instruct their lawyer to draw up a prenup. The reasons for this might range from those contemplated by Ahmed and Jumoke, to providing for devolution of property to children, separation of pre-marital debts and so on. Just as when going into any other contract, obtaining sound legal counsel is crucial. Since prenups are not designed to be used as a coercion tool or mecha-

nism by either party, the courts have always had the final say on what contractual terms will be binding if challenged. For example, ‘agreements’ reached under duress of one party, will not withstand judicial scrutiny if objection or breach results. Drawing from the example of Ahmed and Jumoke, the intending spouses may have an agreement as to the religious indoctrinations to be given to the children, or the preference of both parties as to accommodating distant relations. However, these kinds of issues are not easy to adjudicate under a challenge, and so may not be appropriate issues to resolve in a prenup. As for premarital and marital assets and liabilities, these considerations are more attuned to the determinations that can be made by a court. With the overarching oversight of the court, comes the need to ensure not only that the prenup contains nothing outrightly illegal, but also that it does not by the language of its terms breach the marital and child custodial laws of the jurisdiction to which it is subject. What happens when the courts must intervene? In Nigeria, whilst par-

ties are free to contract, we are guided by existing statutes and case law around the issues that may arise in prenuptials. The Court will interpret a prenup having the overall interest of the child in mind, particularly in making an order of physical and/or legal custody of the child. So, whilst the parties might have agreed that in the event of divorce, custody will reside with one party, it is the duty of the Court to determine who will have custody, given the prevailing facts and circumstances influencing the best interest of the child. Both husband and wife may be entitled to equal rights to custody, provided they can demonstrate that they will take good care of the child. The issue of child custody came before the Court in the case of Mrs. Helen Nwosu V. Hon. Dr. Chima Nwosu (2011) LPELR - 4654(CA) where the Court reaffirmed the position of the Supreme Court that both parents (generally) have equal rights and interest in the children of the marriage. Similarly, the final decision on the settlement of assets and property upon dissolution of a marriage rests with the Judge. And so, whilst a prenuptial contract is one of the compelling documents a court will look into

when making a settlement order, it will only uphold its contents if they are found to be in accordance with the law and what is ‘fair’ in the circumstance. Prenups and unforeseen Situations Despite the best of intentions, just like with any contract, prenups are nuanced in application. For instance, where a party to a marriage with an existing prenup agreement is found guilty of murdering the other party will such a spouse benefit from the provisions of the prenuptial agreement where they make arrangements for the care of the now murderous spouse? There are no simple answers to such intersecting moral, ethical and legal dilemmas and these invariably invoke heightened emotions on all sides and inevitably, proceedings in Court. Simply put, under Nigerian law, “you cannot benefit from your own wrong” but this is not a rule of universal application. As part of marital and wealth planning, prenuptial agreements when done right can be a helpful tool to address financial and legal consequences of marriage in Nigeria. The reader is advised to seek expert legal advice for further guidance.

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Hope returns as banks, Airtel partner TraderMoni to promote financial inclusion at IDPs camps

ince the beginning of the Boko Haram crisis in the North Eastern part of Nigeria, thousands have been affected, with many Internally Displaced Persons (IDPs) forced to live temporarily at camps across the country. While the military continues its efforts to secure the country, these displaced Nigerians continue life at the camps even as they wait to be resettled back to their homes. Displaced from their homes, disconnected from their daily jobs, many Internally Displaced Persons are stuck at the bottom of the economic ladder and remain part of extremely poor Nigerians, estimated at 80 million according to recent reports. Camp residents

visited Bocolis, Teacher’s Village, Custom’s House, and Learning Centre, all IDP camps in Maiduguri, Borno state. At the camps, TraderMoni enumerators met with thousands of IDPs, educated them about the TraderMoni scheme and enumerated them by taking their details especially their phone number. Through a partnership with the Bankers Committee, a group that represents all Nigerian commercial banks and Airtel Nigeria, camp residents without mobile phones were given TraderMoni branded mobile phones and free sim cards through which they were able to access their mobile wallets. After this, they received the initial ten thousand Naira

remain unbanked for several reasons; chief among them being loss of identification documents during unexpected crisis that ravaged their communities In 2016, the Government Enterprise and Empowerment Programme (GEEP) was initiated by the Federal Government with the knowledge that millions of Nigerians at the base of the economic pyramid lack access to credit facilities. Many of these Nigerians are at IDP camps, displaced from their daily sources of income and uncertain about their future. To reach this population in desperate need of loans with which they can transform their lives, in January 2019, the TraderMoni team

TraderMoni loans. Through a simple technologydriven process, largely tied to a phone number which also doubles as a mobile wallet, database that contains the names and contact details of every beneficiary, TraderMoni is not only including them in the financial ladder but giving them seeds with which they can start a new life. When repaid, the interest and collateral free loans, also provides an avenue for these beneficiaries to access larger loans, giving them better opportunities to improve their lives. If these beneficiaries repay their first loan as promised, they immediately qualify for N15,000. After payback of the

second loan, they qualify for a N20,000 loan, and then N50,000, and then N100,000. Through a methodical and gradual process, their businesses will grow in an organic manner. The beneficiaries promised to repay. As the country continues its

race to financial inclusion, Nigerians at the IDP camps are not left behind. “These initiatives are aimed at expanding financial inclusion because we have over 23 million Nigerians who are financially excluded, as this administration

aims to reach them so that they can grow their businesses,” he said that so far 12 billion Naira has been disbursed in loans to a total of 1.2 million people; the target is to disburse a total of 20 billion Naira to 2 million people across Nigeria.

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Manufacturers lament poor energy supply as power accounts for 40% of production cost

Pg. 23

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

CONSUMER GOODS

PZ Cussons may ‘streamline’ Nigeria operations amid declining share price OLUFIKAYO OWOEYE & GBEMI FAMINU

Z Cussons warned has warned that its profits will drop almost 13 percent in its cur rent financial year, with consumers “under pressure” across its markets, especially Africa. PZ Cussons has seen shares tumble after warning over profits amid mounting woes in its Nigerian business. Shares dropped as much as 13% after the group said underlying pre-tax profits are now expected to be “towards” £70 million, down from £80.1 million a year earlier. Caroline Silver, chairwoman of PZ Cussons, note d that the macro economic conditions in Nigeria remain extremely challenging and continue to have a significant negative impact on overall group performance. Ms Silver confirmed the group is working on initiatives to “streamline its portfolio of activities a n d l i m i t e x p o s u re t o volatility in Nigeria”, with more details expected in due course. ‘PZ will prioritise key p ro d u c t c a t e g o r i e s i n Nigeria until growth re-

turns to the market.’ The group said profits are being hurt by economic troubles in Nigeria, with wages lagging b e h i n d s p i ra l l i ng c o s t inflation in recent years, as well as an estimated £5.5 million from significant port disruption in the country. “We expect the consumer to remain under pressure in all of the markets in which we operate,” the group said. PZ Cussons, founded 1 3 5 y e a r s a g o i n S i e rra L eone, faced strong headwinds in Africa during the first half of its financial year, with revenue dropping 23 percent year on year. On a constant currency basis that helps smooth foreign exchange volatility, sales were down 13.3 percent. It pointed in particular to Nigeria, where “consumer disposable income has remained weak ahead of the general election which is scheduled for February 2019.” P Z Cu s s o n s s a i d i t s performance in the African nation is being hit further by higher supplychain costs and a lower exchange rate. “ T h e re a re o n g o i n g cost challenges due to

significant disruption being faced in clearing goods at the port and a further 10 percent weakening of the naira against the US dollar in the period,” it added. In Europe, PZ said

there was a good performa n c e ove ra l l d e s p i t e Brexit uncertainty in the U K , w i t h t h e r e g i o n ’s half-year underlying earnings up 1.7% at £24.6 million. It said a raft of new

product launches helped drive good revenue growth in its UK washing and bathing division. In Europe, the group’s biggest market, sales increased 1.2 percent or 1.4 percent in constant

currency. New product launches drove sales grow th in the washing and bathing unit, with the beauty division also boosted by new products and expansion in distribution channels.

BANKING

Osuntoki resigns from Access board as Moody’s set to lower Bank’s rating SEGUN ADAMS

oard of Tierone lender, Access Bank, in a release to the Nigerian Stock Exchange on Wednesday, January 30, announced the resignation of Titi Osuntoki. ’’The Board of Directors of Access Bank hereby announces the resignation of Mrs. Titi Osuntoki as the Bank’s Executive Director, Business Division with effect from March 18, 2019’’ the notice read. Consequently, shares of Access Bank dipped by 0.83 percent to continue its downward trend on Wednesday.

Access stock has been falling since it peaked at N6.50 on the 25th of January-the highest it has traded in 2019 after it opened for the year at the same price. The retirement of Osuntoki who had served for six years comes at a period in which the proposed merger of Access and Diamond bank has been scheduled to be completed. The Board of Access, however, allayed fears of conflict within the organization, citing Osuntoki’s exit as a personal decision to pursue other interests. ‘’Mrs. Osuntoki has confirmed that she has

no disagreement with the Board and there is no matter relating to her resignation that needs to be brought to the attention of the shareholders of the bank or the regulatory authorities,’’ the Board stated. Titilayo Osuntoki has been an Executive Director of Business Banking Division at Access Bank Plc since October 2013 and a Member of Supervisory Board at Access Finance B.V. since March 17, 2017. With over two decades as a banking professional, Osuntoki has served in many capacities, including

Head of Lagos Division of Guaranty Trust Bank ; Executive Director of Guaranty Trust Bank Plc, as well as Chief Executive Officer of GTO Professional Services Limited Plc ; Independent NonExecutive Director of Wapic Insurance Plc; Director of CRC Credit Bureau Limited and Patrick Learning and Speech Centre Limited. Osuntoki obtained her first degree in Civil Engineering from the University of Lagos, where she also holds an MBA . Ahead of the proposed merger, Moody’s Investors Service on Tuesday placed Access

on review for downgrade, citing concerns of the potential negative effect on the capital and asset risk metrics of the Bank. The rating agency expects that Access’s asset risk would likely increase as it takes on low-quality assets from Diamond Bank. Explaining that Diamond’s risk management and underwriting procedures were weaker than those of Access, Moody’s positioned that the nonperforming loans (NPLs) of Access Bank would rise. On the other hand, the Global Rating Agency placed Diamond Bank under

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: CHINEDUM ONYEMA

review for upgrade on the back of expectations of improvements in its creditworthiness upon merging with Access Bank. In a conference call held Thursday, January 25, Management of both banks disclosed that it was bringing the merger forward by two months, with April being the speculated period in which a new entity would emerge from both banks The merger once completed in H1 2019 is estimated to create Africa’s largest bank by customers, with synergy opportunities of up to N150.3 billion to be exploited.

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Monday 04 February 2019

COMPANIES & MARKETS CONSUMER GOODS

Flour Mill posts N10.3 billion profit in third quarter 2018 amid restructuring plan ISRAEL ODUBOLA

lour Mills of Nigeria (FMN) Plc, a leader in food and agro-allied products, recorded N10.3 billion post-tax profit for nine months ended 31st December 2018, as the Group’s plans to transfer existing assets in one of its divisions, Golden Penny Fertilizer, to its wholly-owned Agro-Allied company, Golden Fertilizer Company Limited, awaits the approval of the Securities and Exchange Commission (SEC). The move is consistent with the on-going restructuring process of FMN Group and is expected to boost synergy, increase efficiency and positions FMN for greater operational and financial flexibility in business growth push. Golden Fertilizer Company Limited would be registered as an independent company to oversee the Group’s agro-allied businesses. The company recorded revenue of N297.2 billion for nine months ended 2018, indicating a marginal contraction of 2.14 percent from N303.7 billion recorded in a similar period a year ago. Revenue declined as a result of logistic turbulence posed by Apapa gridlock. Despite the fact profit before and after taxes went down by 25.50 percent and 21.65 percent to N13.6 billion and N10.3 billion respectively, the com-

pany stressed that they have succeeded in posting strong performance amid business challenges, and remained positive that with sustained efforts to boost sales and marketing activities, a good performance would be sustained. According to the Group Managing Director, Paul Gbededo, the results portray the efforts of the company to push up growth and efficiency to acquire new opportunities in the market. “The results are largely a reflection of our focus on driving volume growth while improving operational efficiency and ramping up strategic marketing and promotional activities to win over new segments in our food business”, Gbededo said in a statement filed with the Exchange. The earnings per share, which indicates the portion of a company’s profit that is allocated to each outstanding share, appreciated by 81.82 percent to N5 from N2.75 a year earlier, indicating that profit for every share held rose from N2.75 to N5. The company’s total assets went up by 6.46 percent to N343.4 billion for nine months ended 31st December 2018 compared with N322.6 billion recorded a year earlier, driven by 17.73 percent expansion in current assets. Total indebtedness of the company increased by 8.55

L-R: Mohammed Iyamu, Vice President, Trading, Cars45; Olu Tikolo, vice president, business development, Kia Motors Nigeria; Olajide Adamolekun, Chief Financial Officer, Car45, and Olawale Jimoh, marketing manager, Kia Motors Nigeria, at the Car45 and Kia Motors media parley which held in Lagos.

percent to N185.8 billion in the period considered from N171.1 billion a year earlier, triggered by an upsurge of 119.6 percent in short-term borrowings. The cost-control strategy of the company turns out to be unsuccessful as the cost of sales, selling and administrative expenses rose in the period under concern. Cost of sales, which indicates the direct cost attributable to the

production of goods, inched up marginally by 0.36 percent to N263.5 billion from N262.6 billion in the previous period. Administrative expenses for nine months ended stood at N11.1 billion, representing 9.84 percent compared to N10.1 billion in 2017, while selling expenses surged by 33.20 percent from N3.6 billion for nine months ended in 2017 compared with N4.8 billion in the period under focus.

Gbadedo stayed positive that improvements will be seen across major business segments before the close of the financial year as the company is focused to deliver its promise of quality to consumers despite the adverse effects of traffic congestion on business operations. Share price of FMN has been on a bearish note since Tuesday Jan 29 2019. After close of trading on Thurs-

day (Jan 31), price per share slumped by 2.37 percent or 45 kobo to N18.55 as against N19 recorded in the preceding day. Flour Mill of Nigeria Plc was incorporated as a private limited Company in 1960 and got converted to a public liability Company in 1978. The Group has four value chains namely food value chain, sugar value chain, agroallied value chain, and support services.

INSURANCE

MICROFINANCE

AXA Mansard, TechPoint Africa collaborate to boost insurance penetration among youths, startups

LAPO subsidiary plans N3bn for MSMEs empowerment in 2019 fiscal year

ISRAEL ODUBOLA

XA Mansard, the largest Nigerian insurance firm by market capitalization, says that it has entered into a partnership with TechPoint Africa, a leading media platform for startups, innovation & technology, to boost insurance penetration among youths and tech-entrepreneurs in Nigeria in particular, and Africa in general. This partnership is coming at a time when insurance penetration in Africa’s most populous country is extremely low, below one percent, less than that of South-Africa (13 percent), Kenya (2.75 percent) and Ghana (2 percent). Speaking at the launch of the partnership which held at the Techpoint Build Conference in Lagos, the Chief Digital Officer of Axa Mansard, Bayo Adesanya, said that the partnership is poised to enhance insurance coverage in Nigeria beyond its current level, adding that the company has strategically positioned itself to leverage on technology for improved service delivery. “Coverage for insurance

in Nigeria is below one percent of the population, so if you are going to address that, and we are going to spread the benefits that come from the services that are provided in the sector, it’s important to engage the youth and it’s also to do so in a digital technology-driven way”, Adesanya said. Speaking further “In the wake of the digital age and technology vastly changing the way we do things, it is therefore important that companies begin to actively integrate into their operations the benefits of technology and leverage on it”. According to him, 60 percent of the country’s population is below 30 years, and this prompts the need to reach out to the youths that are currently underserved by the insurance sector. This collaboration is expected to cover the gap between the vast population of young people and the insurance sector in general through technology. “Technological disruption to insurance has begun in advanced climes and insurance is going digital and technological solutions are needed to deepen penetration”, he said, adding that

the company is taking huge steps to utilize technology to upgrade its services beyond traditional insurance. In his remarks, Adewale Yusuf, Founder, TechPoint Africa said that the partnership came up out of the need to assist start-ups and small and medium enterprises by equipping them with requisite technical skills to improve their profitability. “For years, I and my team have documented the journey of startups and SMEs in Nigeria and Africa, and we discovered that problems attributed to businesses are the same “We have brought out experts, founders in different fields to assist businesses to understand the intricacies of having and building a successful business in Africa”, he said. According to Yusuf, technology affects businesses, economy, and humans in all respect, and it is imperative to keep up with the evolving trends in technology. The clinic sessions of the programme for startups and SMEs would reawaken them with diagnostic advice from advisors and assist them to harness their potentials for economic growth.

IDRIS UMAR MOMOH, Benin

icro Investment Support Services Limited (MISS), a subsidiary of Lift Above Poverty Organization has planned to disburse the sum of N3 billion to support Micro, Small and Medium Enterprises (MSMEs) in 2019 fiscal year. Elizabeth Ngozi Ehigiamusoe, managing director of MISS gave the hint on Wednesday at the 2019 LAPO annual media interactive forum in Benin-City. Ehigiamusoe represented by Akin Ashaolu, Chief Operating Officer of the subsidiary said the sum of N2.8 billion was spent on the acquisition of 3,375 income-generating assets on micro-to support MSMEs in 2018 fiscal year. She added that the sum represents 106 percent performance over the sum of N2.6 billion disbursed by the subsidiary during the same

period in 2017 She also put the total lease portfolio of the leasing company from N1.89 billion in 2017 to N2.16 billion in 2018 while repayment grew from N2.07 billion in 2017 to N2.53billion in 2018 representing 22.20 performance increase. The managing director listed some the income- generating assets assisted MSMEs to acquire to include generating set, motorcycle, tricycle, buses, household items, welding machines, photocopier machines among others. She said the LAPO subsidiary currently covers eight states in the federation which are Lagos, Ogun, Edo, Ondo, Oyo, Enugu, Osun and Rivers States, 18 branches and five regional offices with 286 staff. Ehigiamusoe, also disclosed that as part of its diversification strategy, the establishment is making more emphasis on agricultural improve-

ment in the 2019 fiscal year with the disbursement of equipment for farm mechanization. She explained that in the 2019 fiscal year, the establishment plans to spend the sum of N700million to acquire farm equipment for about 150 farmers as against the sum of N250million spent to empower 54 farmers in 2018. While noting that financial empowerment of Micro, Small and Medium Enterprises (MSMEs) are vital for the sustainable economic growth and development of Nigeria added that supporting their business initiatives would accelerate their business growth and development for a greater economic impact. She further disclosed that plans are underway to open more branches so as to ensure that the impact of the organization is optimally felt among MSMEs across the country.

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MANUFACTURING

Manufacturers lament poor energy supply as power accounts for 40% of production cost DAVID IBIDAPO

he Manufacturer Association of Nigeria (MAN) has lamented over the state of Nigeria’s power supply and the negative effect on manufacturers’ balance sheet. According to MAN, N246 billion has been spent by manufacturers fuelling their generators alone in the last two years. In a report released by MAN recently, manufacturing operators spent a whopping N129 billion in 2016 and N117.38 billion in 2017 on private power generation. Despite decline year on year, the manufacturers spent further N43 billion on private power generation in the first half of 2018. “The challenge of inadequate electricity supply persisted in 2018, worsened by skyrocketing electricity price.

Inadequate electricity supply remains a major driver of the cost of production.” MAN laments. The major challenge facing Nigeria power sector was however tied to obsolete power infrastructure and weak transmission and distribution networks. This is despite “finding showing a slight improvement in electricity generation and distribution” MAN reiterates. The amazing fact about this is that Nigeria is the world’s largest deposits of coal, oil and gas and the oil producer in Africa. The lament of the manufacturer, however, cannot be compared to laments in homes and small businesses. According to an analyst who pleaded anonymity, “a minister controlling three major sectors which include works, housing and power cannot be efficient in any one.

These ministries should be divided into three with different minister handling them. This would promote accountability in these sectors.” Some analysts pin the slow growth in the economy on the poor power supply which prevails in Nigeria. As the output from companies is key in determining macro-economic output, the poor power supply is likely to increase the cost of production. Increase in cost of production reduces earnings which should be plunged back into investment to ensure the company’s growth. The ripple effect of the poor power supply is affecting wages, increasing unemployment in the bid to cut cost, higher prices on final output without corresponding increase in wages, upward pressure on inflation rate etc. to mention but a few.

Adam Nuru, managing director, First City Monument Bank (FCMB) (l), interacting with some tech start-ups during the launch of the FCMB Hub One (a tech-themed co-working space), located in Yaba, Lagos.

PROPERTY

Rendeavour provides homes, creates jobs as its city devt footprints widen CHUKA UROKO

endeavour, Africa’s largest builder of new cities, says it has over the last decade, provided affordable houses for 3,000 families and created 10,000 direct and indirect jobs through its cities development and infrastructure provision across five African countries. Acording to Stephen Jennings, Founder & CEO Rendeavour, with an average of four persons per family, the company has created homes for 12,000 persons. Given the multiplier effect of job creation, it means that about 50,000 people may have benefited from the development activities of the company given five dependants per worker. Backed by American, British, Norwegian and New Zealand investors with a long-term commitment to Africa, and to Nigeria in particular, Rendeavour opened its

first businesses in Nigeria in 2006 when it launched Renaissance Capital, one of Nigeria’s and the continent’s leading investment banks. In 2012, it established RenMoney, Nigeria’s leading consumer finance bank. Since that time, the company has not wavered in its commitment to large-scale, transformational investment in Nigeria, especially in Lagos, the country’s commercial nerve centre. Rendeavour is Africa’s largest builder of new cities and is currently developing seven major satellite cities in five countries, including Nigeria, Ghana, Kenya, Zambia and theDemocratic Republic of Congo (DRC). “These cities, on more than 12,000 hectares of land, are providing homes, offices, schools, hospitals and industrial parks within well-planned urban environments, delivering new roads and

utilities such as power, water, and ICT, to thousands of people today, and to hundreds of thousands in the future”, said Stephen Jennings, the company’s CEO. Citing their work in work in Kenya, Ghana, and Zambia, Jennings disclosed that they had invested approximately $300 million of their own capital to develop sustainable and inclusive new cities. In turn, this investment has catalysed well over $1 billion in additional investment in construction, plant, and equipment in these countries by indigenous and multinational companies looking to build their own future in Africa. More than 60 companies including Unilever, MTN and Africa Logistics Properties, the IFC- and CDC-financed Grade A warehousing business, are building or have completed offices, manufacturing facilities, and world-class logistics and warehousing complexes.

L-R: David Majekodunmi, president Fs Club; Gbenga Ashafa, senator representing Lagos east senatorial district and past president of Fs Club; Mr Babajide Sanwoolu, Lagos State APC governorship candidate; Otunba Femi Pedro, former Lagos State deputy governor and past president of Fs Club; Dr Femi Hamzat, Lagos State APC deputy governorshp candidate and Ashiwaju Temitope, vice president of Fs Club, during a courtesy visit by Lagos State APC Governorship Candidate to Friends Club Jibowu Lagos.

CONGLOMERATES

MOJEC International among LSEG list of ‘companies to inspire Africa’ 2019 KELECHI EWUZIE

ne of Africa’s leading conglomerates with business interest in Power, Technology, Real Estate and Agriculture, Mojec International Holdings - has been listed as one of the ‘Companies to Inspire Africa’ in 2019 by the London Stock Exchange Group (LSEG), an international market infrastructural business which focuses on capital formation, intellectual property and risk and balance sheet management. The ‘Companies To Inspire Africa’, CTIA, is prestigious annual report compiled by the London Stock Exchange Group to identify most inspirational, dynamic, privately owned high-growth companies investing in the real sector of the economy and African continent that are making significant socio-economic impact by creating substantial numbers of jobs and have the potential to be publicly listed within the next few years. The growth rates and sector diversity of these firms featured in the report highlight their potential to transform the African and wider economy.

Over 5000 companies were recommended and shortlisted across the continent, only 5 percent of these companies from 32 different countries made the list. The companies that made the list boast of an average compound annual growth rate of 46 percent, up from 16 percent last year. On average, each firm employs over 350 people, with an average compound annual employment growth rate of 25 percent. David Schwimmer, group CEO, LSEG speaking at the presentation of the second edition of the report held recently in London, United Kingdom, stated that LSEG’s ‘Companies To Inspire Africa’ showcases fast-growing firms that are crucial to the future of the African economy, capable of driving transformative economic growth in their home countries, and have the potential to reach over a billion people. Schwimmer noted the increasing influence of women in leadership positions in the fast-growing companies that would play a pivotal role in shaping the future of African business. The CEO commended Mojec Inter-

national for being one of these high growth companies to make a world impact in 2019. Chantelle Abdul, chief executive officer, Mojec International described the listing of Mojec international in the globally acclaimed report as a significant milestone in the history of the company and a worthy recognition of its contribution to leapfrog Nigeria and Africa’s economy into the 21st Century by helping to electrify Africa ,Improve the life of the average African, Creating significant Employment and positive socio-economic impact across the different sectors where it operates and is committed to making positive socio-economic impact. Speaking after receiving the award as one of the ‘Companies To Inspire Africa’ in 2019, Abdul stated that Mojec Meter Manufacturing Company is the largest meter manufacturer in West and East Africa with a footprint of over 80% market penetration rate in the Nigerian Electricity market with ambitious future plans to triple its production capacity in 2019 and further entrench its leadership positioning in the market place.

L-R: Babatunde Aribido, PR Manager, DStv; Olufemi Osobajo, senior marketing manager, Bet9ja, and Jennifer Ukoh, PR manager, GOtv, at the Big Brother Naija Audition in Lagos.

L-R: Folayan Olufemi Alawemo, partner, Enyo Retail and Supply Limited; Abayomi Awobokun, CEO, Enyo Retail and Supply Limited; Bimbo Awobokun, director, Enyo Retail and Supply Limited, and Abimbola Alawemo, partner, Enyo Retail And Supply Limited, at the launch of Enyo Petrol Station in Ibadan.

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CEO INTERVIEW

Monday 04 February 2019

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BUSINESS DAY

Stephen Jennings

Founder and CEO of Rendeavour, Africa’s largest new city developer and Founder of RenMoney

Interview with Private Sector Leaders

‘We provide the platform and bring dozens of big investors into Nigeria’ Stephen Jennings is the Founder and CEO of Rendeavour, Africa’s largest new city developer and Founder of RenMoney, the fintech bank based in Lagos. He shares insights on how Alaro City, a new large-scale mixed-income city in the Lekki Free Zone being developed under a joint venture between Rendeavour and the Lagos State Government, will boost foreign direct investment and create tens of thousands of jobs in Lagos and Nigeria in this interview with BusinessDay’s Endurance Okafor. Excerpts:

ell us about yourself and what is the basis of your recent trip to

Nigeria? My name is Stephen Jennings. I am the Founder and CEO of Rendeavour and I’m in Lagos to participate in the launch of Alaro City in the Lekki Free Zone, which occurred on Tuesday. We are the largest builders of new cities in Africa. We believe that to decongest and modernise the existing cities, it’s going to take many decades, to solve a lot of issues around land rights, titles, planning, etc. We therefore need also to build new cities and Rendeavour started doing that about ten years ago. About six years ago, the then governor of Lagos State approached us with the view to building a new city on the Lekki Peninsula in the Free Trade Zone and so we discussed to form a joint venture between the Lagos State Government and ourselves on a 2,000-hectare piece of land. That took a number of years and various administrations to finalise the structure and negotiate the details. In the meantime, they also saw the on-going progress with our other cities, so we went from being an idea to something very tangible in their minds. And so last year, we finalised our legal structure and in the middle of the same year we got our Certificate of Occupancy (C of O). What will the city be like and what kind of infrastructure will be found in it? So there are a lot of projects that are referred to as a cities: Technology City, Entertainment City, Sports City - 99 percent of those projects are not cities because they don’t have the scale and they do not have all of the multitude of ingredients that go into a

city. Our cities - and if you visit them you will see - are planned as new and complete cities. The scale needed for a city is typically around 2,000 hectares. A city needs a minimum of 150,000 residents with enough space for a full range of industry, commerce, residential, recreational and environmental activities with the scale of infrastructure to support it. The first thing about Alaro City, and people will see as it unfolds month by month, quarter by quarter, is that it is a city; it is not a project called a city, it is a new city. Why did you decide to lunch Alaro City at time when the general election is just by the corner? It is just a milestone. We really started working in 2012; a lot of work, a lot of negotiation, a lot of planning and a lot of discussions with people that we are bringing to Alaro City. These didn’t just start recently;

I don’t believe any of the headlines I read about Nigeria, I can honestly say that. I come here with the team and I have an open mind. I judge what I see in front of me

these discussions go back quite a few years. So what we saw at the launch of Alaro City on Tuesday 29th January 2019 was just a milestone in that process and these are 20- 25 years projects. Some of them I will say we have been 10- 12 years into them. So we have seen many elections, we have seen local politicians/presidents come and go, we have seen political turbulence, we have seen business cycles come and go. Our approach as a business is that we just keep on going and we try not to be distracted too much by short-term events because we are long-term investors and the main issues with people coming into our cities is confidence. Everyone loves your idea; the issue is: is it real or is it just a marketing idea? It becomes real when the city is actually being implemented and our co-developers, they need to see continuous development; more roads, more buildings, more schools, more factories, etc. Alaro City has already started and people will see that on the drive towards Epe. You have launched 6 other cities across 5 different African countries. How is Alaro in Nigeria different from others? I think Nigeria has always been on the top of the list; and within Nigeria, Lagos is the top of our list. Why? It is obvious: this is one of the biggest cities in Africa, this is one of the most commercial cities on the continent. Its existing infrastructure, with all due respect, is not of the quality that Lagos needs and deserves. So whether it is office space, residential, or the incredibly congested industrial zones that you have, there is huge demand for a normal world-class large-scale, properly planned city. And there is more demand here than anywhere else in Africa. On top

of that, we have this fantastic Lekki axis, the Free Zone, with all the benefits of the new sea port, the biggest sea port in the region, the likelihood of the airport, the advantages of the Free Zone and the huge activities from the Dangote Refinery. If anyone knows the relative benefits of the different sides of Africa, we do. This is a unique location. What challenges did you encountered in the other 6 cities you launched across other

African countries and will Nigeria’s be different? Some of the issues are identical, and some others are specific to the market. And that is the benefit of being across multiple countries on multiple projects. The way you build roads, the way you work with contractors, the way you design a city, the way you build a water system, the way you build a sewage system, a lot of the issues you have to plan, the way you work with international clients. For example we are talking with 350 multinationals around the world about our projects.

So those issues are the same; and then obviously Lagos, like any other city, has its own specifics: the infrastructure specific, so for example at Alaro City, we have gas at our door step. You literally have to walk over the gas pipeline to get into the site and so there is a unique advantage. There are other issues; it is a bit further out from the centre, so that creates challenges as well as opportunities because people who are buying and building factories want residential conversion at Lekki, so the details of how you acquire those lessons and skills

have to reflect the reality of the market and the need of your local community. Another challenge is how fast you are able to roll out infrastructure in the city. So the bigger and more powerful your market, the faster you go. Lagos is a big market and the economy in the state is incredibly diverse. There is the propensity to go faster and you probably have the ability to invest a bit more heavily in the quality of infrastructure because the demand structure is stronger here than a city like Accra for example. As a foreigner, what are the challenges of having investments and doing business in Nigeria? I have been working extensively in Nigeria since 2006. I led the building of Renaissance Capital here, starting from scratch, when investment banking was really a nascent industry. We had to help build the industry, not just our business. Then we launched RenMoney in 2012 and we have been working on this (Alaro City) business since 2012. I think the main thing is just to be open-minded. I don’t believe any of the headlines I read about Nigeria, I can honestly say that. I came here with the team and I have an open mind. I judge what I see in front of me, and the people I meet and the opportunities. If you come to Nigeria with an open mind, it is obvious that the opportunity is extraordinarily big. Nigeria is one of the biggest in the emerging markets anywhere, particularly in Lagos. There are not many cities in the world that you can compare with Lagos, in terms of the potentials relative to how it is perceived. The city is, I wouldn’t even say a sleeping giant; it is a waking giant. The scale is truly extraordinary. Like in anywhere, you have to adjust to the reality of how you proceed. You cannot im-

pose your way of doing business, and you have to understand how you work with people, what the logistical constraints are, and the legal situation, and so on. Speaking of RenMoney, are there recent developments in its operations? The mind change since last year is that we greatly increased our focus on the self-employed which basically is small businesses, which is really the engine of this economy. Most lenders are not focusing on small, self-employed which is basically SMEs; and if they are, then they are not doing it in a more convenient and efficient way. So that has become a very big part of RenMoney’s business and it’s driving very strong growth. We have a lot of scale; we have a lot of momentum in that business. It’s taken 6 years to get to where we are, but there is a very strong lending business now.

Will the newly launched Alaro City bring in FDI into the country? We provide the platform and then we bring dozens and dozens of big investors who now feel comfortable to come into the country. Dolan Chandaria, you see his factory in Alaro City. He hadn’t been to Nigeria before. He knew nothing about Nigeria but he knew a lot about us. He knew there’s a market opportunity but he trusteed us to create the environment where he can come in and build his factory in six months without any problems. What should the Nigerian government do to attract FDIs like Alaro City will be doing? I think the Free Zone concept is an inspired idea, and it’s clearly already working, and you can see the magnitude of the investment already happening with the existing developers including Dangote. I think the key role for the government is to maintain the integrity of the Free Zone and

to provide the required supporting infrastructure. If people coming to invest come and there is no issue with land title, there is no issue with road, water, power and there are no issues or uncertainties around the tax and custom status, then they can focus on their business. The trouble is that most of the time, investors are spending two-thirds of their time and effort worrying about those other issues. If you take those issues away, they are much more likely to invest. This is what Rendeavour does. The second issue is providing the requisite public infrastructure - so there is the port (or facilitating the port), the airport, the roads, and the water. These are not within the development nodes but the bulk public infrastructure. If the government does that and maintains the integrity in the Free Zone, this would be the biggest development known anywhere in Africa and I do not mean starting in three years, I mean starting now.

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Manufacturers set 15% GDP target, want auto policy reviewed

total of 70 percent. Even with 70 percent fees paid on imported vehicles, imp or ters of damaged or ‘accidented’ vehicles officially enjoy a rebate of 30 percent. What this has done is to encourage the importation of rickety vehicles, which

make up 70 percent of imported cars today. This has hurt local vehicle assembly as only 6,999 new cars were sold in the whole of 2017 as against South Africa’s 555,716. “There is a need for the policy to be revised, which will ensure the growth of the sector while ensuring that new policies will not be a threat to members of the association,” he said. On political debates, the helmsman of the manufacturing sector in Nigeria said manufacturers would like to see more focus on the economy, especially on the sector. “They should pay attention to the problems manufacturers are facing, particularly on issues such as infrastructure, access to finance, access to foreign exchange and other challenges.” O n made-in-Nigeria campaign, MAN president said the association is its major promoter and advocate and part of the advocacy led to the Executive 0rder 003, which

ma n d at e s g ov e r n m e nt departments and agencies to patronise locally made goods. “Plans have been made to engage these agencies. Also, manufacturers have been asked to improve their efforts in terms of e n ha n c i ng t h e q u a l i t y of products so as to aid the made in Nigeria campaign,” he added. He stressed the need to monitor government agencies and departments to ensure compliance, stating that some of them do not adhere to that. On high interest rate, he said lower ing rates could present opportunities for borrowers, but acknowledged that the the banking sector is already confronted with liquidity problem which makes lending difficult. “So, this balance has continued to be based on the reality of the situation, but MAN has always asked for measures that will keep inflation at a lower rate because that will improve our goods and services.”

he added. The exit rumours are not totally strange. Bef o re P ro c t e r & Ga m b l e (P&G) shut down its Agbara plant in July 2018, r umour mill had g one to town with the stor y t hat t h e d i ap e r ma ke r was leaving the country. P&G did not entirely exit Nigeria, but it shut down its Agbara factory, which was a big hit for its host state, Ogun. There is a general consensus that firms are facing tough macroeconomic conditions in the country. PZ’s financial statem e nt f o r t h e f u l l y e a r ended May 2018 showed that the consumer goods company’s revenue increased from N78.2 billion in 2017 to N80.5 billion in 2018, representing a 2.94 percent increase year on year. But profit before tax fell from N4.8 billion to N2.3 billion in 2018. Profit after tax also

dropped from N3.6 billion to N1.9 billion. In the third quarter of 2018, PZ Cussons, like o t h e r f i r m s, s t r u g g l e d from weak consumer discretionar y spending in Nigeria and macroeconomic issues. “It is a wake-up call for the government to put policies in place that will spur the economy,” said Ike Ibeabuchi, a manufacturer and CEO of MD Services Limited. Manufacturers w ere unable to sell goods worth N149.23 billion in the first half of 2018 after producing goods worth N4.6 trillion. They are selling to a population whose disposable income and spending are shrinking. Real household consumption and government consumption expenditures declined in 2017 (at –0.99 percent) while national disposable income fell by 1.52 percent, according

to the National Bureau of Statistics (NBS). Pz Cussons has billions of naira worth of investments in Africa’s biggest consumer nation and has made commitments to do more. The company has a number of ongoing investments and may not exit the Nigerian economy within the shortest possible time, given the countr y’s demographic potential and market size, which has It has a joint venture partnership with Wilmar International aimed at developing the country’s depleted palm oil industry. Santosh Pillai, managing director of PZ Wilmar, told BusinessDay last year that PZ Wilmar was committed to the development of palm oil industry in Nigeria, stating it had invested approximately $150 million in palm oil plantations in Cross River State alone.

ODINAKA ANUDU and GBEMI FAMINU

anufacturers say they have the capacity to contribute 15 percent to the Gross Domestic Product (GDP), but this can only happen if governments at all levels put policies in place to drive the sector. Nigeria’s manufacturing sector contributed 8.84 percent to the GDP in the third quarter of 2018, according to the National Bureau of Statistics (NBS), as against South Africa’s 13 percent. “We want to substantially improve the manufacturing sector ’s contribution to GDP to 15 percent within the next two, three years,” Mansur Ahmed, president, Manufacturers Association of Nigeria (MAN), said at a media luncheon in Lagos. “ This is also part of g ov e r n m e nt ’s p l a n o n

L-R: Adane Abera, third secretary, Embassy of the Federal Republic of Ethiopia; Solomon Abebe Tessema, ambassador extraordinary & plenipotentiary of the Federal Democratic Republic of Ethiopia to the Federal Republic of Nigeria; Babatunde Paul Ruwase, president, Lagos Chamber of Commerce and Industry (LCCI); Muda Yusuf, director general, LCCI, and Okooosi Rakeeb, head, Strategy, Primelead, during a courtesy visit of the Ambassador to LCCI in Lagos recently

Economic Recovery and Growth Plan (ERGP).” He said the manufacturing sector must make significant contribution to the economy not because it has more resources, but owing to its capacity to grow alongside a modern economy.

Ahmed said the automotive sector faces many challenges, which underscore the need to review the National Automotive Policy of 2013. The policy imposes 35 percent levy and 35 percent duty on imported vehicles, amounting to a

PZ Cussons and Nigeria’s exit rumours ODINAKA ANUDU

any Nigerians panicked last Thursday when a national newspaper reported that PZ Cussons was considering leaving Nigeria as a result of its tough financial situation in the country. Social media picked the story and ran to town with it, generating a plethora of reactions from Nigerians at home and in the Diaspora. O n e D e m o l a O l a re waju, w ith the Tw itter handle @DemolaRewaju, said PZ leaving Nigeria was like half of his childhood going with them. “You practically didn’t grow up in the 80s/90s if you didn’t use at least one of their products,” he said. Another Twitter user, who goes by the name Novah’s Stitches, said: “ PZ! Makers of Cussons?

Oh no. This one is like my lifestyle leaving me behind. Please someone should tell the company to carry me along. Seriously, tears dropped from my eyes for Nigeria.” H o w e v e r, t h e Fa s tMoving Consumer Goods (FMCG) firm, which produces and distributes detergents, toiletries, soaps and home appliances, has dismissed the report as false. “The headline is totally false and misleading and creates the impression that PZ has decided to leave Nigeria,” Christos Giannopoulos, chief executive officer, PZ Cuss o n s Nig e r i a Pl c, sa i d weekend. Giannopoulos said the trading statement issued to the London Stock Exchange, which was quoted by the newspaper, was clear on the company’s continued operations in Nigeria. Quoting the trad-

ing statement issued in London, he said: “Whilst these conditions prevail, we will maintain our strong market shares in key product categories in Nigeria until growth returns to the market.” He said PZ was celebrating 120 years of its existence this year, making life better and adding value to Nigerians. “In our 120 years of doing business in Nigeria, we have faced different conditions and come out stronger at the end,” the managing director said. “ We c o n f i r m t o o u r consumers, customers, employees, business partne rs and stakeholde rs that Nigeria still remains a market of interest for us and have made no plans to leave Nigeria,” Giannopoulos stated. “Our factories in Ikorodu, Aba and all our distribution centres around the country are operational and will continue to be,”

Monday 04 February 2019

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real sector watch

Why Nigeria’s manufacturing sector needs more M&A deals

M&A deals, but foreign exchange woes and recession cut short this dream that year. More than any sector, Nigerian manufacturers need M&A deals to achieve economies of scale. Coca-Cola, for example, is a clear leader in the drinks business in the country. Coca-Cola is also the leader in Nigeria’s bottled water market, estimated at N938 billion, according to a recent report by Euromonitor International. Currently, Coca-Cola has a strong presence in many countries, with a strong consumer base. Chi Limited, on the other hand, led yoghurt and sour milk products in 2018, operating an effective distribution network nationwide, through which it leads many food and

drink products such as fruit juice. It has ensured strong popularity for its Hollandia brand, said Euromonitor International in its September 2018 report. But Chi does not have Coca-Cola’s distribution strength. Coca-Cola has the capacity to deliver Chi products to all of its branches across Africa, where Chi, on its own, cannot get to. This reduces logistics costs and raises revenue. It will also lead to more dividends for shareholders. Already, Coca-Cola has launched Hollandia in South Africa and is launching in Kinshasa, Democratic Republic of the Congo, and Ghana. “Essentially, a business will attempt to merge with another business that has complementary strengths and weaknesses,” said Rob Renaud, an investment analyst at Investopedia, an investment and business outfit. “Mergers can give the acquiring company an opportunity to grow market share without having to really earn it by doing the work themselves. Any M&A deals allow the acquirer to eliminate future competition and gain a larger market share in its product’s market,” Renaud said. The manufacturing sector suffers from high production cost, which makes competitiveness difficult. Forty percent of manufacturing expenditure goes to alternative energy. Manufacturers have spent N212.85 billion on alternative energy sources between the second half of 2016 and the first half of 2018, according to data from the Manufactur-

ers Association of Nigeria (MAN). This is over 100 percent higher than what was incurred in the previous four halves. Manufacturers told BusinessDay that logistics costs have risen by 50 to 100 percent in the last two years, owing to poor state of roads and lack of a good transport system. Poor infrastructure such as roads and absence of functional railways are not helping matters. The result of this is that manufacturers are increasingly reducing the size and spread of their plants to cut costs. Procter &Gamble shut down its $300 million consumer goods plant in Agbara in July 2018 to concentrate on its Ibadan plant. Nigerian Bottling Company closed down its Enugu plant in 2018. Unilever sold its Blue Band in 2018. Nnaemeka Achebe, Unilever chairman, gave the reason for the company’s decision. He said the spreads business was under-performing. He pointed out that the transaction would enable the company to focus more on other well-performing categories. “It is a no-brainer,” said one of the manufacturers, whose firm is considering a merger in the near future. “Many manufacturers are struggling and except there is a merger, some will die.” He explained that sourcing raw materials locally was becoming difficult, meaning that more foreign exchange was now being sought to import inputs. “This, alone, can cripple you as a manufacturer, which is why we need M&As.”

tracking and planning difficult. “This is where the problem lies. We in Aba have no good machines,” Anyanwu of ALAIN said. He said this is why the majority of Aba shoe makers are not meeting demands and are overworking themselves once orders are placed. Aba shoe makers import animal skins from China and many parts of Africa and Europe. “What happens is that the tanneries in Kano and Kaduna process animal skins and sell them as leather in the global market, earning

foreign exchange,” said Chinatu Nwagbara, coordinator of Made-in-Aba Project, who produced shoes for Olusegun Obasanjo in 2016. “So we go to China and other countries to buy. Sometimes, we buy our products and re-import,” he said. The Abia State government said in 2016 that Huajian Group in Ethiopia, which made shoes for Ivanka Trump, United States president’s wife, would be coming to Aba. In September 2017, Sherry Zhang, general manager of Huajian Shoes in Addis Ababa, told BusinessDay in

Addis that the company was still interested in setting up a shoe factory in Aba, southeast Nigeria. But this has not happened since. However, a new set of machines have been imported by a new investor in Aba, who plans to modernise the industry, BusinessDay was told. “We need good roads and we hope that Geometric will come soon to power our firms,” said a shoe maker, who does not want to be mentioned. Geometric Power Limited is billed to provide electricity to Aba shoe and garment makers.

Stories by ODINAKA ANUDU

he Coca-Cola Company last Thursday announced completion of its acquisition of Chi Limited in Nigeria. Coca-Cola first announced a minority investment in Chi three years ago and, as planned, acquired full ownership of the company last week. Chi is an innovative, fastgrowing leader in the beverage categories, including juices, value-added dairy and iced tea. The company, founded in Lagos, Nigeria, in 1980, produces juice under the Chivita brand and valueadded dairy under the Hollandia brand, among many other products. Coca-Cola acquired a 40 percent stake in Chi in 2016 from Tropical General Investments Group, the holding company for Chi Ltd. Juices and value-added dairy categories rank among the fastest-growing beverage segments in Nigeria and Africa. This acquisition further signals Coca-Cola’s optimism about Africa’s consumer opportunity and a commitment to its long-term investment and growth plan on the continent, where it has been present for more than 90 years, Coca-Cola said. “Coca-Cola is continuing to evolve as a total beverage company, and Chi’s diverse range of beverages perfectly complements our existing portfolio, enabling us to accelerate expansion into new categories and grow our business in Africa,” said Peter Njonjo, president of the West Africa business unit of Coca-

L-R- Clem Ugorji, director, public affairs and communications, Coca-Cola West Africa business unit; Peter Njonjo, president, West Africa business unit of Coca-Cola and Deepam Jan Roy, managing director, Chi Nigeria Limited at a press briefing on the acquisition of Chi Nigeria Limited by CocaCola, on January 31.

Cola. “We will support the Chi management team in building on the company’s remarkable heritage and achievements, while using the scale of the Coca-Cola system to replicate their success in more markets across Africa.” Financial details of the deal were not disclosed at a news conference in Lagos on Thursday, but Coca-Cola’s 40 percent acquisition in 2016 was said to be around $230 to $250 million. Analysts think the deal could be around $500 million to $600 million. The acquisition is targeted at building billion-dollar beverage brands in Nigeria that will expand to many parts of Africa, said Peter Njojo, president of Coca-Cola Company in West Africa.

In 2016, there were positive signs that manufacturers were tilting towards mergers and acquisitions (M&As). It started with Olam Nigeria acquiring BUA Group’s flour business in a deal worth $275million. Foam maker Vita Foam and Vono Products merged that year, while GSK Consumer Nigeria plc received a non-binding offer from Suntory Beverage & Food Limited to take over the former’s drinks business. This deal has so far been sealed. Later in the year, Japanese food maker Ajinomoto acquired 33 percent stake in pan-African FMCG company Promasidor, in a deal valued at $532 million. In the early part of 2016, analysts had predicted more

Boosting N120bn Aba shoe industry

ne million pairs of shoes are produced by more than 80,000 leather makers in Aba each week. With 48 million pairs produced each year at an average price of N2,500 a pair, the industry is said to be worth up to N120 billion. The industry is currently gaining traction across Africa, but government is not pulling enough strings to stimulate it. Traders from West African neighbours storm the industrial city every week to buy different product designs, just as Southern African schools are beginning

to place orders directly from the shoe makers. Canadians, Europeans and the Chinese are also in the party, placing orders themselves directly or through their Nigerian proxies, BusinessDay was told in Aba. Ken Anyanwu, secretary of the Association of Leather and Allied Industrialists of Nigeria (ALAN), who produced Nigerian armed forces shoes in 2016, said they are no longer meeting demands. The Abia leather industry is made up of shoes, trunk boxes and belts. It provides employment for tens of thousands, with many specialis-

ing in different stages such as designing, patterning, cutting, skiving, stitching, peeling and finishing. It is made up of clusters such as Powerline, Imo Avenue, Bakassi, Aba North Shoe Plaza, Omemma Traders and Workers, ATE Bag, and Ochendo Industrial Market, comprising input supplers, among others. However, the industry is in thriving in chaos as the majority of shoe makers in the industrial city are poorly structured and are not registered at the Corporate Affairs Commission. Exports are made informally, making

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Why Nigeria’s huge population has not translated to large numbers for insurance Stories by Modestus Anaesoronye

igeria’s huge population put at over 180 million should ordinarily be a growth potential for insurance growth because the more there are many people to insure their assets and protect their dependants, the more insurance grows. Overtime, the country’s population has been the attraction of many international investors into the local insurance business, who believe that the population is an advantage when deepening penetration. The challenge according to experts is the lack of purchasing power by the citizens to afford some quality of life. A report by the World Poverty Clock shows Nigeria has overtaken India as the country with the most extreme poor people in the world, with 86.9 million Nigerians now living in extreme poverty, representing nearly 50 percent of the estimated 180 million populations. With this figure, it becomes clearer that a larger population of the population do not have the purchasing power to afford quality life, which insurance is part of. Purchasing power therefore has been described as very critical in the ability of the consumer to buy insurance service for risk protection. Mohammed Kari, commission for Insurance/ CEO, National Insurance Commission said during an interview that increasing

insurance penetration does not only depend on population, it is more dependent on spending power of the population. According to him, if you check the poverty level of Nigeria’s population, it is much lower to some of those countries we keep comparing Nigeria with”. Kari said the level of education and enlightenment of the insured is a factor, and also, awareness of the benefits of insurance. “I am sure you are aware that the insurance industry has commenced campaign to make the consumers aware of the benefits of insurance. We believe that when this is done, it will improve on the penetration”. He however noted that there is still a huge poten-

tial because of that population size and that is why the industry is realising the need to do more retail, and personal-line insurance against the corporates. According to Mohammed Kari, the corporate has almost reached its limit, because you cannot go beyond what exists, but individual classes are yet to be tapped into, and when this is done, then, the population of insured will increase. Ada Ufomadu, analyst, Financial Institutions Unit, Agusto & Co Nigeria had in report on insurance in 2017 said the Nigerian Insurance Industry, like most other industries, is affected by the macroeconomic environment. “The downturn in Ni-

geria’s fortunes which had its roots at declining global crude oil prices since 2014 has triggered changes in the consumption pattern of insurance products in recent times.” She however stated that with an estimated insurance penetration rate of 0.4 percent and only 1 percent of the population holding any form of insurance policy, the opportunities in the Nigerian market are enormous. “The Nigerian economy is expanding and new risks are evolving, hence a growing need for companies and individuals to insure businesses and protect themselves in the event of unexpected losses. By this, the economy is able to rebuild and recover from losses quickly. “ When we compare the country’s insurance penetration to economies like Kenya and South Africa which boast of insurance penetrations of 2.9 percent and 14 percent respectively, we see a clear lag. According to Ufomba, Agusto & Co believes that it is imperative for both operators and regulators to work together to increase awareness and educate the populace on the benefits of insurance. We need to take a cue from countries like Kenya and South Africa who have adopted various strategies including the support of other sectors such as telecommunications to drive penetration of insurance. “Industry operators must be more aggressive in their marketing approaches, offering products and services that are bespoke to the Nigerian environment and populace.”

IICC pushes for knowledge, compliance to boost uptake of compulsory insurances

he Insurance Industry Consultative Council (IICC) is committed to supporting growth of the industry in the area of awareness creation and capacity building. This effort will enable the sector unlock growth potentials in the different compulsory insurances through improved compliance. The Body therefore will on Wednesday 6th February 2019 gather stakeholders in Asaba, Delta State to review the different compulsory insurance as find ways that will enable government key into the various schemes. The event is at Sweet Spirit Hotel and Resort, Mardezok, Asaba, Delta State. The training will see participants receive training and sensitization on the categories of compulsory insurances and the enforcement laws governing them amongst other topics. Participants will be afforded deep insight into Liability/ Compulsory insurance, Assessment and rating of compulsory Insurances and Insurance claims administration. Participants for the programme have been drawn from government parastatals in Delta State and the private sector. Eddie Efekoha, chairman of the Insurance Industry Consultative Council, stated that the council was totally focused on promoting the growth of the Insurance and this is one of the platforms the IICC was leveraging on. “This training further serves to reiterate, the commitment of the IICC to achieving its’ laid down objectives and to promote Insurance awareness in Nigeria. With Insurance, you have the ultimate keys to live and work with freedom. A lot of Insurance products and offerings are not being

Eddie Efekoha, chairman, IICC

patronised and enforced because of inadequate understanding of insurance Laws, we are passing across invaluable knowledge to the participants at the seminar that will aid the dissemination of their duties”. In continuation he said “The training on compulsory Insurances has become a fixture in the Calendar of the Insurance Industry. Last year, it was held in Abuja and this time, it is going to be held in Asaba. We will continue to rotate the regions where the trainings will hold in a bid to ensure that the message reaches every nook and cranny of the country” It will be recalled that the Insurance Industry Consultative Council was formed in 2013 to act as the unifying voice of the Insurance Industry in Nigeria and to represent it on national issues while taking up and assuming roles that would serve the best interest of the Insurance Industry in Nigeria. The Council is made up member bodies which include The National Insurance Commission (NAICOM), Chartered Insurance Institute of Nigeria (CIIN), Nigerian Insurers Association (NIA), Nigerian Council of Registered Insurance Brokers (NCRIB) and the Institute of Loss Adjusters of Nigeria (ILAN)

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Kenyan insurers diversify into real estate to boost earnings as Nigeria lags BALA AUGIE

henever interest rates are high and stock markets weak, some Kenyan insurers diversify into real estate especially when there is sharp rise in the price of homes and rental income. On the other hand, Nigerian insurance companies have not been investing in housing and real estate as they rely on interest from government securities, dividend income, and corporate bonds to add impetus to investment income. But yields and interest rates are subject to the vagaries of macroeconomic shocks. For instance, bond yields were high while prices fell high between 2015 and 2017 when a precipitous drop in the price of crude oil tipped the country in its first recession. In short, there was an inversion of the yield curve those periods. Financial institutions in Africa’s largest economy made money from treasury bills in 2017 when yields hovered between 18 percent and 22 percent. However, T-bill yields began to fall in the first six months of 2018, albeit it started to rise and it is now between 14 percent and 17 percent. Insurance firms usually channel premiums from

their clients to government securities, shares and real estate from which they look to earn interest. Of course more worrisome is that the Nigeria’s economy has been growing sluggishly as it GDP expanded by 1.80 percent in the third quarter of 2018, below 2.10 percent figure as at the last quarter of 2017. The stock market has been beaten down throughout 2018 and the selloff has spilled into 2019 as investors fret over the outcome of the forthcoming election while the continuous rate hike by the United States Federal Reserve forced in-

vestors to dump emerging and developing market assets for the save heaven of dollar assets. Despite susceptibility of yields and bonds to the above systematic risk, insurers do not see the housing and real estate market attractive enough for them to invest in and earn higher returns. This is because there has not been a significant rise in the price of homes and rental income as a tough and macroeconomic environment is taking a toll on consumers and companies. Nigerians are getting poorer and cannot

afford decent homes while office occupancy rates are just picking up as many firms are not renting office apartment as they did during the pre-recession period. “Many tenants are not paying rent as at when due and it difficult ejecting the recalcitrant ones,” said Fola Lawal, Chief Financial Controller at Old Mutual. “A house of N100 million in Lekki will fetch a rent of N5m, that’s just 5 percent. Treasury bills will fetch 16 percent tax, without stress. Insurers were not investing in real estate when other sectors offered more attrac-

tive return on investment,” said Lawal. Despite insurers allure for fixed income investment, they earn less in investment income. For instance, investment income of 15 largest quoted insurers that have released third quarter 2018 results stood at N20.15 billion, this compares with N118.8 billion incomes from treasury bills raked in by First Bank Holdings Plc. Little wonder combined average net margins of all listed 23 firms fell to 12.15 percent in September 2018 from 20.12 percent as at September 2017.

Also, combined net income dipped by 3.54 percent to N20.54 billion in the period under review as against N21.29 billion as at September 2017. Jide Orimolade , former CEO and managing director of Law union and Rock Plc said that retail life business is growing very well in Kenya like individual life policies, burial expenses compared to Nigeria that the only product assisiting the life business is Group life. “You need long term funds to be able to play in the housing market,” said Orimolade. Kenya, with a population of 51.68 million and GDP of $98.26 billion, has an insurance penetration of 2.80 percent, thanks to expanding middle class and young population. On the other hand, Nigeria, with a population of 180 million people and GDP of $414 million, has insurance penetration of less than 1 percent, as the sector continues to struggle with a myriad of challenges like apathy for insurance, poor corporate governance, poor regulations, and tough and unpredictable macroeconomic environment. Lack of capital that has hindered Nigerian firms from taking on more risk prompted policy makers to be more aggressive on recapitalization as investment returns of insurers are ebbing.

Stakeholders to deliberate on insurance distribution, inclusivity in Johannesburg Modestus Anaesoronye

he African Insurance Organisation (AIO) this year slated to hold in Johannesburg, South Africa will deliberate on: Insurance penetration in Africa: Insuring the Uninsured, while focusing on insurance distribution and inclusivity across the continent. The 46th conference and annual general assembly will take place at Emperors Palace in Johannesburg, South Africa, from 8 to 13 June 2019. Each year the event attracts senior delegates from across Africa and the rest of the world to discuss and workshop the most pressing issues facing the insurance industry on

the continent at the time. Other topical issues under discussion will include micro-insurance and the effects of climatic events (such as floods, droughts and wildfires) on the industry and the economy in general. “We have managed

to secure a number of highly regarded speakers, panellists and facilitators from all over Africa – and beyond – for this year’s conference,” says AIO vice president Delphine Traore Maidou “We have also got some quality bookings and are

very happy at the rate that seats are filling up. As always, I am sure my colleagues from across the continent will network, do business and drive further cross-border collaboration.” Thokozile Mahlangu, CEO of the Insurance Institute of South Africa (IISA) – the official host of the conference – says she is thrilled that the event will be held in South Africa this year. “South Africa has a very active insurance community, with ties to many other countries on the continent,” she says. “With the support of SA Tourism, the organising committee is thrilled at how we will be showcasing our country – especially during this exciting election year.” Although the event will focus primarily on Africa-

specific insurance issues, many of these affect and apply to other markets around the world. “We invite anyone who has an interest in insurance in Africa to reserve a spot by visiting www.africaninsurance.org/events,” says Mahlangu. The African Insurance Organisation (AIO) was established in 1972 as a nongovernmental organisation recognised by many African governments. It is headquartered in Cameroon. The objectives of the organisation are to develop a healthy insurance and reinsurance industry in Africa and to promote inter-African co-operation in insurance. The AIO lists the following as its priority areas for the future -consolidating

and strengthening the existing pools and associations set up by AIO; partnering with other organisations, notably the World Bank, UNCTAD, ILO and Access to Insurance Initiative in various capacity-building programmes; encouraging the development of micro-insurance; promoting African regulatory capacity-building; promoting the capacity building of African training institutes Other priority areas for the AIO includes promoting the management of life and pension funds for development; developing the AIO website into a veritable reference point for African insurance; promoting the African Centre for Catastrophe Risks; creating a pool for catastrophe risk and encouraging scholarly research

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Monday 04 February 2019

Live @ The Exchanges Top Gainers/Losers as at Friday 01 February 2019 GAINERS Company

LOSERS Opening

Closing

UNILEVER

N35

N36.9

1.9

UACN

N8.4

N9.2

0.8

N22.5

N22.95

0.45

CCNN

ZENITHBANK GLAXOSMITH UBA

Market Statistics as at Friday 01 February 2019

Change

Company

Opening

Closing

Change

NESTLE

N1440

N1420.1

-19.9

SEPLAT

N535

N530

-5

N24

N22

-2

N11.65

N12

0.35

DANGFLOUR

N5.8

-0.2

N6.8

N7.15

0.35

WAPCO

N12.5

N12.4

-0.1

ASI (Points) DEALS (Numbers)

espite that the performance gauge of Nigerian stock market showed a decline of about 2.78percent in January 2019, many investors still made money because of their decisions to either hold or buy some stocks. The stock market opened this year with record value of N11.721 trillion, but as at Friday February 1, 2019 the value of listed stocks stood at N11.424trillion, representing a decline of about N297billion. Amid this record loss, investors made money from stocks like C&I Leasing Plc which gained 407.87percent in January. Also in the review month that just ended, Cement Company of Northern Nigeria Plc was up by 23.71percent; Julius Berger Nigeria Plc (+29.35percent) and Sterling Bank Plc (+25.79percent). Our trend watch also showed others stocks which investors who

never sold till January 31 made money from. They are: ABC Transport Plc (+17.24percent); Africa Prudential Plc (+6.98percent); AGLeventis Plc (+7.41percent); AIICO Insurance Plc (+1.59percent); Carverton Plc (+14.58percent). Cornerstone Insurance Plc advanced by 10 percent, Custodian & Allied Plc (+9.73percent); Cutix Plc (+9.76percent); Dangote Cement Plc (+0.16percent); Diamond Bank Plc (+3.21percent); and FCMB Group Plc (+4.23percent). Ahead of the expected recovering in second-half (H2) of 2019, many smart

investors are strategically buying value stocks following the bear reign in the market which pushed many equities to new lows. These investors positive outlook for the stock market in H2 comes on the heels of many analysts reiterating their bearish outlook for this H1 amid political uncertainties which cloud investors’ sentiment as the election draws nearer. As value-investing strategy remains the key to approaching on Custom Street in 2019, investors are seen selecting companies that are in good business with sound

VALUE (N billion)

fundamentals, whose share prices are trading below their fair values. Also considered are in the investors’ stock picks are equities with history of dividend payment. Fidelity Bank Plc gained 8.37percent last month; Forte Oil Plc (+2.79percent); John Holt Plc (9.09percent); Learn Africa Plc (+0.74percent); Livestock Feeds Plc (+8.16percent); AXA Mansard Plc (+3.83percent); Mutual Benefit Plc (+4.76percent); Okomu Oil Palm Plc (+7.61percent); Prestige Assurance Plc (+4percent); RedStar Express Plc (+19.05percent); and Regency Alliance Plc (4.76percent); and Royal Exchange Plc (+31.82percent). Sunu Assurance Plc stock price advanced last month by 10 percent; Total Nigeria Plc (+10percent); Transnational Express Plc (+6.15percent); Union Bank of Nigeria Plc (+11.61percent); United Capital Plc (+12.41percent); Union Dicon Plc (+20percent); Vita Foam Plc (+9.09percent); Lafarge Africa Plc (+0.40percent); and Wema Bank Plc (+3.17percent).

… OTC Exchange commits to deliver innovative, key market development initiatives in 2019

positioned to bring revolutionary changes in the Nigerian debt capital, foreign exchange (FX) and derivatives markets, FMDQ OTC Securities Exchange (FMDQ) in 2018, rolled out market development initiatives, with a focus on infrastructure/housing development, sustainable finance development, clearing and settlement solutions, new products development, financial markets education and capacity building, proprietary market system launch, amongst others, with key support from, and collaboration with market stakeholders and regulators. The year in review was marked by significant ac-

tivities/events, ranging from the launching and implementation of key activities and initiatives, to the making of history in the Nigerian financial markets. Having delivered value-adding initiatives and solutions in line with its 2018 strategic focus – Market Diversification, FMDQ, leveraging on the effective support and collaboration of its stakeholders remains committed to continue working assiduously, in 2019. This includes delivering innovative and key market development initiatives, including but not limited to: Introduction of new derivatives products to the financial market landscape, and expansion

of the Nigerian derivatives market; activation of new products such as repurchase agreement (Repo) with collateral management service. Also in 2019, FMDQ targets full operationalisation of the Dealing Member (Specialists) “DMS Market” to further enhance market integration and retail participation in the fixed income markets. Other areas of commitment include infrastructure/Housing development; Sustainable Finance development; development and launch of new/co-branded indices; and financial market education and capacity building for its stakeholders through FMDQ Academy.

270,938,797.00 4.418

MARKET CAP (N Trn

T.Bills trading activity accounts for 33.4% of N182.8trn FMDQ turnover in 2018 MDQ OTC Securities Exchange delivered an aggregate turnover of N182.86 trillion for the January to December 2018 period. Trading activities in T.Bills contributed the largest to overall turnover, accounting for N72.12 trillion or 39.44 percent of the market. FX market transactions (Spot FX and FX Derivatives) accounted for 37.04percent whilst Repos/Buy-Backs product categories (Repos/ Buy-backs) accounted for 16.50percent, and Bonds and Unsecured Placements & Takings representing 6.55percent and 0.45percent respectively, of overall market turnover. As an OTC Exchange

3,144.00

VOLUME (Numbers)

Investors made money in C&I Leasing, CCNN, Julius Berger, other stocks despite January dip Stories by Iheanyi Nwachukwu

30,636.36

11.424

NAHCO restates commitment to deliver greater value for stakeholders

he Board and Executive Management of Nigerian Aviation Handling Company (NAHCO) Plc last week paid a courtesy visit to the Nigerian Stock Exchange (NSE) and introduced their newly appointed Board/ Executive members to capital market operators. They were also honoured with the NSE closing gong ceremony. Olatokunbo Fagbemi, group managing director, Nigerian Aviation Handling Company Plc who spoke to select financial market journalists on the sideline of the visit reassured of the company’s commitment to delivering greater value to its stakeholders. The new GMD of NAHCO Plc is also committed to creating a place

cured manner”, she said. NAHCO is a Nigerian diversified enterprise with interests in aviation cargo, aircraft handling, passenger facilitation, crew transportation and aviation training. “My top priority is very simple. It is to get everything right because when we get everything right for the customer and we deliver the right kind of service, then we get the right kind of income that can trickle down to profit and it is from the profit that we are going to be able to pay the right kind of dividend. “It is from also being able to drive that kind of service and creating a company that is an enviable place to work in, a company that is operating at international standard, that is when we create the value and that

that delivers service to the customer, follows all the regulation and deliver greater stakeholder value. “I know it sounds like a lot of beautiful things but that is the reality. Customer first, everything that will deliver the services for the customer in line with the international standards as set up by International Civil Aviation Organisation (ICAO) or International Air Transport Association (IATA) to drive airline services; that is what we want to do and that is my focus. “A lot of work has been done in the past. What I will do is to build on what is already there –the areas where there are gaps, I will close those gaps and ensure that we deliver services in a safe and se-

is what I want to do”, Fagbemi noted. NAHCO Plc grew its revenue by 25.2percent to N7.25billion in the nine months (9M) period ended September 30, 2018, up from N5.79billion reported in same period of 2017. The company’s Profit Before Tax (PBT) grew by 117.7percent to N731.84million, from N336.12million recorded same period in 2017. Since January 24 2019, the company’s share price has remained at N3.45. It had reached a 52week high of N4.32 and 52-week low of N3.21. Its shares outstanding are 1,624,218,750 units while market capitalisation slightly is in excess of N5.603billion.

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This is M NEY A daily guide to your Personal Finance

Grace Agada

ccording to a worldrenowned author, marketing expert and coach, Dan Kennedy, there is an Income and Wealth Pyramid in every society and in almost every industry, that distribute wealth using the same metric: 1%, 4%, 15%, 60%, 20%. This pyramid has remained the same for many decades despite the numerous new year resolutions, wealth empowerment programs, technological advancements and all the governmental wealth re-distribution programs. 60% of any given population barely gets by. They have a myriad of financial and personal needs. 20% are broke and struggling and find it hard to meet basic needs. 15% have their personal and family needs covered and can afford to save and invest with cash to spare. 4% are prosperous and can afford to live in luxury,

BUSINESS DAY

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

How to turn 2019 into your year of wealth while the last 1% are super wealthy and can afford anything money can buy. Every year, people make new resolutions hoping that they could turn that year into a prosperous year, but most people wind up circling back to the same position on the wealth pyramid. Why is this so? While there are many reasons, there is one major reason for this disparity, and it is based on the one type of wealth that can never be recovered once lost or misused. This wealth is distributed to all individuals in the same proportion. After over 5 years of research and my own personal business experience, I have come to believe that the primary reason for the disparity between extraordinarily wealthy people and the extremely poor people is the use or misuse (or abuse) of one’s time and the degree to which peak productivity is attained. The power of time, therefore, is not in its quantity but in its usage. How many hours in your day is productive and directly geared towards generating revenue? How much of it is spent commuting, drinking, filling paperwork, chatting, sleeping and watching TV? Research has shown that most people have an average of 28 productive minutes per day. All of Dangote’s billions cannot buy one minute of yesterday. When time is lost; life is

Objectives • Solid wealth • Groomed Heirs • Undying legacy and Name • Rich relationships • Personal development • Healthcare Planning • Giving.

lost As a fellow user of time, I understand your needs and sometimes frustrations about time. How you have so many things you want to do at the same time and how you run through every day from the early hours to late hours wishing there was more time available. The multiple demands on your time can be extraordinary. But I am here to tell you that you need to take extraordinary measures to match those demands. Measures that can sometimes be radical and extreme. Since time is valuable and we all have the same amount of time, why do most people still end up

‘

In the year 2019 just like any other year, there will be massive distractions. You need to drastically reengineer your entire relationship with time and be very aware of the passing of time because it is the only way to achieve the wealth of your dreams

‘

The Solid Wealth Messenger

@Businessdayng

poor? The answer is simple. Most people delay doing the most important

things in their lives. They procrastinate and, as we know, procrastination is the thief of time. ‘Delaying your life goals for later, is like saving up sex for old age’ Warren Buffet’ But why do people procrastinate? Two reasons. The first is that they fear the possibility of failure. The fear of failure makes people sit back, wait, and pray for the perfect day to come. The day when they will have the amount of money, have the perfect circumstance and timing before they take action. However, this perfect day will never come because there is no such day called the perfect day of the week. You will always feel uncomfortable, sometimes awkward when you are out of your comfort zone and trying to accomplish something great. The second reason people procrastinate is that they are reluctant to pay the price. Thousands of people have tried to bargain the price that is required for success. They try to cut corners and bargain on the amount of work required, the mental exertion required, the rigors of accurate thinking, the time that should be sacrificed, the commitment, and discipline required for the achievement of their goals. Unfortunately, life does not offer bargains, discounts, or promos; a fair price must be paid if a goal is to be achieved. People who are broke (20%) and financially

struggling (60%) are perpetually bargaining on the prices of life and no amount of new year resolution can bail them out. In the year 2019 just like any other year, there will be massive distractions. You need to drastically reengineer your entire relationship with time and be very aware of the passing of time because it is the only way to achieve the wealth of your dreams. Time has a significant impact on wealth and your capacity to create wealth is affected by time. In whatever ways you can, in your life and business, you need to seek ways to leverage time and make it work in your favour. Have zero tolerance for impromptu activities, surround yourself with people who understand and respect the value of your time, and put a financial value on you time so you are scared to waste it or give it away. If you do not value your time or know what your time is worth, you cannot expect the world to know it either. There are five ways you can use time to kill wealth. These five wealth killers can significantly reduce your capacity to create enormous wealth. You need to know them and do everything within your power to avoid them. “The five time-based wealth killers” have been curated in a special infographic report that you can access by Sending the Text “Send me the Five Time –Based Wealth Killers” to 08101860042.” There’s no black box, special new year resolution, magic wand, random luck, or quick fix. What it takes is simply discipline, dedication, productive use of time, hard work, and increase in your financial knowledge to transform your 2019 into a wealthy year.

Grace Agada is a Senior Wealth Advisor and Author with extensive experience in wealth creation, wealth preservation and wealth transfer.

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Monday 04 February 2019

Access Bank Rateswatch KEY MACROECONOMIC INDICATORS Indicators

Current Figures

GDP Growth (%)

1.81

Market Analysis and Outlook: February 1st – February 8th, 2019

Comments

Broad Money Supply (M2) (N’ trillion)

27.07

Decreased by 14.38% in Dec’ 2018 from N31.79 trillion in Nov’ 2018

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

22.72 23.29 11.44 14 14 (+2/-5) 43.18 61.94 1.75

Decreased by 1.54% in Dec’ 2018 from N23.08 trillion in Nov’ 2018 Increased by 10.93% in Dec’ 2018 from N2.1 trillion in Nov’ 2018 Increased to 11.44% in December 2018 from 11.28% in November 2018 Raised to 14% in July ’2016 from 12% Lending rate changed to 16% & Deposit rate 9% January 30, 2018 figure — a increase of 0.23% from January start February 1, 2019 figure— no change from the prior week December 2018 figure — a decrease of 0.63% from November 2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

NSE ASI Market Cap(N’tr) Volume (bn) Value (N’bn)

Friday

01/02/19

25/01/19

30,636.36

31,426.63

Change(%)

(2.51)

11.42 0.27

11.72 0.42

(2.51) (35.05)

4.41

3.14

40.40

MONEY MARKET NIBOR Tenor

Friday Rate

Change (Basis Point)

Indicators

01/02/19

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

61.94 2.80

1-week Change

YTD Change

(%)

0.00 (10.54)

(3.89) (8.38)

2180.00 1 06.80 74.19 12.75 519.50

(3.50) 1.09 0.93 (0.62) (0.10)

12.60 (17.97) (4.27) (16.83) 19.84

1321.33 16.00 276.45

2.95 4.10 4.44

0.29 (6.92) (15.67)

(%)

01/02/19

25/01/19

OBB

12.08

15.33

(325.0)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N CALL 30 Days

13.00 12.79 12.79

16.17 13.97 15.19

(317) (118.6) (240)

Tenor

90 Days

13.28

13.62

(34.8)

FOREIGN EXCHANGE MARKET Market

Friday

1 Month

(N/$)

Rate (N/$)

01/02/19

25/01/19

01/01/19

Official (N) Inter-Bank (N)

306.75 362.71

306.80 362.43

306.95 364.18

BDC (N) Parallel (N)

362.00 361.00

362.50 364.00

364.50 362.00

Friday

Change

(%)

(Basis Point)

01/02/19

25/01/19

3-Year 5-Year

0.00 15.12

0.00 15.47

0 (35)

7-Year 10-Year 20-Year

14.85 14.89 15.01

15.35 15.22 15.35

(49) (33) (34)

(Basis Point)

25/01/19 12.57 11.87 14.29

(52) 14 4

9 Mnths 12 Mnths

16.72 17.48

16.65 17.10

7 38

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Friday

Change

(%)

(Basis Point)

01/02/19

25/01/19

2,769.94

2,730.70

1.44

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

8.80 5.49 12.76

8.57 5.30 11.16

2.65 3.51 1.60

YTD return (%)(US $)

(44.90)

0.00

Index

TREASURY BILLS (MATURITIES)

Disclaimer

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

Change

(%)

12.05 12.02 14.33

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

Friday

(%) 01/02/19

AVERAGE YIELDS Friday

Friday

1 Mnth 3 Mnths 6 Mnths

BOND MARKET Tenor

Global Economy In the US, the Federal Reserve left the target range for the federal funds rate at 2.25-2.5% during its first policy meeting of 2019. The Committee views sustained expansion of economic activity, strong labour market conditions, and inflation near the Committee's 2% objective as the most likely outcomes. It reaffirmed its position to be patient about further policy firming in light of recent global economic and financial developments and muted inflation pressures. Elsewhere in the Eurozone, year-on-year inflation rate eased to 1.4% in the month of January 2019 from the previous month's figure of 1.6%. Considering the components of inflation, energy had the highest rate at 2.6% in the reference month. Food, tobacco & alcohol had a slightly higher rate at 1.8% from 1.7% in the previous month. The core inflation rate which excludes the prices of food items stood at 1.1% from 1% in the month of December. Heading over to the Asian continent, Japan's unemployment rate slid to 2.4% in the month of December 2018 from 2.5% in the preceding month. The unemployed figure declined by 60,000 to 1.67 million in the aforementioned month due to an increase in the number of people detached from the labour force. However, the number of those employed dropped by 450,000 to 66.68 million. Youth employment rate (15-24years) declined to 3.3% in December from 3.5% in the previous month.

Q3 2018 — Higher by 0.31% compared to 1.50% in Q2 2018

Amount (N' million)

Rate (%)

Date

91 Day 182 Day

28,018.96 58,684.52

11.3102 14.4753

30-Jan-2019 30-Jan-2019

364 Day

167,932.67

17.6385

30-Jan-2019

Domestic Economy The Nigerian Stock Exchange (NSE) in its monthly Domestic & Foreign Portfolio Investment report for the month of December 2018 revealed that transactions at the nation's bourse fell by 15.93% to N125.86 billion from N149.72 billion recorded in November 2018. Total foreign transactions dropped by 28.78% to N60.08 billion from N84.36 billion the previous month. Meanwhile, total domestic transactions grew by 0.64% to N65.78 billion from N65.36 billion in November. A breakdown of foreign transactions showed that there was a decrease in foreign inflows in the month under review by 34.31% to N22.97 billion from N34.97 billion in the prior month. Foreign outflows also edged lower by 24.86% to N37.11 billion in December from N49.39 billion in the preceding month. The cumulative transactions from January 2018 to December 2018 declined by 5.44% to N2.404 trillion in 2018 compared to the same period in 2017 (N2.542 trillion). In a separate development, the Manufacturing Purchasing Managers' Index (PMI) stood at 58.5 index points in January 2019. This indicates an expansion in the manufacturing sector for the twenty-second consecutive month. The index grew at a slower pace when compared to the previous month (61.1 points). This was shown in the latest PMI report by the Central Bank of Nigeria (CBN). A PMI above 50 points indicates that the manufacturing sector is generally expanding, while a reading below 50 points indicates a contraction. All the fourteen sub-sectors surveyed, recorded growth during the month. Stock Market Indicators at the local stock exchange were bearish as investors took profit in industrial, consumer and oil & gas sectors. Weak earning reports by blue chip companies in the sectors also supported the decline. The All share Index (ASI) contracted by 2.51% to 30,636.36 points from 31,426.63 points the preceding week. Similarly, Market Capitalization decreased by a similar rate at 2.51% to N11.42 trillion from N11.72 trillion the prior week. This week, we expect market to decline further due to lingering profit-taking.

Money Market Rates closed in varying directions last week as short-dated rates eased while longer dated placements increased marginally. The dip in short-dated rates came on the back of inflow of about N310 billion from the Federation Account Allocation Committee (FAAC). Shortdated placements such as Open Buy Back (OBB) and Over Night (O/N) rates declined to 11.07% and 11.86% from 12.08% and 13% respectively the previous week. In contrast, Longer-tenured interbank rates, such as the 30-day and 90-day NIBOR rose to 13.25% and 13.48% respectively from 12.79% and 13.28% the prior week. This week, rates are likely to climb as the CBN carries out Open Market Operations (OMO) mop up. Foreign Exchange Market The local currency appreciated across most market segments monitored last week. At the official window the naira gained 0.02% to close at N306.75/$ compared to N306.80/$ the previous week. Similarly, at the parallel market the naira strengthened N3 to close at N361/$. Meanwhile, at the Investors' and Exporters window, it lost 28 kobo to settle at N362.71/$ from N362.43/$ the previous week. The current stability of the naira is a result of the sustained interventions of the CBN. This week, we envisage the naira will oscillate around current levels. Bond Market Bond yields ticked lower as market traded on a bullish note. Demand across trading instruments predominantly the 2026, 2028, 2034 and 2037 maturities pushed prices higher. Yields on the five-, ten- , seven- and twenty- year debt papers closed at 15.12%, 14.85%, 14.89% and 15.01% from 15.47%, 15.35%, 15.22% and 15.35% respectively the previous week. The Access Bank Bond index jumped by 39.24 points or 1.44% to finish at 2,769.94 points from 2,730.70 points the previous week. Market is expected to remain client driven in the near term barring any impactful news. Commodities Oil prices notched higher as reports from Energy Information Administration (EIA) show that U.S. imports from Saudi Arabia fell by more than half from the previous week to 442,000 barrels per day (bpd). This indicates OPEC's efforts to tighten the market are impacting trade. OPEC basket price for oil, gained 97 cents to settle at $61.19 a barrel, 2% up from the previous week. In a similar vein, precious metals made a comeback as prices surged. Sharp rise in US jobless claims and a pause in U.S. interest rate hikes unleashed new momentum within the bullion market. Gold prices rose 2.95% to $1,321.33 per ounce last week, while silver prices closed higher by 63 cents, or 4.1%, to $16 per ounce. This week, bullish catalysts such as Venezuela sanctions, a drop on U.S. fuel stockpiles and an anticipated pause in U.S. interest rate hikes might likely push up oil prices. Precious metals prices are expected to rise further supported by increasing U.S. budget deficit.

MONTHLY MACRO ECONOMIC FORECASTS Variables Exchange Rate (NAFEX) (N/$) Inflation Rate (%) Crude Oil Price (US$/Barrel)

Feb’19

Mar’19

Apr’19

364

365

11.5

11.61

11.7

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

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Preparing for an African Century

eturning to the warmth of Abidjan after the World Economic Forum’s meeting in icy cold Davos, under the theme Shaping a Global Architecture in the Age of the Fourth Industrial Revolution, I have been reflecting on the discussions and what they mean for African development. Participants from government, business, academia and civil society debated how technological and other shifts will change the way the world works, lives, governs itself and communicates. This might seem far removed from the challenges and realities of the everyday lives of Africans, but we should not underestimate the relevance of Davos discussions for Africa. How Africa and Africans adapt to the new realities and harness the latest technology and tools will determine the pace and direction of the region’s development, and the opportunities for Africans to lead increasingly healthy and prosperous lives. There is nothing particularly new about the idea of growing via technological adoption. What is different today is the pace of change and the extent to which Africa risks being left behind if it does not manage to harness the best knowledge and technology for its development. And this goes beyond the obvious cases of mobile phones displacing traditional telephony and banking as Africa forges its own identity within this evolving global landscape. The discussions were vast and covered so much ground, so here is my attempt to boil it all down to five Davos takeaways on Africa’s development priorities and opportunities. First, it will be critical for Africa to integrate itself more fully into global value chains, ensuring greater value addition, revenue and good jobs. A particular area of focus in Davos was the potential of agricultural value chains and food systems for Africa to move from net importer to dependable exporter of high quality processed food. Africa holds roughly 60 percent of the world’s uncultivated arable land. Combined with rapidly increasing demand for processed goods both within and without Africa, and a young population in search of good jobs, turning this into a competitive advantage is a win-win both for Africa and for the world. Making it happen requires the wide dissemination of the latest technologies for agricultural production and processing, for example through the African Development Bank’s Technologies for Africa’s Agricultural Transformation initiative. Also needed are transparent access to land and finance for women and young people to allow them to fully participate in agribusiness. The potential of Blockchain--or distributed ledger systems--was discussed at length in Davos and is already be-

Abiy Ahmed of Ethiopia in Davos

ginning ensuring proper recording of matters like land tenure in Africa. Africa must move ahead quickly in adopting the latest technologies and knowhow to harness this opportunity. But technologies are only as useful as the ability of Africans to employ them. So second, adapting to the great shifts taking place requires access to skills. This concern is not unique to Africa. Countries around the world are struggling with the skills mix that will be needed in the future since no one has a crystal ball to predict what the economies of tomorrow will look like. However, it is a pretty safe bet to invest in science, technology, engineering and mathematics (STEM), coding, as well as problem solving skills. We must also dispense with the idea that education is something for young people: only lifelong learning will prepare African economies to continuously adapt to changing skills needs. This represents a particular opportunity for Africa to learn from the shortcomings in other regions and to build education and training systems to last from the get go, given the comparatively lower legacy investments and infrastructure. One example are the coding centers that the African Development Bank is rolling out across Africa in partnership with Microsoft, Facebook and others. Africans need concrete skills for employability. Third, while it prepares a well skilled workforce to integrate into global value chains and higher value added work, the African continent cannot continue to hobble along as 54 separate, mainly small, economies. The continent must move forward in earnest to create its single African market. Africa trades with itself much less than do

other regions. Intra-African exports make up less than 20 percent of the region’s total exports, compared to nearly 60 percent in Asia, and nearly 70 percent among European countries. This is particularly important given the general slowdown in the growth in global trade, which will make it much harder for African countries to trade their way to prosperity with other regions of the world. A lively discussion in Davos focused on the promise and urgency of establishing the African Continental Free Trade Area (CFTA). Regional integration has the potential to massively transform Africa’s opportunities by ush-

to move freely as well as goods and services. Moves towards an integrated market would not only strengthen the continent’s appeal as a global trading partner but also increase Africa’s attractiveness as an appealing investment destination, supporting the achievement of many of its goals such as Agenda 2063 and the SDGs. Fourth, the world has woken up to the dangers of climate change and this was high on the agenda in Davos, with much talk about the latest startling statistics about the extent of global warming. Africa is on the front lines of climate impacts, and it is also in a position

The African Development Bank will be accompanying decision makers and investors as they move forward on this path. Africans can provide solutions to the challenges of Africa, and African countries have power in numbers ering in the economies of scale that are not available to individual African economies. Importantly, Africa is in a position to learn from recent decades of regional integration in other parts of the world, and to take stock of what has worked well and the pitfalls to avoid to ensure that the gains from trade liberalization are shared widely. Other important efforts that are moving forward are Africa’s Single African Air Transport Market and work towards visa free travel, since people must be able

to avoid making the same environmental mistakes as other regions as it grows. Africa has the opportunity to grow in a different way, harnessing the latest technologies for renewable energy and better water management through for example drip irrigation methods. Uptake in many African regions remains low but is on the rise as affordable schemes become available. As well as mitigation, adaptation will also be key, and can be supported by financial innovations such as climate

risk insurance. African Risk Capacity is a promising model, providing a vehicle for African countries to work together and mutualize their risks, thus pooling resources for better outcomes. Indeed for such cross border challenges as climate change, the most meaningful solutions are those with a regional or global scope. Fifth and last, there was much discussion in Davos, particularly among the younger participants, about the shortcomings of the traditional for-profit business models that prevail in economies around the world. It is becoming clear that in the 21st Century the world needs more inclusive business models that consider all stakeholders, not just shareholders, and that harness the latest technologies for the good. These go by many names including social enterprise, forbenefit enterprise, fourth sector, b-corporations. But the underlying idea remains the same: in today’s complex and interconnected world it is in all of our interest to do business in a different way, moving beyond traditional notions of the role of companies. I believe this represents a massive opportunity for Africa. African countries must ask themselves as they move from informal to more formal economies: what kind of economy do they want to institutionalize? The business environment can be built in a new way that particularly supports the development of such for benefit companies. Young Africans see challenges all around them, which are opportunities for new types of enterprise that make a real positive difference. African economies will greatly benefit from deliberate measures taken by African governments to create the right kind of supportive infrastructure that give rise to such positive-impact enterprises. A deliberate approach to addressing these five forces would allow Africans to manage some of their own greatest challenges in an inclusive and sustainable way, and leapfrog outmoded infrastructure and technology. There is more knowledge and accumulated experience at Africa’s fingertips today than ever before. Governments, businesses, educational professionals and civil society must come together to harness these forces for the good of Africa’s future, advancing to higher and more sustainable levels of development. The African Development Bank will be accompanying decision makers and investors as they move forward on this path. Africans can provide solutions to the challenges of Africa, and African countries have power in numbers. The world is transforming rapidly and there is no time to lose. Let this be Africa’s century!

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Significant stock rally awaits Oil Palm producers on attractive valuation

P.E

SHORT TAKES $2.2bn Foreign direct investment inflows to Nigeria declined by 36 percent to $2.2 billion in 2018 from $3.2 billion recorded in 2017. FDI inflows to Africa appreciated by 6 percent to $40 billion in 2018 from $38 billion recorded in the previous year.

BALA AUGIE

here are indications the lower valuations of quoted Oil palm producers will translate to share price appreciation as their stocks trade below emerging market peers, prompting analysts to place Buy ratings. Investors and shareholders should take advantage of these positive prognoses to bolster their investment portfolios. Okomo Oil Nigeria Plc and Presco Nigeria Plc have a price to earnings (P/E) ratio of 7.83 tines and 2.37 times respectively, this compares with similar companies in South Asia (17.64 times), and Africa (12.61 times). Stocks of companies

have been beaten down as investors dump shares over uncertainty surrounding the forthcoming elections and global geopolitical tension such as the trade spat between the United States and China and rate hikes by the United States Federal Reserve that damped investor appetite for emerging

market assets. Also, the Nigerian economy has been growing sluggishly. Amid the tough and unpredictable macroeconomic environment, oil palm producers have been able to deliver a higher return on investment to shareholders while they’ve turned each Naira invested in sales into higher profit. Okomu’s and Presco’s return on capital employed (ROCE) of 39.31 percent and 37.04 percent as at the third quarter of 2018 are higher than the NSE 30 firms- the lists of the most liquid and capitalized companies- average of 17.98 percent, according to data from the Bloomberg Terminal. Similarly, Okomu’s and Presco’s net margins of 34.71 percent and 28.19 percent exceed NSE 30 firms’ average of 22.83 percent, data from Bloomberg shows. The stellar performance was largely driven by government policy and Nigerian rising population that crave for consumption. In 2015, the Central Bank of Nigeria (CBN) included palm kernel oil and oil palm in the list of goods banned from its foreign exchange market. Consequently, average palm oil prices jumped in 2016 and 2017 as local demand expanded without corresponding increase in supply. “Oil palm prices in Nigeria are relatively higher than international prices primarily due to import restrictions on the commodity following the introduction of the central bank’s list of 42 excluded items,” said Abiola Gbemisola, analyst at Afrinvest Research Ltd.

27 points Nigeria’s score in the 2018 Corruption Perception Index (CPI) remained flat at 27 points similar to that of 2017. The country moved four spots higher to 144 out of 180 countries compared to the 148 in 2017.

3.78%

Little wonder Okmou’s ROCE surged to 39.31 percent in the third quarter of 2016 from 6.94 percent in 2015. Similarly Presco’s net margin jumped to 85.71 percent in 2016 from 66.79 percent in 2015. Analysts at Afrinvest placed Buy ratings on Oko-

mu, on the expectation that profit will be driven by improvements in output based on maturing plantation for the oil palm and rubber business. “We expect c.8090.0 and 1989.0 hectares respectively of oil palm and rubber plan-

In the third quarter of 2018, the nominal year on the yearly growth rate of Trade stood at 3.78%. This indicates an increase of 3.34% points when compared to the third quarter of 2017 and 3.79% points higher than the previous quarter.

Continues on page 36

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

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

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Tier 2 lenders to slash dividend on CBN’s new capital rules DAVID IBIDAPO

ier 2 lenders in Africa’s largest economy may cut dividend disbursement to shareholders in order to fend off the effect of the new capital adequacy requirement of the Central Bank of Nigeria (CBN). Lenders, especially the small and the mid-sized one are struggling with rising Non Performing Loans (NPLs), but the new rules are to ensure that banks are adequately protected against shocks both domestically and internationally. Asset quality has deteriorated with the industry’s NPL ratio climbing 1.7ppts to 14.2 percent as at 9M’2018 from 12.5 percent as of 2017, which constitutes a threat to capital itself. “Several banks particularly among the tier-2 banks are strug-

gling to meet up with existing CAR requirement as the CBN requires a minimum CAR of 10.0% for banks without international operations……,” said analysts at CSL Stock Brokers Ltd. While the new rules could force lenders to raise additional capital and continue to refuse to turn the tap on lending, analysts say the safest option is to slash dividend disbursements. However, an announcement of a dividend cut could send jitters through the market as investors and shareholders perceive a firm that reduces payment from profit as being financially unstable. In short most shareholders are attracted to divined paying stocks. Analysis of dividend yields of tier 2 and 3 banks showed that amongst peers FCMB recorded the highest dividend yield of 4.81 percent. Lagging FCMB is Fidelity with a dividend yield of 4.76%.

Meanwhile, risk based capital adequacy ratio of all mid-tiers banks appeared to be above regulatory threshold of 10 percent and 15 percent respectively. However amongst peers, Sterling bank records the lowest ratio at 12.10 percent as at Q2 2018. Dividend yield of sterling bank also stood as the lowest at 0.83 percent amongst banks that declared dividend in Q3 2018. Move by the CBN is in a bid to shield the Nigeria banks “against shocks emanating locally and from abroad” by increasing the level of regulatory capital and the quality of the assets, as expatiated by the mail. According to the mail, the central bank plans to “apply a leverage ratio to supplement existing capital ratios” for lenders as well as “additional lossabsorbency requirements for domestic systemically important banks.”

Executive Order 007: Opportunity for Companies to boost earnings – Analysts ISRAEL ODUBOLA & SEGUN ADAMS

he Executive Order 007 would likely reduce liability of firms and bolster their profitability and returns to shareholders in form of dividend payment and share appreciation. The Executive Order 007 titled “Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme” was signed into law last week, and aims to relieve government’s burden of funding critical road infrastructures and promote private sector investment in infrastructural projects “Judging from the comment of the Chief Executives of the firms that were listed in Executive Order, it seems to me like a win-win for all parties involved”, Rafiq Raji, Chief Economist at Macroafricanintel, told BusinessDay. Gbolahan, Ologunro, research analyst at CSL Stockbrokers, explained that the tenure of the scheme allows companies spread the project cost to be recouped from the Government. He further posited that “tax credits arising from expenditure on road projects will be used in offsetting their tax liability in a fiscal year, which ultimately reduced their tax expense,

hence should support earnings” Over the years, cement industry, unlike others, enjoys more tax relief because they are located in economically disadvantaged areas and as such tax authorities give them rebate in form of capital allowance. Analysis of tax credit/expense of listed firms across six sectors revealed that only two entities - Lafarge Africa Plc and John Holt (the company) enjoyed tax credit in the first nine months of 2018. Lafarge Africa Plc received tax credit worth N3.99 billion, while John Holt (company) got N20 million in form of tax credit, although the group paid N11 milion as tax expense. Other players in the cement industry – Cement Company of Northern Nigerian (CCNN) and Dangote Cement Plc, which had enjoyed tax credit in the past, remitted N1.7 billion and N89.1 billion respectively as taxes in the period under focus. No entity enjoyed tax credit in the consumer goods, oil & gas, financial services and construction/real estate sectors in the reviewed period. The cumulative tax expense of 9 industrial goods covered in the analysis stood at N94.8 billion. The aggregate tax expense of 7

oil & gas and 24 financial services firms captured in the analysis stood at N53.1 billion and N220.5 billion respectively. “Companies might benchmark their expenditure on road projects against their tax liability for a fiscal year, in order to mitigate the impact of profit”, Gbolahan added. The Executive order 007 is based on the demand for road projects by companies and other corporate sponsors, who are willing to deploy their own working capital and financial resources to fund road projects located in the major economic corridors of the country where they have significant businesses and operations. Participating investors can use tax credits to reduce corporate taxes payable to the government until they recoup the value of their investment in road and bridges. At the pilot phase, six companies - Dangote Industries Limited, Lafarge Africa Plc, Unilever Nigeria Plc, Flour Mills of Nigeria, Nigeria LNG Limited and China Road and Bridge Corporation Nigeria Limited, will be investing in 19 road projects totalling 794.4 km, which have been prioritized in 11 states across the six geo-political zones.

Fund managers contemplate rebalancing portfolios after elections to benefit from expected late equity rally … Investors express market fears as possibility of a global recession looms

midst political uncertainty this year as the nation goes to polls in a fortnight to select a government of their choice, investors have been contemplating the idea of rebalancing their portfolio in the first half of the year after a successful election in order to benefit from a stock market rally that analysts forecast will come in the second half of the year. Bismark Rewane, a Lagos based economist and founder of Financial Derivatives Company predicts an equity market recovery in 2019 in which most of the growth will be recorded in the second half of the year. Rewane anticipates that PFAs will rebalance their portfolio accordingly, holding up to one third of their assets in equities by the second half of the year as they seek to enjoy the stock market recovery after the early general elections

difficult to keep interest rate low in such an environment in order to ensure that treasury yields remain attractive to investors.” One-year treasury yields on Friday closed at 16.9 percent, above the 10-year yield which closed at 15.1 percent, causing the yield curve to remain inverted as fears of a recession two continues to gain ground in board room discussions. “Italy entered a recession yesterday and the European market is struggling to grow and at risk of entering a recession too. Chinese economic growth is slowly down as the trade war has continued to hurt economic performance in the country. America too is struggling to grow as the shutdown with the government shutdown, there are fears that growth in this quarter could fall to zero. This is setting up stage for a global recession and even though we think Nigerian equities are cheap today, we could still see

this year. However, investors will still be wary to the market risks that that they could assume by exposing their portfolio to more equities, causing some to doubt that equities will be the best performing assets this year. Wale Okunriboye, head of research at Sigma Pensions told BusinessDay by phone that “that fixed income may be the best way to go in 2019 considering the volatility in crude oil prices since last year, we expect that the Central Bank of Nigeria (CBN) will find it

further declines if the global economy slips into a recession this year,” said Maju Eldad, Lecturer of Economics at Federal University of Kashere, Gombe. The stock market has remained somewhat flattish this year as investors wait and see if the elections will be successful and to ascertain if the market outlook will improve amidst the threat of another global economic recession. The Nigerian Stock Exchange All Share Index has returned -2.53 percent this year but the index gained 0.26 percent on Friday.

IFEANYI JOHN

Significant stock rally awaits Oil Palm... Continued from page 35

tation to mature with the forecast period of (2018-2023),” said analysts at Afrinvest Research. However, these two players face obstacles such as backward integration by takers like PZ Wilmer, consistent volatility in crude palm oil price (CPO), shortages of labour force, and the acceptance of African Continental Free Trade agreement (ACFTA). If the federal

government accepts the ACFTA, it means the central bank will have to delist kernel oil and palm oil from the list of items banned from foreign exchange market; while there will be influx on cheap products from Indonesia and Malaysia. Okomu Oil’s shares has risen by 7.60 percent since the start of the year, outperforming the NSE ASI Index which has returned -2.53 percent. However, Presco has returned -6.30 percent year to date, underperforming the broad index.

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Orizu: Entrepreneur providing Nigeria’s nutrition requirements Josephine Okojie

machukwu Orizu is a passionate Nigerian entrepreneur who uses organic fruits and vegetables from the country to make food products for children. With this, she builds a strong nutrition community. Her Mmachukwu Somma’s Yummies is a 100 percent natural food brand that is produced using freshly harvested grains, nuts, roots and tubers, legumes and fruits and vegetables, among others, depending on the nutritional combination. She is the founder and managing director of Mahauty Health Solutions— a start-up promoting infants and children’s health. In a bid to help Nigeria tackle its malnutrition challenges, especially among children, the biochemist-turned -entrepreneur was inspired to establish Mahauty Health Solutions in 2016. “I was increasingly worried by the number of children who came to the hospital daily and are diagnosed with conditions caused by malnutrition,” she says, while explaining her motivation. “Through research, I realised that there was no known healthy baby food product made in Nigeria. “Nigerian babies are being fed with imported complementary foods that are pre-packaged, full of artificial additives and nutritionally-imbalanced,” she explains. The young entrepreneur was also inspired to establish her business owing to her experience as a mother. “When I had my daughter, I

Mmachukwu Orizu

started creating recipes and feeding her with it. “When people observed how healthy my daughter is, family and friends who knew of the recipe I fed her with started making demand for the recipe and this led to the establishment of my company – Mahauty Health Solutions,” she says. To further broaden her skills, Mmachukwu took up a training course with the United Nations International Children Emergency Fund (UNICEF) and also acquired an Advance Diploma in Nutrition. The young entrepreneur started her business with N150, 000, which she got from her personal savings. She has not taken loan from any money deposit bank. Since starting, the business has grown tremendously and it

now has six ranges of baby food products. “Somma’s Yummies are sold across Nigeria through a distribution network of mothers and a growing number of retail outlets.” “We have connected over 13,000 mothers across Africa via social media and provided regular advisory sessions using Facebook and Instagram live videos creatively, addressing the very real problem of malnutrition in children,” the young entrepreneur notes. She sources her raw materials directly from smallholder farmers across the country that grows biofortified crops. Speaking on why mothers should patronise her products over other established brands, she says hers offer them unprec-

edented benefits which include ingredients innovation, great taste, enhanced nutritive value and product varieties, meeting both dietary intake and diversity needs. “Most of our customers say our products enable their children to have good skin, stay healthy and look chubby, unlike other baby food brands. This is what every Nigerian woman wants for their child,” Mmachukwu says. The business has won several awards both within and outside the country. In 2018, it was named the Top Health Innovation Company in Africa among 241 health businesses from 21 African countries by Amref Health Africa, an NGO based in Kenya. In response to the potential in the country’s infant formula industry, Mmachukwu says that the opportunity is enormous. “The infant formula industry is a very huge one. On 1st of January 2018, over 20,000 babies were born in Nigeria in one day. You can imagine how many babies would be born before the end of the year?” She asks. “We are strategically positioning ourselves to feed these babies. I must also say it is a very delicate and risky industry. It’s not for the faint-hearted. That’s why we invest a lot into research and development,” she elucidates. Speaking on the business expansion plans, she says Mahauty wants to standardise its factory with an adjoining quality assurance laboratory. Also, the business plans to get its products on the shelves of retail stores and outlets across major cities on the continent. “We are working tirelessly to get more qualified individuals into

our team and keep improving our product quality and packaging design to compete excellently with world top baby food brands,” she says. Answering questions confronting her business, Mmachukwu says that the constraint in getting licensing with the National Agency for Food and Drug Administration and Control (NAFDAC) and the Standards Organisation of Nigeria (SON) is the greatest challenge that the business experienced since it commenced operations. She explains that procuring advanced equipment and machinery for the factory is another major challenge confronting the business, owing to the high cost and difficult clearing process at the seaport. Similarly, high cost of major raw materials is also limiting her business. She tells Start-Up-Digest that continuous partnerships the business attracts have made it survive the odds and grow. She laments that poor power supply has continued to impact negatively on the business, hurting it while raising operational costs. She calls on the Federal Government to bridge the huge infrastructure gaps, saying that it will help increase the survival rate of start-ups in the country. Also, she urges the government to ban or increase tariffs on imported infant food products to minimise importation and ensure the growth of the local industry. On her advice to other entrepreneurs, she says, “Know everything there is to know about your business. Be resilient. Stay determined and committed to what you do. Make mistakes, learn from them and allow yourself to grow.”

REA to provide energy to 500,000 SMEs in 5 yrs GODFREY OFURUM, Aba

he Rural Electrification Agency (REA), under the Federal Ministry of Power, Works and Housing, says it plans to provide constant electricity to about 500,000 small businesses within 350 economic clusters in the country in the next 5 years. Damilola Ogunbiyi, managing director, REA, who made this known Tuesday, in Aba, Abia State, at the commissioning of Ariaria Market Independent Power Project, said the effort is aimed at empowering small and medium scale enterprises (SMEs), which are at the centre of Nigeria’s economy. She stated that the Energising Economies Initiative (EEI) seeks to address power deficiencies experienced by economic clusters such as markets, industrial clusters and shopping complexes, through off-grid solutions.

Ogunbiyi explained that the first phase of the Ariaria Market Independent Power Project has energised 4,000 shops, noting that the shops are presently receiving constant, cleaned metered electricity with the remaining shops expected to be connected this year. According to her, the project is in fulfilment of a commitment made by the present administration in the country to increase energy access through sustainable and renewable energy solutions. In her words, “To date almost 10,000 shops have been electrified as part of the initiative within Ariaira Market, Sabon Gari Market in Kano, Sura Market complex, Iponri market in Lagos and Isikan market, in Ondo. “The Ariaria Market Independent Power Project is funded, constructed and operated by Ariaria Market Energy Solutions Limited (AMES) and consists of an independent gas-fired power plant, extensive distribution net-

work and metering systems for each shop. “The pre-paid meters mean that there is no more estimated billing and the traders only pay for what they consume, therefore we encourage energy conservation and payment of power supply. “It is therefore very clear that this administration is committed to ensuring that Nigerian businesses are given the ability to thrive and thus boost economic activity in a conducive and healthy environment. Ubani Ngaginieme, managing director, Ariaria Market Energy Solutions Limited (AMES), explained that the firm was set out to show and prove that when Government and private enterprise come together with strong will and alignment, great and wonderful things happen He explained that Federal Government’s Energising Economies Initiative was responsible for their being able to carry out

the project, stressing that the present administration in the country has created the enabling environment for businesses to thrive. Ubani explained that AMES deployed modular, environmentally-friendly natural-gas-fuelled gas generators to power Ariaria Market, but noted that its future deployments as they ramp up towards 10MW of power and connection of more than 37,000 shops-beyond the presently connected 4,000 shops, would include other renewable, like Solar, and other hybrids. “What AMES has invested in, and built from ground up, is a complete captive power ecosystem that includes, proper customer enumeration/sensitization, all shops metered; a robust distribution network with redundancy; and a modular environmentallyfriendly natural-gas-fueled power stacks”. With this AMES setup in place, Ubani said AMES has been able

to reduce the Ariaria Market emissions profile, by more than 85 percent, reduced the ambient noise in the market, by over 50 percent, made uninterrupted power available to sections of the market since October 2017 and provided and sustained jobs to over 100 Nigerians.

Start-Up Digest Team Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Gbemi Faminu Joel Samson Graphics

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Monday 04 February 2019

Start-Up Digest

How young Fabowale redefines IT sector Faminu Gbemi

dedapo Fabowale is a native of Osun State. He is the chief executive officer (CEO) of Fabiomatic Solutions, an Information Technology (IT) solution and services company that specialises in website development, mobile application development, digital marketing and IT infrastructure. Although a graduate of Computer Science from the University of Ilorin in 2012, he proceeded to complete his Masters of Information Technology at the University of Lagos in 2017. He was inspired to start his business after his National Youth Service. He could not get a white collar job early enough and did not want to remain idle. Eventually, he got a job as an IT administrator, which he accepted for corporate experience and communication purposes. Few months later, he resigned and established his company fully in March 2018. He initially started his business

Adedapo Fabowale

when he built a website for his cousin, who eventually referred a friend. The entrepreneur built a website for the person’s company with N250, 000 and from there he

was able to get more referrals and build his clientele. Some of his web projects include Sproutjet Farms, the Palms Shopping Mall, and Herosplus Shipping Inter-

national, among others. He says that his business growth has not been easy but has been steady and encouraging. Although he has been able to acquire certificates from trainings and seminars, he is still working on getting more, as he attends various trainings to gain expertise that will help him grow. He says the IT world develops fast with new innovation, which means that every techie person has to be kept in loop with new trends. Currently, Dapo has five adhoc staff members, whom he employs whenever he has a project to work on. He is yet to have enough resources to employ permanent staff members but is working on growing his business to bring in more and permanent employees. Speaking on some of the major challenges confronting his business, he complains about the problem of electricity, lack of infrastructure and outrageous data charges, which usually gulp a lot of his revenue. He asks that government should help provide adequate

power supply and also pay attention to the ICT sector, as the world becomes increasingly digitalised. “It will not be fair to leave Nigeria out of the development,” he says. He advises that the government should, through the Nigerian Communications Commission (NCC) work on the outrageous charges by telecommunication companies. Speaking on his expansion plans, he reveals that he intends to have a very good office space, expand to other major cities in Nigeria and eventually build Nigeria’s Silicon Valley. He also plans to have one of the most sought-after IT solutions and services company in Nigeria and Africa. His mentor is Mitchell Elegbe, founder of Interswitch, who he tries to emulate while applying his life values, which include honesty, innovation, personal development and hard work. Advising other entrepreneurs, he says, “Make a conscious effort to develop yourself regularly, ensure you grow your people network and work hard.”

Oluchukwu Ezenwaka: I will change the way schools are run in Nigeria ODINAKA ANUDU

luchukwu Ezenwaka is an entrepreneur that believes in starting small and growing big. She has tried her hands in many businesses, but believes that hard work, diligence and God’s grace pushed her up. She is the proprietress of Havilah Academy, currently located in the busy city of Onitsha, Anambra State, south-eastern Nigeria. Oluchi, for short, started like most entrepreneurs, working for organisations to make both ends met. She started her work life as an executive marketer at Industrial and General Insurance Plc in Onitsha in 2009 after her National Youth Service Corps at Bayawa Day Secondary School, Arugungu, Kebbi State. In 2010, she set up a crèche in her house in Onitsha. This did not, however, keep her stuck in the school, as she handed it over to competent hands to gain more work experience. She decided to work for Nigerian Orient News, a magazine in south-eastern Nigeria, where she was the circulation officer. Thereafter, she got a part-time lecturing job at Abia State College of Education Technical Onitsha Study Centre. In September 2015, she decided to dedicate her whole time to the school, as she felt her presence could influence the institution positively. She decided to site

her Havilah Academy at 22 Nathan Okafor Street, Odume Obosi. Oluchukwu was inspired to set up the school because of her love for teaching and her understanding that the teacher had an enormous influence on the students. “l love teaching and giving inspiration to the young ones,” she says. “So all the while, I never experienced job satisfaction and fulfilment as a staff member,” she adds. “I noticed I am a self-motivated person. There was a vacuum within, which was begging to be filled,” she tells Start-Up Digest. Oluchi says she decided to set up Havilah owing to the obvious gaps she saw in the education sector, which she has vowed to correct. “On daily basis, I travelled miles to drop my baby in a crèche far from my house. I discovered there were many schools with no provision for kids below three years of age. In 2010, when a friend who knew me well came visiting, she looked around my house and said, ‘Oluchi, you have space enough to start whatever you have in mind’. That was the push and encouragement I needed. I immediately decided to take a step. I created a space and decorated one of our sitting rooms and started a crèche right there. I made fliers, moved from house to house to get kids from below three years. I gave out announcement to churches around my house,” she explains. She says in paid employment, people work just for the money and only very few go the extra mile

to make things happen, even when nobody appreciates their efforts. In her first year, which was in September 2015, she registered 17 kids and employed two more staff members. The next year, the number of kids rose to 25, with an addition of one more staff member. The number later rose to 60 and, by end of 2016, she had registered over 80 pupils, she says. Today, the number has grown dramatically, which is a testament that business growth comes with diligence, quality, determination and divine favour.

Oluchukwu Ezenwaka

She attributes the rising number of kids to the quality of teachers in the school as well as the institution’s capacity to handle children effectively. Armed with Bachelor of Arts and Master’s degrees in Psychology, Oluchi also holds Post-Graduate Diploma in Education. She points out that one of the major challenges facing many youths today is lack of patience, which is increasingly killing lofty dreams. She calls for more mentoring of young entrepreneurs to save businesses and dreams from

dying. “Many youths are in a hurry to succeed. That is not a problem as such. But the problem arises when they fail to be patient,” she observes. She says lack of capital or collateral to source for loans to set up befitting structures is a limiting factor for the school. According to her, she uses technology in educating the kids, adding that she needs between N5 and N10 million for expansion. “There is also a challenge with getting dedicated staff. Due to poverty and influx of school everywhere, some parents now move from school to school and, as such, evade payment of their wards’ school fees,” she explains. Oluchukwu needs money to expand the school to accommodate more kids and plans to invest in real estate in the nearest future, she discloses. “There are many challenges facing entrepreneurs in Nigeria, but I guess the biggest and most challenging one is capital. No bank gives you a loan without collateral,” she laments. She advises younger people interested in venturing in education business to be sure they really love education. “The space is very wide and is waiting for innovative young people who have knowledge of information and communication technology (ICT). Always bear in mind that it cannot be over saturated, rather innovative people will always beat the tide and remain afloat,” she states.

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‘Microsoft 4Afrika identifies critical stakeholders to provide value for SMEs’ Soromfe Uzomah is the head of strategic partnerships at Microsoft 4Afrika, the market development engine for Microsoft in the African continent. In this interview with Jumoke Lawanson, he talks about why and how the initiative is committed to boosting SME businesses in Africa. How does Microsoft 4Afrika initiative help SMEs, and what type of start-ups are you interested in? e do this in three buckets, majorly access – which is basically access t o e n e rg y a n d connectivity; skills development because we believe that for a continent to be able to achieve its potential, it would need to invest in capacity building, and then innovation, where we help organisations that we believe have scalable and sustainable solutions to African problems, led by African founders, to begin to drive value through that. When I say start-ups, it doesn’t necessarily have to be technology start-ups. It can be somebody selling food solutions. It might be agricultural business. Some of them are doing N10million, N100million a month in revenues and are employing up to 100 people. But because access to funding is usually very difficult, owing to the fact that interest rates from banks are very high, they are not able to access funds. These types of organisations typically should be able to access venture capitals, but they have to be able to communicate their numbers in a way that these venture capitalists and angel funds will understand. So, 4Afrika has a consulting company that will come in and sit with the SME to work through their financials, operations, organisational structure and help them put together something that enables them to approach venture capitalists and access either debt or equity funding at lower cost to their business. Typically, we do this through hubs and accelerators because we find that that’s the easiest and fastest way to identify people who can actually grow.

SMEs. A simple example of that could be optimisation of operations. With regard to innovation, we invest in organisations and have invested in about 64 SMEs and have touched about 94 of them deliberately. These are start-ups that we believe have the potential to spread across the continent, and although for Microsoft, it is not so much about the dollar figure. We have done $5.1million in investment over time, but the real value for the SME is having the stamp from Microsoft that says that it believes that these organisations will scale in the long term.

Why is SME development impor-

What would you say is a major hindrance to SME growth in Nigeria? The truth is that SMEs need more than finance to grow. It is true that sometimes the most pinching problem is finance, but even if you raise the money or you are given the funding, you would suddenly discover that even having the right team could be a challenge. We believe that hubs and accelerators are a holistic approach to solving that problem for SMEs.

Soromfe Uzomah

tant to Microsoft? Microsoft realises that we need to make investments into the African eco-system to be able to drive businesses to a point where they can actually begin to leverage the right technology to grow. We believe that SMEs are the engine of any economy. We believe that they can drive value. In Nigeria alone, there are between 18 and 37 million SMEs, so we have to find a way to give them

the support that they need to be able to grow their businesses. We can’t speak to all SMEs because it is almost impossible to have a system that allows us as a company speak to 18 or 37 million SMEs. So what we are doing across the continent is to identify critical stakeholders in the value chain for SMEs, and based on our analyses, it would typically fall into three or four categories: financial services institutions, telecoms

organisations and government institutions. We try to engage with these entities, and through them provide value to the SMEs. That value could be in a number of ways, including capacity development, where we provide training content and premium Africa-related articles to them. We also find global subject matter experts, who can come and work with local experts and deliver some capacity-building for local

What does 4Afrika look for in SMES? We look for things that indicate that the business is scalable, that it addresses a huge market, that it is a sustainable business, and we also believe that you would have to leverage cloud technology because that gives the business the ability to be flexible, allows you to operationalise your capital expenses. We also look at the team to make sure that you’re really engaging and you are committed to growing that business. We have done this with some organisations here that we are working with, such as Max, Flutterwave, My Music, Space Point and others. We have even provided innovation grants for some.

Ease of doing business: Kwara ranked 10th out of 36 states in Nigeria SIKIRAT SHEHU, Ilorin

n international independent organisation has rated Kwara second in revenue generation and 10th position out of the 36 states in the country making progress in terms of ease of doing business. Muritala Awodun, a professor of International Business and Entrepreneurship and chairman of Kwara State Internal Revenue Service (KWIRS), disclosed this while giving account of his stewardship at the media parley, held in Ilorin, the state capital.

He said this was contained in African Report Index 2018, which was produced by an independent organisation that comes up with ‘Africa States Progress Report’. The KWIRS boss, who informed that the state was next to Lagos government in IGR generation, stated that “All the states in Nigeria were surveyed on certain indexes and the report as at 2018, placed Kwara State as second after Lagos State.” The criteria used, according to him, included poverty index. “ Kwara was placed 10th out of 36 states on access to electricity. Kwara was 3rd on Internet users index. Kwara was 6th on ease of

doing business index. Kwara was placed 10th on IGR per capita. The state was placed 7th out of the 36 states in Nigeria,” he elucidated. “On infrastructure index, Kwara was placed 11th, on access to health index. Kwara was placed 10th on housing index; Kwara was 9th on primary education access index and was 8th on tertiary education. Kwara was placed 5th out of 36 state in Nigeria. All these were put together and used to determine the position for each state.” He said the state currently generates about N2 billion as its IGR, adding that based on the peculiarity of the state, it was handling the

issue of tax with tact and persuasion. Awodun recalled that before his administration came on board in September 2015, the processes of revenue collection were awash with leakages and lots of things were not right. About 45 projects, according to him,,, were abandoned due to dwindling revenue and now, all have been completed and several new projects have commenced because of Infrastructural Fund, IF-K established in 2016. “The Kwara IGR position, which was 27 among 39 states in 2015, has moved to 9th position by 2018.

“The story over the last three and a half years, particularly at the close of 2018, is that the IGR of the state increased to N23 billion, as opposed to N7.2 billion in 2015.” He, however, stated that the state has the potential to rake in about N5 billion monthly from internally generated revenue (IGR). “This is just evidence of the impact of the reformed revenue collection process in the state. “I can confidently say that what we have been able to achieve in Kwara which was attested to, by our colleagues at the joint task board. It is a significant step in the right direction by the state,” he stated

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How trade secrets hurt innovation Andrea Contigiani

ne of the primary ways that employers seek to protect trade secrets is by having employees sign noncompete contracts and nondisclosure agreements. In a recent study, we examined this issue, and found that strengthening employers’ trade-secrecy protection can backfire by dampening inventors’ productivity and hurting innovation in the long run. A lot of innovation research suggests that innovation comes from recombining ideas from different fields, experiences and organizations. To the extent that a more employer-friendly tradesecrecy regime limits employee mobility across

companies, the opportunities for idea circulation in the economy could be curtailed, thus potentially harming innovation. Another set of theories also suggests that stronger trade-secrecy protections may diminish innovation, but for an entirely different reason. This view says that if it’s harder for employees to switch firms, they have less incentive to drive up their market value by demonstrating their productivity — and this reduced incentive could result in dampened innovation. To find out what actually happens, we focused on a specific change in the legal environment surrounding trade-secrecy protection: the adoption of the inevitable disclosure doctrine, or IDD, in

some U.S. states and not others, starting in 1994. The IDD allows a company to seek an injunction in court to prohibit a former employee from working for a competitor for a certain period of

move to direct competitors, they may reduce effort in their current area of focus (leading to the documented innovation slowdown) and find other areas in which they can signal their innovation quality. Overall, our study suggests that, while firms lobby for a strengthened trade-secrecy environment, this may ultimately backfire in the long run by leading to lower innovation.

time, if they can show it would not be possible for the employee to perform her job without “inevitably disclosing” the company’s trade secrets. We conducted an empirical analysis to under-

stand how IDD affected the innovative productivity of inventors. In all, our sample spans 1976 to 2003 and analyzes the patenting outcomes of over 350,000 distinct inventors over that time period, for a total of over 2.5 million inventor-year observations. We found that IDD had a negative effect on innovation, and specifically on innovation quality. We also found that after an inventor is exposed to a stronger trade-secrecy regime, that inventor systematically produces inventions that are more general-purpose (applicable to a wider spectrum of uses and industrial contexts) and thus less subject to the IDD. We interpret this to mean that if an individual can’t

In IBM’s case, having made the shift from tabulating-machine company to hardware leaser to a vendor of mainframe, minicomputer and even PC hardware, Big Blue finally runs adrift. Joan Magretta, too, cites Drucker when she defines what a business model is in “Why Business Models Matter,” partly as a corrective to Lewis. Magretta, like Drucker, is focused more on the assumptions than on the money, pointing out that the term “business model” first came into widespread use with the advent of the personal computer and the spreadsheet. A business model, she says, has two

parts: “Part one includes all the activities associated with making something: designing it, purchasing raw materials, manufacturing, and so on. Part two includes all the activities associated with selling something: finding and reaching customers, transacting a sale, distributing the product, or delivering the service.” Once you begin to compare one model with another, you’re entering the realms of strategy, with which business models are often confused. Magretta goes back to first principles to make a simple and useful distinction, pointing out that a business mod-

el is a description of how your business runs, but a competitive strategy explains how you will do better than your rivals. Introducing a better business model into an existing market is the definition of a disruptive innovation. Knowing you need one and creating one are, of course, two vastly different things.

(Andrea Contigiani is a doctoral candidate at the Wharton School at the University of Pennsylvania, where David H. Hsu is a professor.)

What is a business model? Andrea Ovans

n “The New, New Thing,” Michael Lewis refers to the phrase “business model” as a term of art. And like art itself, it’s one of those things many people feel they can recognize when they see it but can’t quite define. A look through HBR’s archives shows the many ways business thinkers use the concept and how that can skew the definitions. Lewis himself echoes many people’s impression of how Peter Drucker defined the term — “assumptions about what a company gets paid for” — which is

part of Drucker’s “theory of the business.” Citing as a sterling example one of the most strategically nimble companies of all time —

IBM — he explains that sooner or later, some assumption you have about what’s critical to your company will turn out to be no longer true.

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(Andrea Ovans is a senior editor at Harvard Business Review.)

Monday 04 February 2019

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Those who foresee rigging in 2019 polls are the master riggers themselves - Umohinyang Emmanuel Umohinyang, convener, Re-elect Buhari Movement (RBM), leads one of the major support groups rooting for President Muhammadu Buhari’s re-election. He spoke with ZEBULON AGOMUO on a variety of issues including the alleged plot to rig the forthcoming election. Excerpts: There have been allegations and counter allegations over plots to rig the 2019 general election. What is your reaction to former President Obasanjo’s allegation that President Buhari is planning to rig the coming election and that his administration is like that of Abacha? s you know, when it comes to the issue of credible election, Obasanjo does not have a say. He does not have the morality to talk about credible election in Nigeria because he is the grand master of election rigging. Under his watch, we had the Maurice Iwu of this world. During his time, election was not won at the ballot; results were written from the comfort of people’s homes. It was during his era that we had the famous “Mr. fix it”. Election was fixed. It is only an exhibition of fear, thinking that we are back to the era we are coming from. I want to assure our former President that the new Sheriff in town is different from what we had during his era. Under President Muhammadu Buhari, elections will not only be free and credible, it will be seen by even the worst critics of his administration. Let us not becloud ourselves with the issue, coming from Otta, asserting that this administration is being run like the Abacha era. I think it is the most unfortunate statement I have had from a former President. By the way, Obasanjo is not the only former President we have had in this country and one expects that as an elder statesman, if he sees anything that the administration has done that he feels strongly about, he could approach the President and share his views. The late former President Shehu Shagari, and Gen. Yakubu Gowon are examples. We have the Council of State of which he is a member, so trying to portray himself as saint when we have his records is like a slap on our face. It’s quite unfortunate. I think we should give it to this administration that it has saved us the pain and agony of the past, talking about the Obasanjo/ Atiku era, when the issue of political detainees was the order of the day; politically motivated assassination was the order of the day. I think ex-President Obasanjo may have run out of ideas and is just trying to seek attention from Nigerians. Unfortunately, he cannot get it. President Buhari is a general of the people’s army. Nigerians love

candidate.

Emmanuel Umohinyang

him and appreciate what he is doing. That is basically the reason we are pushing for his re-election come February 16, 2019. Don’t you think the former President has a point with Gen. T.Y Danjuma toeing the same line? I am surprised that you mentioned Gen. Danjuma, so we can say it is a communion of the Generals. Their views do not represent Nigerians’ views and I think at the last Council of State meeting, the INEC chairman was there to explain the level of preparation. From what we heard, the Council of State endorsed INEC’s preparation. INEC has equally said they have worked independently. There has not been pressure from any quarter. I want to assure you that under President Muhammadu Buhari, election will not be rigged; rather we will have something better than what we had in 2015. I think the President has endeared himself to Nigerians. It is not easy for a man to maintain the position of “Mr. Integrity” for decades. Who among these people can you call ‘Mr. Integrity’ without hearing a boomerang from Nigerians? President Buhari has held on to ‘Mr. Integrity’ for years. Nobody, not even his worst critics have ever queried that posture. He didn’t earn that over the shelf. It is due to hard work that he has put into the system. He has held

several public offices. You can go and check his records. Go and check what he has, and you will realise that we have moved from that era where a sitting President will gather contractors and gather N7 billion in the name of a Presidential library. What we are saying is that we should have more faith in President Muhammadu Buhari. The integrity of some people is tied to their stomach, not President Buhari. He will never allow the coming election to be rigged in his favour or that of any other

I think I need to correct this impression; Justice Walter Samuel Nkanu Onnoghen remains the CJN. We must enlighten our people that he has not been removed in the literal word of it

How do you react to the removal of CJN by President Buhari? I think I need to correct this impression; Justice Walter Samuel Nkanu Onnoghen remains the CJN. We must enlighten our people that he has not been removed in the literal word of it. He was only suspended. The provision for the removal of the CJN is provided for in section 291 and 292 of our constitution as amended. Under those provisions, I don’t think the President can unilaterally remove the CJN. No. what the President has merely done is to carry out an order of the CCT, directing that the President should suspend the CJN, pending the conclusion of his trial, and that the most senior judge in the hierarchy of the Supreme Court be appointed in acting capacity. The suspension simply means if the person is found not guilty after the conclusion of trial, he will be reinstated. People made some funny and ridiculous comments, prior to his suspension. We had some governors assemble in Abuja and declared that the CJN ignore the summon of the CCT. If at all, those governors made those statements, I think it is the most ridiculous statement I ever heard because when you tell an ordinary Nigerian on the street who was caught stealing yam, that the full weight of the law would be brought on him and you try to turn a blind eye on somebody just because he is from your zone, such is really unfortunate. We cannot make progress as a country. My position is that irrespective of who is involved, even if it is my father, the very minute you go against the laws of the land, you must face the consequences, pure and simple. What becomes of our country when people begin to disobey the order of the courts? If we go tribal, it means the Northern governors could also say El-ZakZaky and Dasuki are from our zone. The next thing will be anarchy. We should all rise against sectional interests and begin to deal with issues on its merits. What is your reaction to the backlash that followed the suspension? Look, we are in a political era. The Presidential election is by the corner. It is expected. We are in era where the politicians, lawyers, doctors, etc all have interest to protect, but I think we should

look at the larger picture regarding whose interest the President should protect. That of his political party? The answer is no. His personal interest? The answer is no. That of the constitution? I think the answer is yes. The President is acting based on the powers given to him by our constitution, to obey orders that come from courts. You must also understand that it is a simple principle of law that orders of courts must be obeyed, no matter how bad. It was Lord Denning who said in his famous quote that no matter how tall a man is, the law is taller than him. That is why I subscribe to the removal of immunity against criminal prosecution for all categories of office holders, so that any occupier of even the office of President can be tried for criminal infractions. It will be an aberration to smuggle immunity that was not conferred on the CJN. I think Nigerians should rise up and be counted if we want to move Nigeria from where we met it to where we want it to be. Don’t forget fighting corruption is one of the cardinal programmes of this administration. The present happenings in our country today remind me of the famous poem by Prof. Niyi Osundare titled, ‘My Lord, where do I keep your bribe?’ As members in the temple of justice, we must ensure that corruption is eradicated from our Judiciary. There are different interpretations about the warning by the US and UK against violence in the coming polls; where do you stand on this? I would rather commend the UK and US for always showing exemplary interest in everything that has to do with our country. First, we know how elections had been conducted in the recent past. We know how results were written. This current President has been a victim of series of election. He has also been a beneficiary of a transparent process in 2015. For a man who benefited from a transparent process, he will never do anything to circumvent the will of the people. Two, if anything goes wrong with Nigeria, Africa as a continent catches cold, so you can now see why there is much interest in what is happening in Nigeria’s election. We have become a mirror to many African countries, so it is expected. We want to assure other countries that Nigeria under President Buhari will not derail this process.

Monday 04 February 2019

NATIONAL DISCOURSE

BUNMI BAILEY

olitical leadership is important for the development of any nation. But in Nigeria, it is gendered. The poor and low participation of women in elective and appointive positions are some of the reasons why Nigeria is broken as we don’t have a

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Engendering a healthy political environment for women healthy political environment where lot of women can participate. Deprived access to finance, access to membership forms, subject to sexual harassment, especially from the “god fathers” of the country and the poor perception of women in politics are some of the challenges faced by women who intend to run for elective offices. Notable women such as Margaret Ekpo; Janet Mokelu; Funmilayo Ransome-Kuti; Ngozi Okonjo-Iweala, played crucial roles in the political life of Nigeria and this contributed significantly in shaping the political system in Nigeria. The Beijing Platform for Action prescribed by the International Women’s Conference in Beijing, China in 1985 has a benchmark of at least 35 per cent for women participation

in politics. However, despite Nigeria being one of the largest economies in Africa, which other African nations should take lessons from, it is yet to meet up with this benchmark. The Global G ender Gap index which measures the gap between men and women at the highest level of political decision, ranked Nigeria 1 3 5 t h p o s i t i o n ou t o f 1 4 4 countries scoring 0.052 point in 2017. That aside, the national average of women’s political participation in Nigeria has remained 6.7 percent in elective and appointive positions, which is far below the Global Average of 22.5 percent, Africa Regional Average of 23.4 percent and West African Sub Regional Average of 15 percent. Nigeria is yet to produce a

female governor in any of the 36 states of the federation. African countries like Rwanda, Ethiopia, and Liberia are above us in this area based on the certain measures put in place in these countries to include women in politics. For example Rwanda which has the highest representation of women in politics, education and the workplace in Africa, made agenda to include a level playing ground for women to participate more in politics. Recently in 2018 Ethiopia elected Sahle-Work Zewde as its first female president. Despite Nigeria having a higher percentage of its population skewed to women than men, its environment does not encourage women to be in the forefront of politics because there is gender bias in our culture.

The so called “godfathers” in the Nigerian political landscape think that women are not able to handle matters that have to do with governance. As the country approaches elections in 2019, the government should develop strategies to get more women involved in the political process and develop more policies that will prioritise the best interests of women, which would in turn benefit society as a whole. The obstacles are many but if the government and political parties can show a good example of fairness or level playing ground for women, more women will come forward. Women should be sensitised and encouraged through the media as this will build their confidence and get them to see why their full participation is required.

Reducing cargo dwell time to avert losses AMAKA ANAGOR-EWUZIE

oday, Nigerian seaports are rated as one of the most expensive to do business in the entire West African region, judging by the fact that imported cargoes, especially containerised ones, stay longer days in port terminals before importers can obtain the needed authorisation to move the containers to their warehouses. As a result, importers using seaports in Nigeria pay more as demurrage charges to shipping companies and storage charges to terminal owners for not taking delivery of their consignments as and when due. The existence of these challenging factors is not down to increased volume of goods at the ports, but can be attributed to gross inefficiency in the system, especially on the part of government agencies, including Customs. Nigerian Ports Statistics, as released by the National Bureau of Statistics (NBS), reflected that ship traffic at the Nigerian ports recorded a total of 4,175 ocean going vessels with 131,569,821 gross registered tonnage in 2017, as against 4,622 ocean going vessels with 134,2,13,076 gross registered tonnage in 2016.

Similarly, a total of 12,243 service boats with 5, 910,406 gross registered tonnage was recorded in 2017 as against 9,418 service boats, with 5,193,402 gross registered tonnage in 2016. Also, cargo traffic statistics revealed a total of 71,903,266 metric tonnes of cargo were recorded at all Nigerian ports in 2017 as against 70,819,092 metric tonnes recorded in 2016. The above mentioned challenges were as a result of the various hiccups that come with doing business in Nigerian ports. The hiccups make it more time consuming, cumbersome and expensive for an importer to bring in consignment through the port. A report by the Lagos Chamber of Commerce and Industry (LCCI) and the Financial Derivatives Company published in 2016, estimated that importers pay as much N1 trillion in cost annually to delays caused by use of cumbersome paper work in cargo clearance and inefficient port system. Similarly, the Nigerian Shippers Council (NSC) in 2017 released a report that stated that the nation’s ports have the longest cargo dwell time of 19-25 days, compared to other ports in the world. The report stated that cargo

PORTS clearance timeline takes longer days, against the ideal period of two to seven days it takes in Cotonou port; Durban port, South Africa or Mombassa port. However, BusinessDay recent research shows that the situation has gone from bad to worse as cargoes now dwell between one and two months (30-60 days) in the ports. This can be blamed on delays experienced by importers and their agents during cargo clearing at ports. For instance, all the imported containers in Nigerian ports are now subjected to 100 percent physical examination by the officers of the Nigeria Customs Service (NCS) due to non-utilisation and the faulty state of the multibillion naira scanners installed at the various port terminals and border stations. Also, Customs documentation and clearance processes have remained the same and largely manual coupled with existence of multiple government agencies that delay cargo clearance at the ports. In addition to this, entrance into the port has become very challenging to not only importers but to also service providers

due to persistent traffic gridlock on port roads. This poses serious threat to smooth movement of goods, and it also increases cost of doing business, as importers experience man-hour losses because Customs and other service providers always report and commence examination late due to the traffic situation. For these reasons, Nigerian importers prefer ports in the neighbouring countries of Benin Republic and Togo where it is faster and cheaper to clear cargo from the port. Reducing delays in Nigerian port is not a rocket science as Customs can reduce dwell time to two days (48 hours) through effective utilisation of automated clearing system such as scanners, which has the capacity to fasttrack cargo clearance at the ports. Customs officers and all other service providers that work from 9am to 5pm need to put mechanism in place to be available 24/7 in order to attend to importers and their agents, and they can achieve this by running 12-hourly shift on daily basis, experts say. If port service providers operate 24/7, Nigerian seaports would become user-friendly, more efficient and the dwell time of cargo would reduce. This will also

ensure faster turnaround time for ships calling the ports. But, for 24-hour operation to work, the government must improve on the security system within and around the port by ensuring that port access roads are well illuminated and that security cameras are installed to monitor movement of persons and cargoes in and out of the ports. Security officials such as men of the Nigerian Police Force and others must always be on ground to monitor activities around the ports. Also, Nigerian government needs to bring all the units of Customs, agencies and service providers in the port under one umbrella to enable them conduct cargo examination together without delay. Therefore, there is a need to do away with multiple divisions of Customs and agencies like Standards Organisation of Nigeria (SON), National Agency for Food and Drug Administration and Control (NAFDAC), as they should be moved out of the port. This is because multiplicity of agencies creates avenue for corruption to take place. Therefore, if the incoming government can overhaul the system of cargo clearance at ports, it will help to develop the economy.

44 BUSINESS DAY NEWS

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Monday 04 February 2019

Rendeavour provides homes, creates jobs as its city development footprints widen CHUKA UROKO

endeavour, Africa’s largest builder of new cities, says it has over the last decade provided affordable houses for 3,000 families and created 10,000 direct and indirect jobs through its cities development and infrastructure provision across five African countries. This means that at an average of four persons per family, the company has created homes for 12,000 persons. Given the multiplier effect

Ambode wants civil servants to key into smart city vision JOSHUA BASSEY

agos State governor, Akinwumi Ambode says for the state to achieve the dream of moving from a megacity to a smart city, civil servants must embrace the vision. He stated this at a training programme organised for civil servants in the state, where he also emphasised the need for training and retraining so as to increase their productivity. Represented by Akintola Benson, his commissioner for establishment, trainings and pensions, Ambode also stressed the need to reduce waste in the system. “The importance of eliminating waste cannot be over-emphasised. Countless studies have shown that with good and sound process relating to management of time and resources, one finds that meagre resources can be extended to produce outstanding results. In other words, organisations and individuals can achieve more with less,” he said. The governor said he was confident that the state civil service was on the path to being re-positioned for better efficiency in service delivery, adding there was much to gain from pursuing higher responsibilities in the drive towards attaining the smart city status. Permanent secretary in the ministry of establishment, trainings and pensions, Rohda Ayinde while speaking at the workshop congratulated the trainees, saying, “When you are trained, you are well informed.” Facilitators at the workshop Mike Ikupolati, a professor, and Carla Massoud, a French-Lebanese lecturer lauded the state government for giving priority to the training of its staff. Ikupolati said the twoday workshop would position the civil servants for strategic management.

of job creation, it means that about 50,000 people may have benefited from the development activities of the company, given five dependants per worker. Backed by American, British, Norwegian and New Zealand investors with a longterm commitment to Africa, and to Nigeria in particular, Rendeavour opened its first businesses in Nigeria in 2006 when it launched Renaissance Capital, one of Nigeria’s and the continent’s leading investment banks. In 2012, it established RenMoney, Nigeria’s lead-

ing consumer finance bank. Since that time, the company has not wavered in its commitment to large-scale, transformational investment in Nigeria, especially in Lagos, the country’s commercial nerve centre. Rendeavour is Africa’s largest builder of new cities and is currently developing seven major satellite cities in five countries, including Nigeria, Ghana, Kenya, Zambia and the Democratic Republic of Congo (DRC). “These cities, on more than 12,000 hectares of land, are providing homes, of-

fices, schools, hospitals and industrial parks within wellplanned urban environments, delivering new roads and utilities such as power, water and ICT, to thousands of people today, and to hundreds of thousands in the future,” said Stephen Jennings, the company’s CEO. Citing their work in work in Kenya, Ghana and Zambia, Jennings disclosed that they had invested approximately $300 million of their own capital to develop sustainable and inclusive new cities. In turn, this investment has catalysed well over $1 bil-

lion in additional investment in construction, plant and equipment in these countries by indigenous and multinational companies looking to build their own future in Africa. More than 60 companies including Unilever, MTN and Africa Logistics Properties, the IFC- and CDC-financed Grade A warehousing business, are building or have completed offices, manufacturing facilities and worldclass logistics and warehousing complexes. Five new school campuses have opened in these cities by the company’s partners such

as Johannesburg Stock Exchange listed ADvTECH and Nova Pioneer. These schools are educating thousands of students every day. “Several more major schools are in the planning phase”, Jennings assured. “We have affordable housing for 3,000 families and kilometres upon kilometres of roads and water and sewerage systems. More than 10,000 direct and indirect jobs have been created so far, many of them sourced from our host communities having been trained at our own skills centres,” he said.

Monday 04 February 2019

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BUSINESS DAY

NEWS EXPOSED: The sleazy face of N306/$... Continued from page 1 the transaction. The agent then

accepts dollars from the exporter in§z exchange for naira at an exchange rate of N306 per US dollar. This faceless agent then heads to the black market to sell same dollars at N360, helping himself to a gain of N54 per dollar. BusinessDay estimated these faceless agents to be making no less than N32 billion annually. That’s how much they pocket from crude oil exporters alone. The figure could increase another 5 percent if non-oil exporters are factored in, given that oil exports account for 95 percent of dollar inflows into the country while non-oil exports take up the remaining 5 percent. Five percent will equate to N1.68 billion for a total of N33.68 billion. The amount these agents make on a yearly basis is enough to build 6,400 housing units in Nigeria’s hinterlands. That’s assuming each unit costs N5 million. It is also enough to provide eight ultramodern hospitals, at an average cost of N4 billion each, across the country. The inferences are being made because housing and healthcare are two of the most critical yet under-

funded sectors in Nigeria. In making our assumptions, BusinessDay obtained the financial report of indigenous oil company, Seplat, to extract its administrative expenses and render it as a percentage of total revenues. Seplat’s estimated full-year 2018 revenue is $757 million. In the nine months ended Sept 2018, the company’s revenue was $568 million. That givesamonthlyaverageof$189million. The company’s general and administrative expenses totalled $55 million in the nine-month period. The monthly average comes to $18 million. To roughly estimate full-year administrative expenses, we added $18 million to$55millionandarrivedat$73million. It means 9.6 percent of Seplat’s revenue went to admin expenses. We assumed that the IOCs spent $505 million in administrative expenses in Nigeria. This we derived by applying Seplat’s administrative expense as a percentage of revenue – 9.6 percent on the total Joint Venture share of the IOCs. The NNPC in its September 2018 report stated that the IOCs’ JV share totalled N581 billion between September 2017 and 2018, while the Federal Government claimed N924

billion, which implies a sharing formula of 61 percent for the FG and 39 percent for the IOCs. The report was based on an exchange rate of N306 per dollar, which means the IOCs’ share in dollar terms was $1.9 billion. To estimate how much of that amount is likely committed to administrative expenses, we calculated 9.6 percent of $1.9 billion, which gave $505 million. We arrived at this figure after adopting the Seplat model, wherein 9.6 percent of total revenue is spent on administrative costs. Seplat’s admin costs of $73 million added to the IOCs’ $505 million equals $578 million. At an exchange rate of N306 per dollar, it means the IOCs and Seplat may have spent N176 billion on admin expenses in 2018. When the N360 per dollar exchange rate is factored in, the amount swells to N208 billion, leaving a difference of N32 billion. Given that our conservative estimate leaves out the transactions of other indigenous companies, it is safe to assume these faceless agents make no less than N32 billion annually in exchange rate gain. Our estimate also leaves out nonoil exports, which when roughly estimated translate to a total of N33.68 billion, as stated earlier in the story.

“The FX arbitrage in the country is hardly the best kept secret,” a source who did not want to be named told BusinessDay. “Every bank chief executive officer knows about it, but the fear of the regulatorkeepsthemmum,”thesourcesaid. Two other sources confirmed they were also aware of the dealings. “Every large importer of dollars who goes through the official channel is a victim,” one of the sources said. “The arbitrage opportunity is the reason why the N306 rate still exists, when most market transactions happen at the N360 rate,” the second source said. Treasury sources tell BusinessDay that the practice has forced some exporters to circumvent official channels in order to get a marketreflective rate for their dollars. That has curbed dollar supply, piling pressure on the exchange rate. To address the rising tide of exporters boycotting official channels, the Central Bank has threatened to sanction the banks. According to sources familiar with the matter, the CBN is convinced that the banks could be helping some of their clients divert their dollars and is bent on discouraging that.

Regulation allowing direct purchase of... Continued from page 2

L-R: Opuiyo Oforiokuma, managing director, ARM-Harith Infrastructure; Toyin Sanni, chief executive officer, Emerging Africa Capital Group; Bola Akinlabi, deputy lead pastor, and Godman Akinlabi, lead pastor, The Elevation Church, at the 6th edition of Vantage Forum themed ‘2019 and Beyond: Stimulating National Prosperity’ sponsored by BusinessDay in Lagos.

New minimum wage means more woes... Continued from page 1

N30,000.

Even though the House of Representatives passed a minimum wage of N30,000, with public expectation that the Senate will uphold the decision of the lower chamber, the N27,000 minimum wage for states stands until the legislators’ decision receives the president’s assent. The 50 percent wage hike has increased the amount attributed to salary payments by states, leaving little or nothing from the IGR to deploy to other causes. Before the implementation of the new minimum wage policy, only two (Osun and Yobe) of the 36 states had personnel costs exceeding 100 percent of internally generated revenue. Osun State recorded an IGR of N4.77 billion as at Q2 2018, with a budgeted average monthly personnel cost of N5.33 billion or 112 percent of total IGR. Yobe State recorded an IGR of N1.62 billion in the same period, with a budgeted average monthly personnel cost of N1.81 billion or 112 percent of total IGR. However, with the new minimum wage, that number has increased to eight states – Osun, Kebbi, Zamfara, Borno, Adamawa,

Taraba, Yobe and Benue States. For all eight, their monthly average personnel costs exceed their IGR. In addition to the eight states listed, 16 others will see average monthly personnel cost accounting for more than 50 percent of IGR. This means more than 50 percent of internally generated revenue of the affected states will be used to pay salaries. BusinessDay analysis shows the total average monthly personnel cost of states in the federation totalled N113.75 billion as at 2018. An increase by 50 percent of minimum wage of states to N27,000 will increase average monthly personnel cost to N170.63 billion. “This implies an average recurrent expenditure increase of each state by a minimum of 6.5 percent, without a proportionate increase in IGR in the short term,” said GTI, a Lagos-based international investment banking firm. While Nigerian states struggle to reduce their domestic and foreign debt portfolio, analysts opine that the approval of the new minimum wage by the FGN may likely pile more pressure on their debt profile. Excluding states like Lagos, Rivers, KanoandKastina,other Nigerianstates have their average internally generated

revenue (IGR) below average monthly recurrent expenditure, according to 2017state-of-the-statesreportofBudgit. The new minimum wage of N27,000 increases slightly the purchasing power of state workers by $25 to $75 at an exchange rate of N360/$1. However, compared to exchange rate of N198/$1 five years ago, the new minimum wage is $15.9 lower. While the new minimum wage doesn’t increase real income value of state civil servants due to the persistent devaluation of the naira, it, however, increases debt levels of states significantly assuming debt as a major source of financing new wages. “The inability of many state governments to generate significant IGR independent of monthly FACC allocation suggests there may be serious headwinds ahead given the cloudy outlook for crude oil demand and prices in the global market,” GTI said in a recent report. Damilare Asimiyu, an analyst at GTI, said given “the downward pressure on prices experienced in the crude oil market which accounts for a major proportion of income source for Nigeria, state governments will need to expand revenue base for a successful implementation of the new minimum wage or risk an expansion in debt portfolio”.

“The CBN is penalising banks whose clients don’t bring their dollars through official channels,” a source said. “The banks argue that it is not their fault if clients are bent on diverting their money.” The diversion threatens to take the country back to a period in 2016 when exporters and Nigerians in the diaspora side-stepped official channels because of the country’s longstanding naira peg of N199 per dollar. The black market rate at that time was as high as N300 per US dollar, yet the CBN forcefully exchanged dollars at the N199 rate, denying individuals and businesses, whose costs were anchored on the black market rate, of a spread of N101. The impact was an acute dollar shortage that contributed to Nigeria’s first economic recession in 25 years. “It is perhaps the biggest FX racket since the days of Abacha,” one of our sources said. In the early 1990s, Abacha gave dollars away to his cronies at an official exchange rate of around N20 per dollar when the parallel market rate was anywhere between N70 and N80 per dollar, creating an arbitrage opportunity of between N50 to N60 per dollar.

capacity with the Nigerian Bulk Electricity Trading company (NBET) which settles debt in the market. NERC also said applications have been refused because some applicants lack executed Transmitted Use of System (TUoS). This refers to the charges incurred for transmitting electricity across the national grid network from the source of generation to the network of the local distribution company, including transmission losses. NERC also said that some applicants did not show a letter of no indebtedness to the electricity distribution company (DisCo) allocated the franchise area. “This is why I argued that the Nigerian Electricity Supply Industry (NESI) is not mature for an electricity market,” said Idowu Oyebanjo, a UK-based chartered power systems engineer. Oyebanjo said the NERC should have updated the EPSRA 2005 to reflect the obligations of licensees in relation to the declaration. By extension, relevant grid codes (transmission and distribution codes), standards, manuals and policies have to be updated. “Aside from these, it must be anticipated that some players will be involved in anti-competitive acts to frustrate the implementation of the eligible customer regime and so a separate code of practice is required to forestall this and facilitate the smooth transition into retail competition,” said Oyebanjo. When the policy was announced, there was palpable excitement in the air as analysts believed that industries would latch onto the policy and better their output. According to the Manufacturers Association of

Nigeria (MAN), 40 percent of all expenses of manufacturing firms goes into powering their machines. The eligible customer regime was meant to cut down on this cost. Fashola, at the 29th monthly power sector meeting in August last year, had said that 26 industrial customers were seeking to benefit from the eligible customer declaration. The meeting was hosted by Mainstream Energy (concessionaires of Kainji and Jebba Hydro-Power Stations) in Niger State. “From reports reaching me, five industrial customers are now benefitting from the policy and taking their power directly from a GenCo, who incidentally is our host today, Messrs Mainstream Energy Ltd. We also have a list of 26 (twenty-six) industrial customers who are seeking to benefit from the policy,” Fashola had said. Months later, these industrial customers are still waiting to benefit from the policy. The policy directive was expected to bring into play new and stranded generation capacities which maybecontractedbetweengeneration companies and eligible customers. The declaration further provides that at least 20 percent of the generation capacity added by the existing or prospective generation licensee to supply eligible customer must be above the requirement of the eligible customer and must be supplied under a contract with a distribution or trading licensee at a price not exceeding the average wholesale price being charged DisCos by the Nigerian Bulk Electricity Trader Ltd. Fashola had directed NERC to enforce transition charge on eligible customers to compensate DisCos for revenue loss arising from their customers buying power directly from generation companies. But even this has not enabled the programme to work.

Inside details of alleged contract breach that... Continued from page 2

States District Court challenging the $6.59 billion enforcement proceedings against the Federal Government. Malami, represented by the Solicitor-General of the Federation, Dayo Apata, stated that “what was being taunted as a default judgment was actually a default entry by the court clerk”. “Under the Foreign Sovereign ImmunitiesAct(FSIA),adefendanthasup to 60 days period to answer to a petition filedagainstit.Wherenoresponseisen-

tered for the defendant, the court clerk, upon application by the petitioner, makesadefaultentry,whichinthiscase was made on June 5,” he said. The AGF added that under the FSIA, a default judgment cannot be entered against a foreign state like Nigeria except the presiding judge determines so after the petitioner/ claimant must have established its entitlement to a default judgment.

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Monday 04 February 2019

Live @ the Stock exchange Prices for Securities Traded as of Friday 01 February 2019 Company

Symbol

Deals

Current Price

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 176,460.63 6.10 6.09 196 22,869,259 UNITED BANK FOR AFRICA PLC 244,525.86 7.15 5.15 181 12,557,618 ZENITH BANK PLC 720,549.53 22.95 2.00 173 7,383,144 550 42,810,021 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 263,830.40 7.35 0.68 188 28,289,175 188 28,289,175 738 71,099,196 BUILDING MATERIALS DANGOTE CEMENT PLC 3,237,696.41 190.00 -0.05 76 560,263 LAFARGE AFRICA PLC. 107,550.51 12.40 -0.80 39 182,576 115 742,839 115 742,839 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 311,875.62 530.00 -0.93 33 251,392 33 251,392 33 251,392 886 72,093,427 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,900.00 95.00 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 11,300.89 45.20 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 15,876.20 5.95 - 0 0 0 0 0 0 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 3 503,600 78,220.62 82.00 - 7 2,290 OKOMU OIL PALM PLC. PRESCO PLC 60,000.00 60.00 - 0 0 10 505,890 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,590.00 0.53 - 4 85,988 4 85,988 14 591,878 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 767.71 0.29 - 1 565 186.79 0.48 - 1 9,561 JOHN HOLT PLC. S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 50,809.99 1.25 0.80 163 23,580,417 26,507.93 9.20 9.52 69 1,728,841 U A C N PLC. 234 25,319,384 234 25,319,384 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 34,320.00 26.00 - 8 124,000 ROADS NIG PLC. 165.00 6.60 - 0 0 8 124,000 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 4,469.24 1.72 - 3 6,957 3 6,957 11 130,957 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 14,093.09 1.80 - 1 5,000 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 142,374.88 65.00 - 24 64,683 INTERNATIONAL BREWERIES PLC. 260,024.82 30.25 - 3 3,500 NIGERIAN BREW. PLC. 591,770.75 74.00 - 61 190,398 89 263,581 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 29,000.00 5.80 -3.33 55 3,168,132 DANGOTE SUGAR REFINERY PLC 168,000.00 14.00 - 35 648,771 FLOUR MILLS NIG. PLC. 76,062.04 18.55 - 70 1,298,089 HONEYWELL FLOUR MILL PLC 9,912.75 1.25 4.17 34 1,781,417 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 703.89 3.95 - 0 0 NASCON ALLIED INDUSTRIES PLC 47,424.95 17.90 - 11 64,138 UNION DICON SALT PLC. 3,676.41 13.45 - 0 0 205 6,960,547 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 18,782.02 10.00 - 13 34,445 NESTLE NIGERIA PLC. 1,125,651.14 1,420.10 -1.38 111 452,183 124 486,628 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,992.95 4.79 -0.21 34 1,040,911 34 1,040,911 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 44,866.39 11.30 - 13 43,904 UNILEVER NIGERIA PLC. 211,990.70 36.90 5.43 45 629,466 58 673,370 510 9,425,037 BANKING DIAMOND BANK PLC 53,500.50 2.31 2.67 73 19,006,763 ECOBANK TRANSNATIONAL INCORPORATED 257,811.19 14.05 0.36 31 381,040 FIDELITY BANK PLC 69,539.51 2.40 9.09 132 14,647,533 GUARANTY TRUST BANK PLC. 991,830.74 33.70 0.75 221 65,220,034 JAIZ BANK PLC 14,732.12 0.50 - 6 251,685 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 70,536.52 2.45 2.51 114 2,533,550 UNION BANK NIG.PLC. 182,004.70 6.25 - 29 108,104 UNITY BANK PLC 10,520.40 0.90 - 3 100,577 WEMA BANK PLC. 25,844.89 0.67 3.08 50 1,459,204 659 103,708,490 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,435.33 0.64 - 14 269,273 AXAMANSARD INSURANCE PLC 20,370.00 1.94 2.11 2 101,765 CONSOLIDATED HALLMARK INSURANCE PLC 2,030.00 0.29 -6.45 2 107,000 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 -9.09 7 1,065,665 GOLDLINK INSURANCE PLC 2,411.47 0.53 - 0 0 GUINEA INSURANCE PLC. 1,412.20 0.23 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,270.26 0.31 6.90 12 2,015,219 LAW UNION AND ROCK INS. PLC. 2,191.13 0.51 - 2 103,000 LINKAGE ASSURANCE PLC 4,880.00 0.61 - 0 0 MUTUAL BENEFITS ASSURANCE PLC. 1,760.00 0.22 -4.55 15 1,020,000 NEM INSURANCE PLC 12,620.40 2.39 - 7 74,069 NIGER INSURANCE PLC 1,702.69 0.22 - 5 500,113 2,798.93 0.52 - 1 20,739 PRESTIGE ASSURANCE PLC REGENCY ASSURANCE PLC 1,400.44 0.21 -4.55 1 250,000 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 - 9 443,747 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 1 420 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 -9.09 4 494,412 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 3,050.67 0.22 - 2 34,000 WAPIC INSURANCE PLC 5,353.10 0.40 5.00 46 5,262,389 130 11,761,811 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,315.62 1.45 2.84 33 849,694 33 849,694 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,116.00 0.98 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0

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Trades

Volume

0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,280.00 4.14 - 22 247,650 CUSTODIAN INVESTMENT PLC 38,232.12 6.50 4.84 9 2,939,199 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 42,575.83 2.15 9.14 128 20,498,103 ROYAL EXCHANGE PLC. 1,543.61 0.30 3.45 14 838,000 STANBIC IBTC HOLDINGS PLC 463,897.05 45.30 0.22 47 7,529,805 UNITED CAPITAL PLC 19,200.00 3.20 0.95 85 5,018,473 305 37,071,230 1,127 153,391,225 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 959.35 0.27 -10.00 14 1,592,000 14 1,592,000 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 1 50,000 1 50,000 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 7,050.00 4.70 - 2 175 GLAXO SMITHKLINE CONSUMER NIG. PLC. 14,350.52 12.00 3.00 28 226,350 MAY & BAKER NIGERIA PLC. 4,226.83 2.45 - 8 165,870 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,253.44 0.66 - 4 23,060 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 42 415,455 57 2,057,455 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 2 29,000 2 29,000 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 1 100 NCR (NIGERIA) PLC. 648.00 6.00 - 0 0 TRIPPLE GEE AND COMPANY PLC. 381.11 0.77 - 1 10 2 110 PROCESSING SYSTEMS CHAMS PLC 939.21 0.20 - 0 0 E-TRANZACT INTERNATIONAL PLC 13,650.00 3.25 - 1 1,000 1 1,000 5 30,110 BUILDING MATERIALS BERGER PAINTS PLC 2,028.76 7.00 - 6 1,296 CAP PLC 22,225.00 31.75 - 3 5,000 CEMENT CO. OF NORTH.NIG. PLC 289,157.02 22.00 -8.33 39 1,972,741 FIRST ALUMINIUM NIGERIA PLC 675.31 0.32 - 2 33,500 MEYER PLC. 286.87 0.54 - 0 0 1,999.41 2.52 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC PREMIER PAINTS PLC. 1,279.20 10.40 - 0 0 50 2,012,537 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 3,170.38 1.80 - 8 34,955 CUTIX PLC. 8 34,955 PACKAGING/CONTAINERS BETA GLASS PLC. 29,998.32 60.00 - 3 5,150 GREIF NIGERIA PLC 388.02 9.10 - 0 0 3 5,150 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 61 2,052,642 CHEMICALS B.O.C. GASES PLC. 1,577.57 3.79 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 50.60 0.23 - 0 0 0 0 0 0 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 5.00 13 1,588,863 13 1,588,863 INTEGRATED OIL AND GAS SERVICES OANDO PLC 61,535.49 4.95 -4.04 84 2,902,599 84 2,902,599 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 64,907.15 180.00 - 8 1,712 CONOIL PLC 16,134.39 23.25 - 9 5,249 ETERNA PLC. 5,542.61 4.25 - 14 96,918 FORTE OIL PLC. 38,423.19 29.50 - 28 109,150 MRS OIL NIGERIA PLC. 7,055.81 23.15 - 10 5,377 TOTAL NIGERIA PLC. 75,815.23 223.30 - 17 21,411 86 239,817 183 4,731,279 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 18,038.70 1.85 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 411.72 0.35 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,947.48 5.00 - 4 2,600 TRANS-NATIONWIDE EXPRESS PLC. 323.50 0.69 - 0 0 4 2,600 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 0 0 IKEJA HOTEL PLC 3,118.19 1.50 - 3 99,000 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 46,362.46 6.10 - 0 0 3 99,000 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 272.16 0.45 - 0 0 LEARN AFRICA PLC 1,056.89 1.37 - 13 93,895 1,183.82 1.99 - 0 0 STUDIO PRESS (NIG) PLC. UNIVERSITY PRESS PLC. 897.33 2.08 - 3 18,000 16 111,895 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 596.77 0.36 5.88 6 345,000 6 345,000 SPECIALTY INTERLINKED TECHNOLOGIES PLC 852.12 3.60 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0 0 0 TRANSPORT-RELATED SERVICES GLOBAL SPECTRUM ENERGY SERVICES PLC 4,600.00 5.75 - 0 0 NEWREST ASL NIGERIA PLC 4,089.30 6.45 - 5 30,495 5,603.55 3.45 - 9 97,762 NIGERIAN AVIATION HANDLING COMPANY PLC 14 128,257 SUPPORT AND LOGISTICS C & I LEASING PLC. 3,654.44 9.04 - 0 0 CAVERTON OFFSHORE SUPPORT GRP PLC 7,371.12 2.20 - 8 86,541 8 86,541 51 773,293 2,253 198,503,260 DIVERSIFIED INDUSTRIES CHELLARAMS PLC. 2,226.61 3.08 - 0 0 0 0

Monday 04 February 2019

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Monday 04 February 2019

ABUJACITYBUSINESS COMPREHENSIVE COVERAGE OF NATION’S CAPITAL

How fake agents dupe Abuja residents STELLA ENENCHE, Abuja

hile security and other law e n f o rc e m e n t agencies are busy battling cases of armed robbery, kidnapping, thuggery, cultism among others, there is a serious but less conspicuous crime of house agents defrauding people seeking accommodation in the Federal Capital Territory (FCT) that is receiving little or no attention. There are many cases of agents defrauding people looking for accommodation in the FCT. These unscrupulous agents who take advantage of the desperation of some of the “clients”, end up collecting rents from two or more persons. Accommodation is a very serious problem in Abuja, the Nigeria’s capital as a result of the influx of people from other parts of the country and beyond, who come to the city in search for greener pastures as well as crises in some states have contributed negatively to the shortage and desperation for accommodation in the FCT. BusinessDay’s investigations revealed that many FCT residents have been duped in the course of their transactions with the so-called agents. Some victims of the crime shared their bitter experiences with Correspondent. Femi Badmus, an Engineer, narrated that; “my rent had expired in my Maitama apartment and I needed to move to a new place because I couldn’t afford the N1.2m rent any longer. I contacted this fellow who I met a few months ago at a friend’s

child dedication. He told me he was a House Agent and said he could secure accommodation in any part of Abuja of my choice and he even took me to his supposed office. “We concluded talks and I told him how much I could raise. I finally credited his account with the sum of N600,000 after he alerted me of a two bedroom apart in Ludge( A suburb along Abuja International Airport road) which he said the whole arrangement is on first come, first served basis. After payment, he issued receipts and told me that I can move into my new apartment in two weeks because the landlord needed to fix something in the house. “Two weeks later when I went to the house, I discovered that another tenant had already moved into the apartment. I later gathered that the agent had collected different

sums of money from four tenant for the same apartment. Godsent Etim , narrating his ordeal said,”In my case, the agent took me to a new property which was still under construction. He said that some rooms were available for rent but it is based on first come, first served, I paid for the apartment and he told me that it will be ready in a month. I was okay with the plan because my rent had not expired where I was living. “He handed my receipt over to me and even my supposed house key. By the time I was ready to move into the my apartment, I discovered all the rooms in the compound have been occupied and that the supposed agent was fake. I tried his numbers they were no longer reachable. I had no choice that to let it pass. I have learnt my lesson now I deal directly with the owner of

the property..” Another victim, Yakubu Grace, stated thus: “as for me it was all like a dream. A friend of mine introduced me to an Agent in Karu Site. we talked and I gave him my specifications. He called me few days latter that he has gotten a place for me to rent but the landlord is insisting on two years rent payment which is N500,000. “Initially, I refused to pay because I felt two years advance payment for a self contain apartment was not too tidy for me but he latter convinced me and I reluctantly paid the money into his account. That was the last time I ever heard from him.” However, some Agents interviewed over the development expressed divergent views. Victor Ezeh, President Property Limited said there are categories of agents in the FCT, ranging from roadside, freelance, and others.

he Federal Capital Territory Administration (FCTA) is set to partner with the Nigerian University of Technology and Management Project Group to build a world class University of Technology and Management in the Federal Capital Territory (FCT), Abuja. Mu h a m m a d B e l l o, Minister of the FCT who gave this indication while receiving Officials of the

CYNTHIA EGBOBOH, Abuja

inister of State for Agriculture and Rural Development, Heineken Lokpobiri has assured the people of the Northeast of President Muhammadu Buhari’s commitment to developing the region irrespective of the security challenges ravaging some parts. Lokpobiri gave the assurance in Abuja while receiving a delegation led by the District Head of Degubu, Nagare Local Government Area of Yobe State who paid him a thank you visit for the provision of two solar systems and 15 solar street lights. George Oji, Special Assistant on Media to the Minister in a statement quoted him as urging the people to ensure that those projects get the needed protection from vandals and optimal management. “The President is committed to developing the Northeast. These projects are done at the directive of Mr President. Irrespective of the difficulties of the terrain or security challenges, development must

extend to all parts”, he said. “The important thing you can do for yourselves and to encourage the government is to be able to take care of the projects because they are done for the benefit of the community. I am saying this because people destroy project meant for their development. “So if these projects are sited for your development it is important that you can also see how you can manage them by setting up a committee to manage them. I think Yobe is the least in the northeast states in terms of the number of projects that we are doing,” the statement read. Bah Abubakar, Leader of the Delegation appealed to the Federal Government to create more access roads to enable them ferry their farm produce as the people of Degubu are mostly farmers. Abubakar said, “like Oliver Twist, we cannot but ask for more solar street lights as well as a feeder road because the inhabitants find it difficult to reach the community most especially during the rainy season.

CSO seeks independent oversight of government institution to tackle corruption CYNTHIA EGBOBOH, Abuja

L-R: Babatunde Kuye, director, energy infrastructure, Bureau of Public Procurement (BPP); Mamman Ahmadu, DG, BPP, and Henry Idogun, MD/CEO, Edo State Public Procurement Agency, during the Edo State Public Procurement Agency delegation study visit to BPP in Abuja. Pic by Tunde Adeniyi

FCTA partners group on University of technology, management JAMES KWEN, Abuja

Minister restates Buhari commitment to development of North-East

Group led by the Minister of Trade and Investment, Okechukwu Enelamah in his office in Abuja, said the project is in furtherance of the plan of the FCTA to have specialized institutions in phases 4 and 5 of the Territory. According to Bello, Abuja has matured in terms of population as well as infrastructure and promised to give the group all the support to ensure that the project commence as quickly as possible, saying arrangements are be-

ing made in the interim, to situate the project within the premises of the Abuja University of Technology, Abaji or the Abuja technology village. In his remarks, Enelamah, said Nigeria is very privileged to have a group of investors who have gone through the system, having been trained by such universities and have contributed and given back to their own societies by building such institutions. Also speaking, Rajat Gupta, Senior Advisor of

the Nigerian University of Technology and Management Project Group noted that public-private partnership would be required to create such world class institution in the country. Gupta disclosed that the project will require several years and possibly decades of commitment to make it worthwhile, adding that its impact as an educational institution will be felt in the country for hundreds of years to come.

The Civil Society Legislative Advocacy Center (CISLAC) has stressed the need for independent oversight of government institutions to tackle corruption. Auwal Musa, Executive Director, Civil Society Legislative Advocacy Centre stated that Nigeria and other countries with low performance in the corruption perception index 2018 have weak political rights and rule of law, hence there is need for independent/ civilian oversight of the government institutional practices as a tool of tackling corruption in governance. He said, “in some countries, Nigeria notwithstanding, corruption scandals have eroded trust in democratic politics and institutions. In these cases some leaders have hijacked anticorruption messaging to serve their political agendas, hence, there is need for an independent or civilian oversight of the government institutions”. Musa who spoke at the launch of the 2018 Corruption Perception Index (CPI)

by the Transparency International in Abuja, said the index revealed that Nigeria has neither improved nor progressed in the perception of corruption in public administration in 2018. “The newly released corruption perception index reveals that Nigeria scored 27 out of 100 points in the 2018 CPI, maintaining the same score as in the 2017 CPI. In the country of comparison, Nigeria ranks 144 out of 180 countries this year as opposed to 148 out of 180 countries in the 2017 CPI”, he said. Musa further stressed that public participation and active reporting of corruption is hindered by the absence of the whistle blower protection act that would ensure the protection of the whistle-blowers from dismissals, suspensions, harassment and intimidation adding that the public image of the anti- corruption campaign in Nigeria is being tarnished domestically and internationally with extremely slow progress to move on numerous anticorruption commitments made by the government.

Monday 04 February 2019

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Boko-Haram-ISWAP takes over West Africa’s biggest fish market ADEOLA AJAKAIYE, Kano

he el-Barnawi faction of the BokoHaram insurgent group, and its foreign affiliate the Islamic State West Africa Provision (ISWAP), is now in full control of some strategic fishing communities in the Lake Chad of Nigeria. The group has also taken over tax administration in the area, through which it is building up its revenue base, which is being used to finance the scale of insurgence activities in the country. Yunusa Ya`u, executive director, Centre for Information Technology and Development (CITAD), one of the not-for-profit organisations working in states in the Northeaster Nigeria where the insurgent group is active, confirmed this development. Ya`u disclosed that the group had been able to effectively neutralised the fish

supply from the Lake Chad of Nigeria, established new markets in Chad and Niger republic, and using revenue flow from the business to fund it operations. “ISWAP have effectively neutralised the biggest fish market in West Africa, the Baga Fish Market situated in Maiduguri, Borno State. Instead, they have created two major fish markets outside Nigeria, one is in Kusiri in Chad, while Nigerian traders mostly from South Eastern Nigeria now access through Mubi in Adamawa State. “The second fish market created by the group is situated in Kinchhandi in Niger Republic where traders from Hadeija in Jigawa and Kano states access for their market stocks,” Ya`u said. Between 2013 to 2015 about 90% of the territories that constitute Northern Borno in addition to significant entities in Central and Southern Borno were totally in the hands of the BokoHaram.

These Local Government Areas bear natural land borders with three countries namely: Niger Republic, Chad and Cameroon. But, few months to the 2015 general elections things began to change dramatically. The insurgents began to lose territories steadily. This upsurge in momentum continued into the change of government in May 2015. “With the new regime, and the appointment of a new military service chiefs, the military was able to change the fortune of the war, and built bases in 22 areas captured by them. With these network of bases coupled with several satellites of bases, the military effectively choked and smoked out the insurgents” he said. He noted that with the backing of ISWAP at the moment turned the war to it advantage, as the group had been able to take over 15 out of the 22 military bases previously liberated from them. “These losses have come

with weightier implications. For instance, with ISWAP in control of all the fertile agrarian and aqua resources of the Lake Chad communities, they have introduced a new tax regime and services to the local people. “It seems the military in the height of the control over these territories did not present themselves as a valued option to the villages, unlike, the ISWAP which now control some of these villages, is now providing basic amenities to the people of the area. “The group is now providing security in the areas they are now controlling and working with fish traders in the communities, and have effectively neutralised the biggest fish market in West Africa. In view of the ongoing development, the CITAD’s ED is calling on the Federal Government to institute a full probe of the ongoing military campaign against the insurgence group.

L-R: Uwa Agbonile, MD, Infoware Limited; Adedeji Rabiu, financial control, Nigerian Stockbrokers Limited (NSL); Olukemi Osinaike, MD, Crossworld Securities Limited, and Olatunde Amolegbe, 1st vice president, Chartered Institute of Stockbrokers, at the CEO meets by Infoware cocktail event in Lagos. Pic by Olawale Amoo

NAMA acquires new spare parts to boost TRACON operation IFEOMA OKEKE

igerian Airspace Management Agency (NAMA) has taken delivery of another consignment of critical spare parts required for the continuous service and operation of the Total Radar Coverage of Nigeria (TRACON). The consignment, which was cleared at the Apapa Port in Lagos from Thales Group, in France, include MES1 1400A power supply modules, control units and other critical units that will be used by NAMA engineers to effect repairs on any of the nine TRACON installations across Nigeria as may be required to ensure optimal functioning of the system.

Speaking on the development, Fola Akinkuotu, managing director of NAMA, said, “The relationship between NAMA and the equipment manufacturer, Thales, has never been a frosty one as some media reports would have it. In fact, it has been very cordial and we are poised to continue to keep it that way. You will recall that we cleared some consignments of spare parts for TRACON last year from the same Thales.” Akinkuotu said apart from the spares already received, another consignment of spares had landed Apapa Port and was being presently cleared while other consignments were already being shipped to Ni-

geria from France according to the shipping schedule sent to the agency by Thales, adding that payment had already been made for all consignments ordered for. The NAMA boss also revealed that as part of efforts to keep pace with global best practices, TRACON would in a few months’ time undergo a total reconditioning process that would ensure that the entire system attained the acceptable reliability level specified by the International Civil Aviation Organisation (ICAO). He described this process as “a sort of turnaround-maintenance,” to be carried out by the equipment manufacturer, Thales Group.

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Monday 04 February 2019

BDCs to integrate operations with CBN, NIBSS, NFIU in live run portal HOPE MOSES-ASHIKE

ureaux De Change (BDC) operators are making plans to automate all operations with those of Nigeria Inter-Bank Settlement System (NIBSS), Nigeria Financial Intelligence Unit (NFIU) and Central Bank of Nigeria (CBN) to improve the level of compliance with set regulations. Consequently, the Association of Bureaux De Change Operators of Nigeria (ABCON) will on Tuesday, launch its Live Run Automation Portal in Lagos. Speaking with financial journalists ahead of the portal launch in Lagos, Aminu Gwadabe, ABCON president, said the group had secured the CBN’s no-objection approval to launch the Live Run portal. The approval, Gwadabe said, reaffirms the regulator’s commitment to a transparent and viable forex market where stakeholders’ interest is protected. According to Gwadabe, the world is going digital, and BDC operators under his leadership are committed to staying ahead of the competition by deploying time-tested technology to deliver effective services to customers. The objective is to make Live Run portal enhance BDCs compliance with set regulations and promote market integrity, he said, as the portal will sustain transparent transactions in the BDC corridor, boost the morale of its members and ensure their continuous operations. The ABCON chief said the group had fully upgraded its Information Communication and Technology (ICT) platforms to achieve full digitisation of BDCs operations in line with its goal of sustaining transparent

operation and prompt rendition of weekly returns to operators. He said the group also recently launched the www. naijabdcs.com to serve as a reliable platform for local and international investors, who will rely on it to access uniform forex rate across states, regions and markets nationally. According to Gwadabe, ABCON coordination journey of automation and digitalisation of BDC’s processes started in 2016 with the launch of our automation platform named www. abconng.org.ng. The project came with three layers and stages. First layer is online real time registration of our members with a success rate of over 4,100 BDCs registered nationwide. This layer is to enable our members conduct their membership registration from any of their location without coming physically to ABCON Secretariat. The second layer bothers on automation of ABCON’s operational process, bookkeeping, issuance of receipt, preparation of accounts, balance sheets, ledgers and sales/purchase registers. The most important of this layer is the online real time rendition of returns to regulatory agencies. Another important feature of this layer is the BDCs on boarding and integration of the Bank Verification Number (BVN) platform on the NIBSS portal for verifications and validation of clients’ BVNs, which is a most vital requirement forex sale. “Of special note is also the integration of our platform to immigration platform for the verifications of international passport. Already, we are in advance engagement with the Irish technology experts for the achievement of this idea.

Atiku pledges to end ASUU strike if elected president

residential candidate of the People’s Democratic Party (PDP) and former Vice President of Nigeria, Atiku Abubakar, has pledged to end the lingering strike by university lecturers in the country, from his first day at work, if elected the next president of Nigeria. The presidential candidate made this disclosure in Lagos, Sunday evening, at the Silverbird Man of the Year event. According to Atiku, the industrial action, which has denied university students in Nigeria access to education for a period running into four months, is disgraceful and thus will receive his first attention as president if voted

into office in the February 16 presidential election. “I am aghast that as I speak, our students across the nation are not being educated due to the ASUU strike caused by an unresolved debate of about N60 billion. “If I get the job I am seeking, my first task on day one – along with naming my cabinet – will be to end this disgraceful strike and get our students back to their studies.” In his remarks, the presidential candidate observed that education plays a pivotal role in the rise to success of any individual or nation and hints further that if he becomes the next president of Nigeria, his administration will increase the budgetary allocation to education in triple fold from

the current 7 percent to not less than 20 percent. According to Atiku, “I will also triple the amount the Nigerian Government spends on education from 7 per cent of its budget today, not just to the 15 percent recommended by UNESCO, but to 20 percent. “I recognise the value education can bring to the individual and the nation. But even more than that, I want every child in Nigeria to have the opportunities I had.” Atiku further noted that the 2019 presidential election presents an opportunity for a turning point in the development of the country, adding that he has the requisite experience to drive Nigeria to prosperity.

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GAC resolves rift between Ambode, Lagos lawmakers JOSHUA BASSEY

he crisis between Governor Akinwunmi Ambode of Lagos State and the legislative arm of the state government is believed to have been resolved. The power brokers in Lagos operating under the aegis of Governor’s Advisory Council (GAC), who are believed to have stirred the lawmakers against Ambode in the first place, were said to have convened a meeting on Sunday to resolve the rift. Present at the meeting were Bola Tinubu, former governor of Lagos State, who is the chairman of the GAC, Governor Ambode and his deputy, Idiat Adebule; Mudashiru Obasa, speaker of the Lagos State House of Assembly, his deputy, Wasiu Esinlokun, among others. Tinubu after the meeting was said to assured that Ambode would not be impeached. The House had last week threatened to impeach Ambode after accusing him of ‘gross misconducts’ including spending funds not ap-

propriated for as well as not presenting the 2019 budget to the House. There were allegations in some quarters that the impeachment threat was meant to arms twist Ambode to release funds to the tune of N100 billion to the power brokers in the state to prosecute the 2019 general elections. Ambode is not a candidate in the elections having been denied a second term ticket by his party - APC. Tinubu, who is also a national leader of the APC and godfather of Lagos politics, was said to assured that Ambode would not be impeached. Speaking after the meeting, Tinubu said: “We held a meeting on behalf of entire Lagosians. “In the last one week or so, there has been some talk about a conflict between the Executive and the Legislature in Lagos. This is of great concern to us. “We looked at the source of the conflict, which is normal in a democracy, and that is why there are also conflictresolution mechanisms. We examined the grievances on both sides.

“As leaders, we also looked into areas where there has to be compromise. In order to build institutions and encourage consensus building, we have to do what is right. “There is no impeachment. Let there be more communication and consensus building and understanding. All these are inbuilt in the democratic system. “We thank the speaker and the leadership of the House. We thank the governor and the deputy governor. They have all demonstrated respect for the party leadership in Lagos. “You know when Lagos sneezes, other areas catch cold. We are happy that we are able to resolve the conflict and things will start moving well going forward.” The rift between the executive and legislative arms of the state government as well as the non presentation and passage of the 2019 budget is already telling effect on good governance in Nigeria’s economic capital, as most infrastructure projects meant to add value to the state economy and its estimated 21 million population have a been stalled.

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Angola, Mozambique point way to Nigeria in oil investments HARRISON EDEH, Abuja

... as PIB passage drags

espite Nigeria’s oil and gas sector’s huge potential, Angola and Mozambique are currently a test case on how needed oil investments can be attracted into the country, especially as uncertainties still cloud Nigeria’s investment climate with delays in the passage of the Petroleum Industry Governance Bill (PIGB). Ladi Bada, managing director, Shoreline Natural Resources, is concerned that key oil companies in Nigeria are not getting adequate funding from the global oil majors because fiscal governance structure is not backed by law yet. “There is limited funding in the world, and there is limited funding for Africa, and if Exxon Mobil, Shell want to do an investment, countries with better fiscal framework are better off and automatically their investment destination,” Bada told BusinessDay on the sidelines of the justconcluded Nigeria International Petroleum Summit in Abuja. “Mozambique with just 100mn TCF of gas and no oil has commanded significant investment of late

because of better fiscal framework to operate on. We have seen countries like Angola with lesser oil barrels than Nigeria also keying in more than ever in attracting huge investment sums because of better fiscal framework,” Bada said. Expressing further concern over the uncertainties that characterise the petroleum sector, he argued that the worry of the industry is that the more uncertainties there are, the more shaky people are in pulling in their investments. Industry watchers are further worried that with majority of other African countries discovering oil and getting better fiscal governance structure to drive investments, Nigeria is no longer dominating the African petroleum markets as investors look out for countries with better governance structure for investments. “The minister had made some efforts with the policy documents as outlined in the ‘Seven Big Wins’, but a better fiscal governance structure in the form of a bill for an act is what the policies would ride on to deliver a long-lasting legacy in Nigeria’s oil and gas sector,” Bada said.

Emmanuel Ibeh Kachikwu, Nigeria’s minister of state for petroleum resources, at the just-concluded summit expressed hope on the speedy passage of the bill, noting that President Muhammadu Buhari raised some issues with the bill as passed by the National Assembly. He confirmed the National Assembly is addressing those issues pointed out by the president. “The current Assembly has done some measure of work on the PIGB. The only reason we have not had the kind of push that we would have loved is that the president raised some concerns on the bill, which he had sent back to them, and they are working on it,” Kachikwu said. It would be noted that the overriding purpose of pursuing the Petroleum Industry Bill in the last 17 years is to create the governing institutions with clear, understandable and separate roles and foster bu s i n e s s e nv i ro n m e nt conducive for petroleum industry operations. It is also aimed at promoting accountability and establishing framework for the creation of commercially viable petroleum entities.

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Why manufacturing PMI slumped in January ISRAEL ODUBOLA

he Manufacturing Purchasing Manager Index (PMI), an indicator of economic health for the manufacturing sector, slumped by 2.6 points to 58.5 index points in the first month of 2019, compared with 61.1 index points in December 2018. The decline is attributable to the slower rate of expansion due to lower production level and new orders as well as destocking of inventories, according to analysts at CSL Stockbrokers. They positioned that the slow down in production level was driven by weaker demand on the back of high rate of unemployment and inflationary pressures. The PMI report showed that all 14 sub-sectors recorded growth in the period under

review. According to them, the slump in manufacturing PMI signals a waning momentum that characterises business activities at the beginning of a new year. All the sub-indices of the overall manufacturing PMI contracted when compared with December figures. Production level PMI sank by 4.3 points to 59.3 index points. New orders PMI depreciated by 3.4 points to 63.6 points. Suppliers’ delivery time PMI fell by 3.4 points. Employment level and Raw materials/Work-in-Progress PMIs depreciated by 0.6 and 3.3 points to 56.4 and 59.9 index points, respectively. On year-on-year basis, manufacturing PMI inched higher by 1.2 points compared with 57.3 index points in the corresponding month of 2018. Giving reasons for the decline in manufacturing

PMI, Olayinka Olohunlana, a Lagos-based economic and financial analyst, attributed the decline to infrastructural deficiency in the sector, which had marred them from producing at full capacity. “It would be a daunting task for any manufacturing firm to produce at optimal level without having adequate infrastructural facilities in place,” she said on phone. According to Olohunlana, infrastructural deficiency heightens production cost and hampers business profitability, which is exactly what Nigerian manufacturers are currently facing. This upheld the claim of the Manufacturing Association of Nigeria (MAN) that Nigerian manufacturers expended N246.38 billion on private power generation in two years owing to the poor state of public power supply in the country.

According to MAN, Nigerian manufacturers incurred N129 billion in 2016, N117.38 billion in 2017 and N43 billion in the first six months of 2018. Non-manufacturing PMI stood at 60.1 points in the reviewed period, indicating 2.2 points decline compared with 62.3 points in December 2018. On year-on-year basis, Figure for Non-manufacturing PMI for January 2019 inched higher by 1.6 points as against 58.5 points a year earlier. Out of the 17 non-manufacturing sectors captured in the survey, 16 recorded growth except management of company subsector that remained unchanged during the review period. The four non-PMI subindices weakened when compared with December figures. Business activity PMI sank by 3.5 points; Level of new order PMI dip by 2.9 points.

L-R: Chukwukadibia Okoye, chief financial officer, Coronation Merchant Bank; Aderonke Adebule, business development manager, Lagos and West, Association of Chartered Certified Accountants (ACCA); Abubakar Jimoh, GMD/CEO, Coronation Merchant Bank, and Tom Isibor, head, ACCA Nigeria, at the presentation of ACCA approved employer award to Coronation Merchant Bank in Lagos. Pic by Olawale Amoo

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Rivers N150bn monorail project tears candidates apart … as SDP leads in quest to restart it IGNATIUS CHUKWU & GLADYS NWEKE

he controversial N150 billion monorail project in Port Harcourt, Rivers State, for which N30 billion may have been spent, is tearing apart those who jostle to govern the state come May 2019. Whereas, the Social Democratic Party (SDP) leads in the quest to revive the project because it is peoples’ money that is involved, the Labour Party (LP) is vehemently opposed to such ideas. Those in between, such as the Action Democratic Party (ADP) and Action Democratic Congress (ADC) said they would study it first to know its viability. Details of their positions emerged at the BBC Governorship Debate series that came to Port Harcourt on January 31, 2019, at the Hub on Peter Odili Road at Trans-Amadi section of the state capital. When the issue was thrown up by the moderator, Nduka Orinmuo, the SDP candidate, Precious Elekima, said he would carry on with the project because huge sums had been sunk into it, but said he would divert the route to Isaka in Okrika as part of a plan to push Port Harcourt southwards. The extreme case against the monorail was taken by Ikwerre-born LP candidate, Isaac Wonwu, vehemently rejected the reviving the project. He said he had better ideas with money to invest. Another candidate who derided the project as ‘chopisnon’ meaning fraudulent

project, is the candidate of the ADC, Eniye Braide, but he at least he would look into it. Close to the position of the SDP is the candidate of the ADP, Victor Fingesi, who said he would want to complete it but cautiously said he would first commission a study into it. He however admitted that Port Harcourt needed an efficient transport system. The project was abandoned by the Wike administration who said it was fraught with financial misapplication. Instead, a panel was set up to probe it. Wike had once said it was only if the people demanded for its re-instatement that he could return to it. Thus, the Wikeled administration has not breathed any words about the project since coming into office in 2015. However, while answering questions during the 2019 gubernatorial debate organized by the BBC Pidgin Service, Elekima vowed to continue the Monorail project, but with a diversion to Isaka community in Okrika Local Government Area of the state. The fate of the monorail project was nailed in March 2016 by Gov Wike after a quick probe action on the project started by Chibuike Rotimi Amaechi in 2008. The former administration to which Wike was a principal officer (chief of staff) had initiated the project following a recommendation of a public forum on transportation where a onetime military governor, Tony Ukpo, had suggested the monorail system as best for an emerging mega-city.

NCDMB confirms 60 beneficiaries of its support for indigenous oil firms Nigerian Army redeploys 15 senior officers HARRISON EDEH, Abuja

he Nigerian Content Development and Monitoring Board (NCDMB) has confirmed 60 indigenous oil firms that have benefited from its ‘Project 100’ that seeks to provide institutional support to 100 indigenous oil and Gas Service Providers in the country. The support, Simbi Wabote, executive secretary of the NCDMB, says it is geared towards improving their technical and business management capacity, access to market, healthier business environment, access to finance, business process and technology as well as better procurement process in their business dealings. Wabote, who spoke at the presentation of the 60 selected indigenous firms in Abuja on Thursday, urged benefitting companies to ride on the opportunities presented by

the Local Content Act to drive their activities in the oil and gas sector, while also pledging Federal Government’s technical assistance in driving their business. “The initiative is an initiative of the Minister who challenged us after the technology conference in Houston, Texas in the United States of America, want us to replicate some of the learning for our indigenous oil producers. We have targeted first 100 companies and we are taking off with 60 companies for now. ”We would evolve a financial model that would sort out the bottlenecks often encountered by these companies to enable them also access the funds earmarked by the Bank of Industry to drive local content,” he said. Bello Rabiu, chief operating officer, Upstream, who represented the group managing director of the Nigerian National Petroleum Corpora-

tion (NNPC), Maikanti Baru, stated that opportunities abound in the petroleum upstream and downstream sectors, as he urged the indigenous local firms to take advantage of the opportunities as provided by the Local Content Law. “There is a demand of 150 million metric tons of steel which has now surged up to 450 million metric tons of steel, and industry demands are rising as more countries are discovering oil across the African continent. There is a huge market, and we must take advantage of that,” he said. Earlier in her remarks, Yemi Esan, permanent secretary in the Ministry, said the idea of lending institutional support to indigenous oil firms was to ensure more local players along the oil and gas value chain, which would ensure more local players participate and grow the oil and gas sector.

STELLA ENENCHE, Abuja

he Nigerian Army has announced the redeployment of 15 senior officers consisting seven major generals, seven brigadier generals and a colonel. According to the director Army Public Relations, Sani Usman, a brigadier general, the posting was released February 2. In a statement, “The Nigerian Army has yesterday Saturday 2nd February 2019, released the postings and appointments of some of its senior officers. Those affected by this include, Major General AA Tarfa, who has been posted from Headquarters of Nigerian Army Corps of Artillery, to Martin Luther Agwai International Leadership Peacekeeping Centre, as Commandant, Major General M Mohammed, from 1 Division Nigerian Army, to Headquarters, Nigerian Army Signals Corps

and appointed Corps Commander, while Major General CT Olukoju, the erstwhile Signal Corps Commander, has been appointed Director General of the newly created Nigerian Army Simulation Centre (NASIMC) with Headquarters in Abuja. “Major General US Yakubu has been posted to Headquarters of Nigerian Army Corps of Artillery and appointed Corps Commander, Major General CU Agulanna, has been posted to Nigerian Army Resource Centre (NARC), as Senior Research Fellow, while Major General F Yahaya, the Military Secretary (Army), has been posted to 1 Division Nigerian Army and appointed General Officer Commanding, Major General AR Bakare has been posted to Headquarters, Nigerian Army Finance Corps (NAFC) and appointed Chief of Army Accounts and Budget. “Similarly, Brigadier General DO Donibo has been

posted to Nigerian Army School of Infantry and appointed Director Army Training Support Centre (ATSC), Brigadier General GAT Ochigbano has been appointed Acting Military Secretary (Army), Brigadier General OC Ajunwa has been posted to Nigerian High Commission Brasilia and appointed Defence Adviser, Brigadier General ST Shafaru is the new Commander Engineers, at the Headquarters Nigerian Army Special Forces Command. “Brigadier General BY Baffa has been posted from National Defence College to the Office of the Chief of Army Staff and appointed Chief of Staff, while Brigadier General UB Abubakar has been appointed as Deputy Military Secretary I, Brigadier General EE Emekah has been posted from Army War College Nigeria, to 707 Special Forces Brigade and appointed as Commander.

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Atiku hails endorsement by Northern elders, Middle Belt Forum, others INNOCENT ODOH, Abuja

ormer Vice President and Presidential candidate of the People’s Democratic Party (PDP), Atiku Abubakar, has hailed Sunday’s endorsement of his candidature by Nigeria’s five main sociocultural organisations for the 2019 election, stressing that the pan- Nigerian endorsement by the groups challenges him more for the assignment to rescue Nigeria. The leadership of PanNiger Delta Forum (PANDEF), the pan Yoruba sociocultural association Afenifere, Ohanaeze Ndigbo, Northern Elders Forum, Pan-Niger Delta Forum, and Middle Belt Forum, on Sunday endorsed Atiku for the elections, which comes as a boost to his quest to unseat President Muhammadu Buhari. Atiku in a statement he personally signed and made available to BusinessDay on Sunday, noted that he was moved to tears

by the nationalistic disposition of the groups to endorse him in the midst of deep divisions and deliberate use of state institutions by the Buhari administration to set the Nigerian people against themselves in the last three and a half years. “Responsible and respected leaders across Nigeria have agreed to come together for the purpose of endorsing my candidature for the February 16th, 2019 Presidential elections,” Atiku said. He noted that his endorsement by the leading lights of Nigerian nationalities – Afenifere, Ohanaeze Ndigbo, Northern Elders Forum, Pan-Niger Delta Forum and Middle Belt Forum - is a loud statement that there is hope for the country as the nation goes to the polls in a few days. “Today, we put aside all our prejudices to elect a President with religion and ethnicity playing no role in our elections,” he said. He thanked leaders from the various parts of the country who provided

the “wonderful moment for us to come to the table of brotherhood. “This has buoyed me to lead a Pan-Nigerian team that will give practical interpretation to what has been done by the time I take leadership of our country, by the grace of Allah, on May 29, 2019.” Atiku noted that many countries of the world have been led into disintegration by strongmen (one in each country), not added that individuals who understand the management of diversities have rallied their people for unity,” Atiku said. Atiku said further that he has been chosen to unite the Nigerian people, adding that he will do his best to do that and run a properly federated Nigeria through constitutional reforms to bring out the best from All sections of Nigeria to make Nigeria work again like in the past when the Saudi Royal family came to Nigeria to access Medicare. “We will promote an inclusive Nigeria based

on productivity that every section of Nigeria will bring out the best under their soil, and in their brain to make Nigeria assume its position in Africa and the global community,” he said. “It would be 100% for every section of Nigeria as I would not understand any arithmetic outside that. He enjoined people across Nigeria to come out en-mass to vote on February 16 “to pull our country from the brink and propel it to greater heights so we can live a better life.” Association leaders who attended the Sunday meeting at Sheraton Hotel, Abuja, included Chief Ayo Adebanjo (Afenifere), Chief Nnia Nwodo (Ohanaeze), Ango Abdullahi Northern Elders Forum), Chief Edwin Clark (Pan-Niger Delta Forum) and Bitrus Pogu (Middle Belt Forum. The groups said they endorsed Atiku because he possessed the intelligence, capability and knowledge to lead Nigeria.

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Monday 04 February 2019

Osinbajo helicopter crash: Caverton attributes incident to weather conditions IFEOMA OKEKE

averton Helicopters has attributed the crash landing of the helicopter in which Vice-President Yemi Osinbajo was travelling in Kaaba, Kogi State, to bad weather. This is just as investigation into the aircraft under the management of Caverton Helicopters has commenced to unravel the probable cause of the incident. In a statement, Josiah Choms, managing director/ accountable officer of Caverton Helicopters, described the weather at the time of the crash as an unusual weather conditions. “An Augusta AW139 Helicopter, under management by Caverton Helicopter was involved in a mishap on landing in Kabba, Kogi State around 3pm today (February 2, 2019) as a result of unusual weather conditions.” He said there were no injuries to the passengers or crew on-board and they were all quickly and safely evacuated. According to him, “The relevant authorities have been duly informed and an investigation into the inci-

dent has commenced. We will, of course, support the authorities as required. “We wish to reassure the public and our various stakeholders of our unwavering commitment to safety in all of our operations. The AgustaWestland AW139 is a 15-seat mediumsized twin-engined helicopter developed and produced principally by Augusta Westland. It is marketed at several different roles, including VIP/corporate transport, offshore transport, fire-fighting, law enforcement, search and rescue, emergency medical service, disaster relief, and maritime patrol. In addition to AgustaWestland’s own manufacturing facilities in Italy and the United States, the AW139 is produced in Russia by HeliVert, a joint venture between AgustaWestland and Russian Helicopters. The AW139 was originally designed and developed jointly by Agusta and Bell Helicopters and marketed as the Agusta-Bell AB139, being re-designated AW139 when Bell withdrew from the project.

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Wall St set for $1bn fee bonanza from pharma mega-deal

Bristol-Myers Squibb and Celgene $90bn merger ranks among most lucrative for banks Eric Platt and James Fontanella-Khan

rugmakers BristolMyers Squibb and Celgene will pay about $1bn in fees to seal their $90bn tie-up, including more than $300m to their financial advisers, in one of the most lucrative advisory assignments ever recorded on Wall Street. The fees will be split among a handful of investment banks, including Morgan Stanley, JPMorgan Chase and Citigroup, as well as the lawyers, accountants and consultants who advised on the deal to unite the two pharmaceutical companies, according to a regulatory filing late last week. Some $304m will be paid to the five investment banks for their work advising on the deal, ranking among the largest paydays ever for advisory services on a takeover, according to Dealogic and Refinitiv data. Celgene estimated the costs related to its sale were $225m, while Bristol-Myers Squibb pegged its outlays at $200m before financing fees. The deal, which itself ranks among the largest healthcare takeovers of all time, was financed by one of the biggest bridge loans on record, a funding package led by Morgan Stanley

and MUFG Bank. Bristol-Myers Squibb estimated the cost of the $33.5bn loan at $547m. The overall costs on the deal rival the near $1bn that Japanese pharmaceutical group Takeda spent on its purchase of Shire last year, although it is dwarfed by the roughly $2bn of expenses and fees paid by brewer Anheuser-Busch InBev on its £79bn takeover of SABMiller in 2016. Acquisition activity around the globe has slowed amid geopolitical uncertainties related to Brexit, the trade war between the US and China, and fears that global economic growth is ebbing. A drop in overall deal numbers has heightened the importance of winning advisory mandates on these mega-deals for investment banks. Bankers and lawyers worked with haste to sew up the transaction between the two pharmaceutical groups after BristolMyers Squibb’s chief executive proposed a buyout to the head of Celgene over dinner on September 21, the disclosure showed. The deal was agreed and unveiled to investors less than four months later. Roughly 80 per cent of the $304m in financial advisory fees will be paid once Celgene and Bristol complete the transaction, which still requires share-

Cisco calls for data law as tech split over privacy deepens Hardware group and Apple break with industry by supporting European-style rules Kiran Stacey

isco has joined Apple in calling for a US version of the European General Data Protection regulation, underlining the divisions among big technology companies over how to tackle privacy concerns. The technology hardware group told the Financial Times it wanted US politicians to enact a version of the European legislation in the coming months, despite others in the industry criticising it as overly broad and punitive. Mark Chandler, Cisco’s chief legal officer, told the FT: “We believe that the GDPR has worked well, and that with a few differences, that is what should be brought in in the US as well.” He mentioned the right of individuals to remove their information from search engines as one aspect of the European rules he would not want to see replicated in the US. Mr Chandler’s comments put him in line with Apple’s chief executive Tim Cook, who last year praised Europe’s “successful implementation” of the GDPR, adding: “It is time for the rest of the world . . . to follow your lead.” US technology companies are united in calling for politicians to enact the country’s first national data privacy law in the coming year, potentially in time to overrule a separate one which has been approved by the state of California.

Privately, however, many are urging lawmakers not to use the GDPR as a template, warning that it is too onerous on issues such as the penalties it can levy for data breaches. “If the US is going to do this, it should reflect a more American approach to business and regulation,” said one industry executive. Those in the industry say that as politicians get closer to drawing up a federal law, differences of opinion among tech companies are becoming clearer. “ The business-to-business companies are willing to see much tougher regulation than the consumer-facing ones,” said one industry lobbyist. “Some internet companies want more data collection, others want less. And Apple is trying not to be placed alongside the rest of the industry at all.” The biggest areas of contention are likely to be what counts as personal information, how much power should be given to regulators to enforce the new rules, and how much liability companies will face for data breaches. Ginni Rometty, the chief executive of IBM, has been one of the most outspoken industry bosses in terms of calling for tougher rules on data protection, and one of the most willing to criticise other companies in the industry. “The genesis of the trust crisis is the irresponsible handling of personal data by a few dominant consumerfacing platforms,” she said in November.

holder and regulatory sign-off. Payouts, which are likely to run into the millions of dollars, are also due to legal counsel Kirkland & Ellis and Wachtell Lipton, accountants KPMG, EYand Deloitte, as well as payments to public relations advisers including Joele Frank. The companies will also have to pay the costs to retire some of Celgene’s debt at a premium. Morgan Stanley disclosed that it will earn $82m for advising Bristol on the deal, adding that it would be paid a further

$100m to provide financing and other liability management services. Evercore and Dyal Co stand to earn $55m for their work on the transaction. JPMorgan, which is poised to earn $100m advising Celgene, has worked closely with the biotech company over the past several years, brokering its $10bn takeover of Juno Therapeutics last year and its $7bn purchase of Receptos in 2015. Citigroup will be paid $67m for its work advising Celgene. While Bristol-Myers Squibb

and Celgene worked swiftly to agree to the acquisition late last year, the companies had held takeover talks previously. In early 2017, the two companies held exploratory talks over a stock-for-stock merger of equals and entered confidentiality agreements to share materials. But the talks were called off later that year. Citigroup, Dyal Co, JPMorgan and Morgan Stanley declined to comment. Evercore did not respond to a request for comment.

Virginia governor resists calls to resign over racist photo Democrats turn on one of their own as 2020 candidates line up to condemn Ralph Northam Demetri Sevastopulo

alph Northam, the Democratic governor of Virginia, was on Sunday refusing to resign despite overwhelming calls from Democrats and Republicans for his departure over the inclusion of a racist image in his medical college yearbook. Mr Northam on Friday conceded that a photograph that appeared on his personal page in the 1984 Eastern Virginia Medical School yearbook was “clearly racist and offensive”. The image showed one person in blackface and another dressed in the white garb of the Ku Klux Klan. The revelation sparked immediate calls for his resignation. All of the Democratic presidential candidates, including the two African-Americans in the race — Senators Kamala Harris and Cory Booker — and potential contenders such as Elizabeth Warren, the Massachusetts senator, and former vice-president Joe Biden, urged him to step down. After refusing to resign on Friday, Mr Northam on Saturday held a press conference where he stressed that he would remain in office and claimed — while conceding that people would find it hard to believe — that he was not the person in the offending

photograph. “Yesterday, I took responsibility for content that appeared on my page in the Eastern Virginia Medical School yearbook that was clearly racist and offensive,” Mr Northam said in Richmond. “I was appalled that they appeared on my page, but I believed then and now that I am not either of the people in that photo.” “I cannot in good conscience choose the path that would be easier for me in an effort to duck my responsibility to reconcile,” Mr Northam said. Donald Trump, the US president who has on occasion faced harsh criticism for appearing to condone white supremacists, also joined the chorus of critics. “Democrat Governor Ralph Northam of Virginia just stated, ‘I believe that I am not either of the people in that photo.’ This was 24 hours after apologising for appearing in the picture and after making the most horrible statement on “super” late-term abortion. Unforgivable!,” he tweeted. Democrats want Mr Northam to step down as soon as possible to prevent any further damage to the party, which is more accustomed to criticising Republicans for racist incidents. Mr Northam would be replaced by Justin Fairfax, a 39-year-old African-American descendant of slaves, who cur-

rently serves as the Democratic lieutenant-governor. Democratic party class of 2020: Who will face Donald Trump? At his press conference, Mr Northam, 59, said he was sure he was not in the yearbook photo, particularly because he vividly remembered a racist incident that same year where he darkened his face to look like Michael Jackson. “I did participate in a dance contest in San Antonio in which I darkened my face as part of a Michael Jackson costume,” Mr Northam said. “It is because my memory of that episode is so vivid that I truly do not believe I am in the picture in my yearbook. You remember these things.” Larry Sabato, a University of Virginia politics professor, said he would not rule out the possibility that Mr Northam remained in office, but added that pressure on the governor to step down was enormous. “Trump has taught everyone you can tough your way through almost any kind of scandal or controversy,” said Mr Sabato. “But Democrats are now united in opposition to Northam. They want him gone. They don’t want him dragging down the legislative candidates come November. Democrats are on the edge of taking over [the state legislature].”

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FT Wirecard’s law firm found evidence of forgery and false accounts

Deutsche Bank rejected loan request from Trump in 2016 German lender worried about the reputational and financial risk

German payments company provides no comment on internal investigation

Olaf Storbeck and Demetri Sevastopulo

Dan McCrum and Stefania Palma

n external law firm commissioned by Wirecard to investigate the payment company’s Singapore office found evidence indicating “serious offences of forgery and/or of falsification of accounts”, according to a preliminary report on the inquiry seen by the Financial Times. The document was the basis for an internal presentation to Wirecard’s most senior management on May 8, 2018. The FT published a report about the presentation document on Wednesday. The German company has said that “no material compliance findings” have resulted from its internal and external audits. The preliminary lawyers’ report said: “On the face of the evidence uncovered so far, these acts appear to bear out at the very least serious offences of forgery and/or of falsification of accounts/documents under section 477A of Singapore’s Penal Code. As these acts were intentional, there are reasons to suspect that they may have been carried out to conceal other misdeeds, such as cheating, criminal breach of trust, corruption and/or money laundering.” The new revelation raises further serious questions about one of the world’s most successful financial technology companies, fuelling pressure on Wirecard to explain to investors and regulators what allayed the suspicions of its lawyers at Rajah & Tann — a top-notch law firm in the region — who had found sufficient evidence to warrant an investigation dubbed “Project Tiger”. Shares in the group, which last year surpassed Deutsche Bank in market capitalisation and supplanted Commerzbank in Germany’s prestigious Dax 30 index, fell 11 per cent on Wednesday following publication of the FT’s report as investors looked to the company for reassurance as to the integrity of its financial statements. On Friday, they fell 13 per cent to €126.00. The preliminary lawyers’ report identified potential civil and criminal violations in at least five jurisdictions: Singapore, Hong Kong, India, Malaysia, and Germany. Wirecard could face corporate liability “if the parent entity was acting in conspiracy with its subsidiary”, the report said. Wirecard has denied any wrongdoing. It has said it takes all compliance and regulatory obligations extremely seriously, has “stringent internal and external audits” and any concerns “are always thoroughly and appropriately investigated”. When asked why no material governance or audit consequences arose from any investigation, the company did not provide a response for publication. The lawyers’ report is one of a number of internal documents seen by the FT, in an investigation based on information provided by whistleblowers, which indicates revenues were suspected of being faked through the use of invented and backdated sales agreements. A secret unit in Singapore “worked together to create and backdate agreements in order to support invoices that have been billed by Wirecard [Singapore] up to three years prior”, according to the preliminary report.

Monday 04 February 2019

May warned of ‘trouble ahead’ by Tory eurosceptics Prime minister prepares to return to Brussels with ‘new ideas’ to renegotiate deal George Parker

heresa May has been warned by Tory Eurosceptics not to take them for granted as she prepares to return to Brussels this week with “new ideas” intended to secure eleventh-hour changes to Britain’s exit deal. Mrs May has asked Stephen Barclay, Brexit secretary, to come up with “alternative proposals” to the Irish backstop, which aims to avoid a hard border on the island of Ireland by setting up a temporary EU/UK customs union. Meanwhile Geoffrey Cox, attorney-general, has been asked to come up with ideas for a unilateral exit mechanism from the backstop or a time limit, and to advise MPs on the legal status of his proposals. However, Brussels has already warned that technology-based alternatives to the backstop consist of “magical thinking” — Mrs May has previously admitted they do not yet exist — and has ruled out any reopening of Britain’s draft exit treaty. Tory MPs in the pro-Brexit European Research Group are suspicious of Mrs May’s new diplomatic initiative, fearing that

she will hit a brick wall in Brussels and will be fobbed off with words of reassurance rather than a reopening of the treaty. Steve Baker, former Brexit minister, said on Sunday there was “trouble ahead” and that while Eurosceptic MPs voted last week to support alternative arrangements to the backstop, they had “grave misgivings about the whole agreement”. Mr Baker’s comments have already been noted in Brussels, where diplomats suspect that, even if they were to meet Mrs May’s demands on the backstop, Conservative Brexiters would demand more. The prime minister has interpreted last week’s Commons votes on an amendment tabled by Tory grandee Sir Graham Brady as a sign the ERG would ratify her exit deal if she resolved the issue of the backstop. Mr Baker suggested Mrs May was reading too much into the vote and warned her that the ERG would expect more than a legal codicil — an explanatory note setting out what both sides mean when they say the backstop will be temporary. “Now the PM co-opts us into accepting everything but the backstop, and on the backstop accepting a codicil,” Mr Baker

said. Hardline Eurosceptics, including ERG leader Jacob ReesMogg, want the backstop to be removed altogether. Aides to Mrs May, who is expected to return to Brussels this week for more Brexit talks, said the prime minister had made it clear she was willing to try to reopen the treaty. Separately Sajid Javid, home secretary, suggested Britain would be less safe if it left the EU without a deal on March 29 because it would lose access to EU crime-fighting databases. Mr Javid, a Tory leadership hopeful who is courting Eurosceptic MP, backed Brexiters who claim that technological solutions were available for the Irish border. “The only thing that’s missing is a bit of goodwill on the EU side,” he told Sky’s Sophy Ridge. Downing Street and Buckingham Palace have refused to comment on a report in the Sunday Times that the Queen could be moved to a safer location outside London if there were riots in the event of a no-deal Brexit. Tory Eurosceptic MPs denounced the plans, which were originally intended for use in the event of a nuclear attack from the Soviet Union, as another variant of Project Fear.

Investors urge tech start-ups to hoard cash

VC groups say the slowing economy will make fundraising more difficult Aliya Ram and Tim Bradshaw

enture capital investors are warning their start-ups to hold more cash as worries about the global economy and stock market volatility threaten to trickle down into private tech financings. “We are certainly telling [entrepreneurs] they need 18 to 24 months of runway right now, to make sure they can weather any situation,” said Danny Rimer, a partner at Index Ventures. Just a year ago, Mr Rimer would recommend companies to hold enough cash to cover nine to 12 months’ worth of expenditures and delay raising new funds if they thought they believed they could achieve higher valuations in

future. Now, he suggests start-ups seek more capital sooner rather than later, and at more modest valuations. Venture capitalists make record investment in 2018. Deal value increases from $40bn in 2008 to over $120bn in 2018 in the US Ten years ago, Silicon Valley venture firm Sequoia sparked concerns about a tech bubble with a presentation to its entrepreneurs declaring “RIP good times”. Sequoia’s presentation, which was sent out to portfolio companies at the height of the financial crisis in late2008, warned that any start-up without a year’s worth of cash in the bank could find itself in trouble as the economy slowed. While investors are not yet using such dramatic language, some have

warned tech companies that a downturn in the economy could cause bigger businesses to cut IT spending and make it more difficult for funds to raise capital. “We’ve started to be a little more cautious about that run rate . . . it should be a year or one-and-a-half years,” said Klaus Hommels, founder and chief executive of Zurich-based venture firm Lakestar. “The likelihood of being refinanced and achieving a huge valuation is less.” SoftBank’s decision to slash a planned investment in WeWork, the shared office company, from $16bn to $2bn has also led to fears that valuations for private tech companies will come down, just as they have for high-flying public tech companies such as Nvidia, Snap or Apple in recent months.

eutsche Bank rejected a loan request from Donald Trump in early 2016 after deciding the reputational and financial risks were too high, according to a person familiar with the matter. Germany’s largest lender had a decades-long relationship with Mr Trump, extending hundreds of millions of dollars in credit for property deals and other ventures despite his history of bankruptcies. But during Mr Trump’s presidential campaign three years ago, Deutsche Bank rejected a request for a new loan. The decision was first reported by The New York Times. The request was discussed and ultimately rejected unanimously by Deutsche Bank’s group reputational risk committee. One of the executives who backed that decision was Deutsche Bank’s current chief executive Christian Sewing, who was then the co-head of the lender’s private and commercial bank. Deutsche Bank is facing questions over its relationship with Mr Trump from Democratic lawmakers, who are keen to use their newly-acquired subpoena power in the House of Representatives to examine the president’s finances and look for links to Russia. Among the reasons for turning down the loan was Mr Trump’s acrimonious campaign, which the managers thought could harm Deutsche Bank’s reputation. Another worry was a scenario under which Mr Trump defaulted on the loan after winning the election. In that instance, Deutsche Bank would face the awkward prospect of either writing off the debt or seizing property of a sitting US president. The White House referred a request for comment to the Trump Organization. A lawyer for the Trump Organization did not respond. Deutsche Bank faced further scrutiny over the weekend after it emerged that it had reduced its exposure to Russian state-owned lender VTB in 2016. The decision, first reported by the Wall Street Journal, was made as part of a push to cut its exposure to Russia after the Ukraine-related sanctions were imposed, according to a person familiar with the transaction. The lender sold a $300m wholesale loan it had granted to VTB to Alfa-Bank, the private Russian lender, and took a small loss on the loan’s book value, equivalent to about 1 per cent, according to the person. At the time, Deutsche Bank was under intense market pressure due to rumour about a potential $14bn fine by the US Department of Justice. The German bank failed to find a buyer of a second $300m tranche of wholesale loan to VTB, which matured and was repaid by the Russian lender in 2017. A person briefed on Deutsche Bank’s internal discussions stressed that the German lender’s decision to hive off the VTB loans was not at all linked to potential links between the Russian government and Mr Trump’s presidential campaign. “Any insinuation to this effect is fabricated,” the person said.

Monday 04 February 2019

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Chevron boosted by surging oil and gas production Ed Crooks

hevron, the US oil group, has reported earnings above analysts’ expectations and claimed success in adding to its reserves thanks to growth in the Permian Basin of the US and gas reserves in Australia. Earnings per share were $1.94 for the fourth quarter of last year, up 19 per cent from the equivalent period of 2017 and above the average of analysts’ forecasts, which was $1.87. The company also reported surging production, with a 7 per cent increase to 2.93m barrels of oil equivalent a day; an unusual pace of growth for a company of that size. Chevron, which is the secondlargest US oil group after ExxonMobil, has been investing heavily in large projects including the Gorgon and Wheatstone liquefied natural gas

plants in Australia, and the ramp-up of production from those is helping to boost the group’s output. Profits from oil and gas production rose 68 per cent, excluding the one-off impact from US tax cuts, to $3.29bn, while profits from the downstream operations including refining and chemicals rose sevenfold to $859m. In 2018 the company added about 1.46bn barrels of oil equivalent to its proved reserves, representing 136 per cent of its production during the year. The largest additions were in the Permian Basin of Texas and New Mexico and the LNG projects in Australia. Michael Wirth, the chief executive who took over a year ago, said he expected production to continue to grow at a rate of 4-7 per cent, excluding the effect of asset sales, in 2019. Chevron shares rose 2.4 per cent in early trading on Friday.

Facebook: false friends Number of ad-generated sales rather than fake accounts are advertisers’ main concern

ow many people on Facebook are phoneys? Plenty, beyond that poseur whose friend requests you ignore. The social network is deleting up to 800m “false” accounts a quarter. That looks an incredible number, equivalent to one-third of the 2.32bn monthly active users (MAU) claimed in 2018 results this week. Should advertisers worry? They spent $55bn with Facebook last year. In a recent report, IT entrepreneur Aaron Greenspan claimed that fake accounts “likely exceed 50 per cent of [the] network”. Mr Greenspan admits to biases. He fell out with Facebook founder Mark Zuckerberg. There is a whole winery of sour grapes in his report. He owns put options on Facebook stock. These may pay out if shares collapse. Moreover, Facebook does not count false accounts, most of which

it deletes swiftly, in MAU statistics. And on a monthly basis, deletions are about 260m, equal to just 9 per cent of users. Facebook says Mr Greenspan is “unequivocally wrong”. However, it raised its estimate of duplicate and “fake” accounts to 16 per cent of MAU this week, compared with 7 per cent in the summer of 2017. Great fakes, by definition, are invisible. No one can really quantify fake Facebook accounts — advertised online at $7 per pop. Necessary privacy safeguards could foster a proliferation of fakes, by impeding online identity checks. But there will always be one metric advertisers can rely on, as Matti Littunen, of Enders Analysis, points out: sales directly generated by Facebook ads. If these flag, it is time to worry about fakes.

Bondholders brace for Venezuelan regime change Creditors would face one of the most complicated sovereign debt restructurings in history Colby Smith

o the delight of many Venezuelans, the walls appear to be closing in on Nicolás Maduro, the authoritarian leader of the Latin American country. Bondholders exposed to the country’s defaulted debt, too, may be glad to see the back of him. But if there is a change of regime a very messy restructuring awaits. The Trump administration this week imposed fresh sanctions on the state-owned oil company PDVSA to cut off the spigot of foreign capital flowing into Mr Maduro’s coffers, shortly after the US recognised opposition leader Juan Guaidó as the country’s legitimate president. Mr Guaidó was also granted the right to control Venezuelan assets parked in US bank accounts. While the sanctions rankled some US investors in PDVSA-backed bonds, who are now unable to offload their holdings, the rising possibility of a change of government has left even the most dour bondholders optimistic. Official figures are difficult to come by, but analysts reckon Venezuela has some $140bn debt outstanding, with more than $65bn owed to bondholders and another roughly $40bn due to China and Russia. Venezuela is also on the hook to pay back suppliers and holders of arbitration awards, among others.

This vast pile of debt presents unique challenges, says Mark Weidemaier, a law professor at the University of North Carolina. “Unlike clean restructurings where there are only a few debt instruments and you can imagine a table that creditors could theoretically sit around and negotiate, with Venezuela, you don’t have that.” Since 2017, Venezuela has defaulted on most of its debts, aside from a bond due in 2020 that is backed by a 50.1 per cent stake in Citgo, the Houston-based subsidiary of PDVSA. However, Mr Maduro is likely to default now, given that Washington has granted Mr Guaidó authority over Venezuela’s US accounts. Bondholders, including Fidelity, Pimco and BlackRock, have had to sit on their hands when it comes to starting any kind of restructuring process given the sanctions in place. But should Mr Guaidó or another democratically elected leader take the reins, the path could soon be cleared for talks to begin. Some creditors have already been taking action. In November, Venezuela reached a deal with Canadian mining company Crystallex to settle a $1.4bn arbitration case. The cash-strapped country also settled with ConocoPhillips after the oil company secured court orders to seize Venezuelan oil assets in the Caribbean.

Stocks to watch: TalkTalk, Deutsche Bank, Electrolux, Rentokil Intertek’s China optimism disconnects with peers, says Jefferies Bryce Elder

alkTalk led the FTSE 250 fallers after cutting full-year profit guidance. The internet provider reduced its target range for earnings before earnings, interest, tax, depreciation and amortisation to between £235m and £245m, from £261m previously, to reflect investment and restructuring costs including up to £10m more in the FibreNation venture. Third-quarter results from TalkTalk showed revenue growth of 2.9 per cent and the addition of 44,000 broadband customers, but average revenue per user weakened 2 per cent. “Management say they are comfortable with full-year 2020 ebitda consensus estimates, but the market is understandably concerned given numerous downgrades in recent years,” said Morgan Stanley. Deutsche Bank fell after its fourthquarter earnings showed a €261m loss rather than the €11m profit expected. Revenue from the corporate and investment banking (CIB) division was the problem, with underlying revenues from the Fixed Income & Currencies unit down 42 per cent quarter on quarter to hit the lowest level since 2008. “Although management has delivered on costs and balance sheet reduction, this seems to have come at the expense of revenues. The bank still appears to be losing CIB market share, which we fear will continue. Consequently we expect to see lowsingle digit consensus EPS [earnings per share] downgrades.” Citigroup Electrolux of Sweden surged after announcing plans to spin off its professional appliances division in 2020 with a demerger. The company also delivered fourth-quarter results that were

slightly above consensus expectations. “We see this as a positive step that creates value for shareholders as Professional is viewed as a higher quality business whose attractive features have historically not been fully valued as part of the low-margin consumer appliance business.” JPMorgan Cazenove Electrolux Professional has delivered SKr8.7bn in annual revenue at a pre-tax profit margin of around 13 per cent, with organic growth running at 4 per cent since 2014. JPMorgan said if the division was valued at between 12 and 13 times earnings it would be worth SKr50 to SKr55 per Electrolux share on a debt-free basis. The remaining consumer business would only look good value if Electrolux can convince investors that a 6 per cent group margin target could be achieved even without Professional, which would support a price for the rump of SKr230 per share, it said. Sellside stories Citigroup upgraded Rentokil Initial, the pest control group, to “buy” from “neutral” with a 400p target price. The “market is underestimating the returns Rentokil is enjoying from industry consolidation, a key part of management’s strategy”, it said. Rentokil’s mergers and acquisitions since 2013 have generated a return on capital employed of 14.6 per cent, Citi estimated, adding: “We admire their M&A track record, delivering doubledigit returns and solid top-line growth with margin expansion.” Citi also welcomed an improvement in Rentokil’s cash performance, which had suffered historically from bad debtors, exceptionals and provisioning. Cash conversion of 85 per cent beats the business sector’s 68 per cent average and looks sustainable, with room for further improvement, it said.

While Rentokil’s valuation of 24 times 2019 earnings reflects strong demand for pest control companies, the stock’s enterprise value is no more than on par with the business services sector based on 2020 operating earnings, suggesting a sharp discount to peers if management can deliver on targets, Citi said. Peel Hunt upgraded Plus500 to “add” from “hold” with a £16.50 target price in a post-results review of the UK-listed financial bookmakers. It retained “buy” advice on CMC Markets and IG Group. Trading platforms trade at a deep discount to comparable listed businesses despite similar characteristics, with enterprise values of between 4.5 times earnings for Plus500 to 8.2 times for IG Group compared with a broad peer group on an average of 19 times earnings, Peel Hunt said. “We are positive on this sector given our expectation of a consolidating market and the strong cash generation.” Jefferies downgraded Intertek, the product-testing specialist, to “hold” from “buy”. Uncertainty around tariffs between the US and China has probably caused a slowdown in investment that may accelerate, it said. “There has been a disconnect in messaging around outlook for the consumer division between Intertek and the other main peers Bureau Veritas and SGS. The latter two companies have been messaging some caution for the first half 2019 while Intertek has remained more relaxed about the impact. While Intertek’s products division now houses a lot more than just consumer products, we estimate softlines, hardlines and electronics is circa 50 per cent of the division. The China testing part is a high-margin activity within a high-margin part of that division.”

US stock futures creep higher in choppy trade following jobs data Peter Wells

all Street is to enter February juggling data, with a series of weak economic readings primarily out of Asia juxtaposed against better than expected US jobs data. Only hours after the S&P 500 ruled off on its biggest January gain since 1987, Asian equities hit the skids on Friday following a series of soft reports on manufacturing activity in South Korea and Indonesia. China’s weak run of data con-

tinued, with the Caixin-Markit purchasing managers’ index falling in January to its lowest in almost three years, continuing to stoke concern about the impact of the US-China trade war on growth in the Middle Kingdom. US stocks futures had been nursing losses heading into this morning’s jobs report, but trimmed those declines after the data showed the domestic economy added more jobs than expected in January, despite the overhanging presence of the partial shutdown of the US

government. Futures for the S&P 500 were up 0.1 per cent, while those for the Dow Jones Industrial Average and Nasdaq 100 were up 0.2 per cent and down 0.4 per cent, respectively. Treasuries, which initially sold off on the jobs data, had recovered some ground as yields pulled back from their session high. The yield on the benchmark 10-year US Treasury was up 1.3 basis points to 2.6485 per cent, while that on the policysensitive two-year was up 2.4 bps to 2.4858 per cent.

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Monday 04 February 2019

ANALYSIS Trump floats fresh Xi summit to settle trade war

Two sides claim progress at end of Washington talks but Lighthizer fails to report specific concessions James Politi

T Iran: the Islamic Republic’s 40-year itch Sanctions are hurting and many of those born since the 1979 revolution want reform, but the system remains resilient Najmeh Bozorgmehr

amed is a child of the revolution. His parents were among the thousands of protesters who took part in the overthrow of the monarchy and brought Iran’s Islamic Republic into being 40 years ago next week. His father joined the Revolutionary Guards to defend the system and fought for its survival in the brutal Iran-Iraq war that cost at least half a million lives. Like more than 50 per cent of Iran’s youthful population Hamed, 38, has never known anything other than the theocratic state. But ahead of its 40th anniversary, the business graduate questions why his parents’ generation pushed so hard to topple the Pahlavi dynasty that ran the country between 1925 and 1979. It was a “mistake”, he says, that he is conscious not to repeat. “I respect the desire of my parents’ generation for change but do not understand their immature act to overthrow a ruling system which still had room for improvement,” says Hamed. “Ideally, I want a secular system but I am not willing to destroy everything when we can push for reform.” Protesters calling for the overthrow of the Shah in January 1979 hold up a poster of the exiled cleric Ayatollah Ruhollah Khomeini who went on to found the Islamic Republic © AFP John Bolton, the hawkish US national security adviser, predicted last year that the republic would “not last until its 40th birthday”. He was clearly wrong. But for the first time in four decades there is a serious debate inside the country over whether the Islamic Republic can survive in its present form. Iranian politicians mock comments like Mr Bolton’s as naive and speak of a country that has developed a large, educated middle class which is conscious of the turbulent recent history and wary of risking their security. Ruling clerics insist that the Shia faith — the religion that underpins the Islamic Republic — is flexible enough to adapt its rules to modern demands if need be. Akbar Hashemi Rafsanjani, a pillar of the revolution who pushed for clerical rule, elected president promising a reconstruction plan. He serves for eight years Many Iranians now openly discuss whether the system is heading toward a similar fate as that of Shah Mohammad Reza Pahlavi. “How do you think the revolution happened?” says Bahman, a 65-yearold businessman who took part in the 1979 revolt. “It was exactly like these days when we were frustrated and wanted a big change.” Some have taken to social media — Instagram and the popular mes-

saging app Telegram — to vent their anger at the clergy, circulating jokes on how backward the old clerics based in the holy city of Qom are in the face of modern issues. “Iranians rightly see the root of their problems in mixing politics with religion,” says one cleric. “There is rising demand for separation of the two.” But a former reformist official warns that those seeking radical change will be disappointed: “Those who talk about the collapse of the Islamic Republic have very shallow knowledge of Iran and Shiism,” he says. “The resilience and pragmatism of the Shia clergy and Iranians will prevent a radical movement similar to the 1979 revolution.” Yet, battered by sanctions, criticised over its involvement in foreign conflicts in Iraq, Syria and Yemen, and distracted by internal splits over who will replace the ageing supreme leader, the Islamic Republic looks highly vulnerable. In protests over the past year workers, teachers and even victims of banking scandals have taken to the streets. Female protesters have openly challenged the authorities in anti-hijab demonstrations that have been posted online. At the end of 2017, rising prices triggered widespread demonstrations against poverty and corruption in working class areas that tipped over into calls for a change in the system. Politicians do not rule out the possibility of more protests but urge caution. “The collapse of a system can happen if there is insecurity or when it loses its control over the country’s affairs, none of which has happened in Iran,” says HamidReza Taraghi, a politician close to hardline forces. “The gap between the political system and the people is not big; Iran’s military forces listen to political rulers and Iran has a thorough dominance of intelligence over the Middle East which even the US lacks.” Opposition to the US-backed Shah grew steadily in the 12 months before the 1979 revolution. His regime had become increasingly brutal and the introduction of western-style economic and social reforms antagonised the highly religious and traditional society. But he had also riled the largely apolitical merchants in the traditional bazaars who joined with the clerics, students and ordinary workers in protests and strikes across the country. Fanning those flames was the Paris-based Ayatollah Ruhollah Khomeini, who went on to be the founder of the Islamic Republic. Exiled by the Shah in 1964 after leading protests against his secular reforms, Khomeini communicated

with supporters, many in rural parts of the country, via audio cassettes recorded in the suburbs of the French capital. Smuggled into Iran, the tapes and paper statements were distributed via a network of mosques by young clerics and more widely by an eclectic group that included Marxists and nationalists united behind a desire to overthrow the Shah but all also vying for control of the system that would replace him. Khomeini’s return to Iran on February 1 1979 — two weeks after the Shah had abdicated and left the country — brought the protests to a new height. Many observers believed the clerics would go back to their seminaries and leave power in a Shah-less Iran to the technocrats. Ten days later, February 11, the revolutionaries confiscated the state-run radio and TV and claimed victory. The army put down its weapons and declared itself neutral. A referendum two months later saw 98 per cent of eligible voters support the establishment of the Islamic Republic of Iran. Initially the clerics, who had no history of ruling Iran, welcomed educated figures in suits and ties but later decided to occupy senior executive positions themselves as they grew concerned that they could meet the same fate as the Shah. While the Islamic Republic continues to enjoy the backing of its core believers, estimated by reform-minded analysts to be a few million people, many Iranians have reassessed their support for the revolution. Aziz, at the time a 26-year-old student in Tehran, joined the revolt, he says, after being “shocked” at seeing women in the streets without headscarves and feeling “disgusted” at bars selling alcohol. Forty years on he says he is fed up with what he calls the regime’s “hypocrisy” and what he considers exploitation of Islam for political purposes. He blames the regime for slowing down the country’s economic progress. “Iran could be where South Korea is now if there were no revolution,” he says. “We naively thought there could be social justice under an Islamic system.” Farid is the son of a senior member of the Tudeh party, which was Iran’s largest communist group and played a significant role in the 1979 revolt. But in its aftermath he spent seven years in prison, a victim of the purges that began almost as soon as the clerics took power. Those purges accelerated after Iraq’s invasion of Iran in 1980 with thousands jailed and others, including members of the Mujahedin-e Khalq, which backed Iraq in the war, hanged.

he US and China claimed progress in tackling some of the thorniest issues in their trade war as Donald Trump suggested that a new presidential summit might be necessary to settle the economic conflict within the next month. At the end of two days of negotiations in Washington, Robert Lighthizer, the US trade representative, said his talks with Liu He, China’s vice-premier, had finally centred on US demands for structural reforms by Beijing — such as ending the forced transfer of technology from US companies or reining in the use of industrial subsidies. But Mr Lighthizer failed to report a specific concession made by Beijing, and said he and Steven Mnuchin, US Treasury secretary, were considering a trip to Beijing after the Chinese new year celebration in early February to resume negotiations. “We focused on these core ideas, these core concepts and it’s my judgment that we made headway in significant ways,” Mr Lighthizer said on Thursday.

agreement would “send a positive signal to our two peoples and the broader international community”. China has offered to boost its purchases of US goods to reduce the bilateral trade deficit — including a new pledge to purchase 5m metric tonnes of soyabeans — and suggested it was willing to discuss regulatory changes to improve market access for international investors. But it has been reluctant to undermine state support for the economy in a way that would reduce its chances of competing with the US on innovation and advanced technologies — and doubts remain about its willingness to cede much ground. US officials have stressed that they are looking to ensure that any commitments made by Beijing can be verified and enforced — a politically and legal challenging goal. “If we can get an agreement, it’s worth nothing without enforcement,” Mr Lighthizer said. US officials are counting on fears of a tariff escalation being more intense in Beijing than they are in Washington over the next month, particularly given angst over the Chinese economic slowdown. But the White House is facing

Donald Trump says he wants to discuss with his Chinese counterpart ‘some of the longstanding and more difficult points’ on trade © AP

The two trade delegations held a “frank, concrete and constructive discussion” and “agreed to further strengthen cooperation” on structural issues such as technology transfers and intellectual property protection, according to a readout from China’s state news agency Xinhua, which stopped short of providing details on commitments to resolve such issues. It also confirmed the proposed Lighthizer-Mnuchin visit for mid-February. Mr Trump, the US president, earlier in the day raised the possibility of a new summit with Xi Jinping, his Chinese counterpart. “I think that probably the final deal will be made, if it’s made, between myself and President Xi,” Mr Trump said in the Oval Office. The two countries had “clarified the timetable and roadmap for the next consultation,” according the Xinhua statement. If no resolution is reached by March 1, tariffs on $200bn of Chinese goods are set to increase from 10 per cent to 25 per cent, a prospect that has spooked world financial markets because of the inevitable economic damage. Mr Xi was also upbeat on Thursday, saying in a letter presented to Mr Trump by the Chinese delegation that “intensive consultations” had yielded “good progress”. “I hope our two sides will continue to work with mutual respect and win-win co-operation,” the Chinese president wrote, adding that an

pressure of its own — in the form of the hit taken by the US economy this month from the partial government shutdown and Mr Trump’s sensitivity to adverse movements in equity markets. Politically, Mr Trump is striving to fulfil one of his key 2016 campaign pledges — to reset trade relations with China. But any agreement that is seen as weak or inconclusive would expose him to attacks from Democratic rivals. The chance of a big breakthrough this week in the trade talks was relatively low, after Beijing reacted with outrage to Monday’s indictment of Huawei, the Chinese telecoms equipment maker, on criminal charges it stole US technology and violated US sanctions. But US officials said there was no evidence it adversely affected the negotiations. A new summit between Mr Trump and Mr Xi would follow their steak dinner in Buenos Aires on December 1, just after the G20 summit in the Argentine capital. That meeting resulted in a commercial ceasefire between the US and China and avoided a tariff escalation that was originally scheduled for January 1. According to The Wall Street Journal, the new meeting between Mr Trump and Mr Xi was expected to be held on the southern Chinese island of Hainan, right after a planned meeting between the US president and Kim Jong Un, the leader of North Korea, at the end of February.

Monday 04 February 2019

BUSINESS DAY

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Fixed Income

COMMODITIES

Cover Story

Investors’ 18% bid for Tbills show quest for higher rate

Soya beans prices outstrip cocoa, ginger to emerge January’s biggest gainer

Cement makers shrug off January market rout

Over ambitious investors are raising their bidding for Nigerian Treasury Bills (NTB), higher than the rates the Central Bank could offer, all in anticipation for a higher rate after general elections.

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Soya beans, one of Nigeria’s most cultivated crops took the shine off major export commodities, cocoa and ginger to become the biggest gainer in the opening month of trading on the AFEX Commodities Exchange.

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A 2.78 percent fall in the Nigerian Stock Exchange (NSE) broad index in January did not only wipe off the 1.80 percent gain recorded in the previous month, it also dampened the benchmark index.

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BUSINESS DAY

equities What blue-chip stock investors should look out for amid heightened political risk The heightened political tension has no doubt sent jitters down the spines of investors in the country.

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Fixed Income

Investors’ 18% bid for Tbills show quest for higher rate HOPE MOSES-ASHIKE

ver ambitious investors are raising their bidding for Nigerian Treasury Bills (NTB), higher than the rates the Central Bank could offer, all in anticipation for a higher rate after general elections. The CBN on Wednesday auctioned a total of N254.64 billion NTB at the primary market and investors bided more at higher rates than the offered rates, even though the issue was later oversubscribed. Specifically, investors were bidding as high as 18 percent for long term instruments while the CBN offered 15 percent. The summary of the auction result obtained by BusinessDay shows that N7.85 billion was offered for 91 days tenor with allotment/issue date of January 31, 2019. The offer was oversubscribed by N41.04 billion as a range bid of between 10.8500 – 12.0000 percent. However, N28.01 was allotted at a stop rate of 11 percent. For the 182 days tenor, the CBN offered N 69.56 billion at a stop rate of 13.5 percent. It was oversubscribed by N 68.42 billion at a range bid of between 12.8500 – 14.5000 percent and the allotment was N58.68 billion. Also, for 364 day tenor with allotment/issue date of January 31, 2019, the CBN offered N177.22 billion, which was also oversubscribed by N214.38 billion at a range bid of between 14.3000 – 18.0000 percent. However, the allotment was N167.93 billion, at a stop rate of 15 percent, which was below the offered amount. Ayodeji Ebo, managing direc-

tor, Afrinvest Securities limited said the reason for the under allotment may be attributed to investors demand for higher rates. Based on the data, he explained that the 364-day tenor was over-subscribed (bid-cover ratio of 1.2x) however, the CBN was not willing to go above the 15.0 percent stop rate. From the range of bid rates, we observed investors bid as high as 18 percent. “Investors are still optimistic that the interest rate may still move up before the general elections especially the OMO stop rate”, Ebo said in an emailed response to BusinessDay. The CBN had earlier disclosed that it will in the first quarter of 2019 issue N823.43 billion worth of Treasury Bills, while N985.93

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We expect money market rates to slightly advance as we expect the CBN to sustain the pace of OMOs in a bid to keep system liquidity tight

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billion will mature in the same period. A breakdown of the Nigerian Treasury Bills issue programme for the Q1 2019 released on Tuesday by the CBN show that a total of N59.02 billion Treasury Bills for 91 days tenor, N248.84 billion for 182 days, and N678.05 billion for 364 days tenor, will hit the financial market in the first quarter. The CBN will rollover a total of N51.45 billion for 91 days tenor, N164.91 billion for 182 days and N607.05 billion for 364 days tenor, in the same period. The general elections are scheduled for February 16, 2019 and may likely usher in stability and smooth transition or disruption, either of which will impact the economy and businesses.

Menwhile, rates at the interbank market are expected to maintain upward trajectory despite the Central Bank of Nigeria (CBN)’s N315.6bn Open Market Operations (OMO) maturities this week. Overnight inter-bank rate increased by 0.50 percentage to 11.86 percent on Friday, while the open Buy-Back also rose by 0.79 percentage point to 11.07 percent. “We expect money market rates to slightly advance as we expect the CBN to sustain the pace of OMOs in a bid to keep system liquidity tight. Hence, we don’t expect the OMO maturities of N315.6bn in the coming week to improve system liquidity”, analyst at Afrinvest Securities Limited said.

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder. Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Israel Odubola; Olufikayo Owoeye; Graphics: Fifen - Famous

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Commodities Soya beans prices outstrip cocoa, ginger to emerge January’s biggest gainer

…as weak supply holds opportunities for growers Temitayo Ayetoto

oya beans, one of Nigeria’s most cultivated crops took the shine off major export commodities, cocoa and ginger to become the biggest gainer in the opening month of trading on the AFEX Commodities Exchange. The leguminous crop cherished for its richness in protein, carbohydrate, vitamins among other nutritional contents outstripped other commodities with a seven percent gain in price at N160, 000 per metric ton from N149, 000 as at January 2. Even though they have remained the highest priced commodities on the exchange, Cocoa and Ginger’s performance were not as striking as soya beans as they steadied within a range of N700, 000 and N287, 000 respectively. Maize, Sorghum and Paddy Rice prices relaxed to around N88, 000, N78, 000 and N125, 000 respectively. Analysts ascribed soybeans’ performance to the usual weakness in local production capacity to address ever growing

market demand. “Where there has been no increase in production, the demand for the commodity has been high,” said Obianuju Okafor, AFEX communications officer. “Demand for soybeans currently stands at around 1.5 mil-

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Nigeria, the largest consumer of soybeans in sub-Saharan Africa controls a share of international market worth $85 million. Majority of that consumption is dominated by usage in soy milk production and specially food formulation to tackle malnutrition in infants

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lion metric tons, which is obviously unable to be satisfied by the around 600,000 metric ton supply. The market is simply responding to this gap,” Okafor added. Ayodele Uwala, Nigerian Soyabeans Association President says production by current estimate and observation was now over 900,000 tons and perhaps heading towards 1.2 million but was still inadequate to meet current demand, suggesting that veering into production will still remain a lucrative venture in the future to come. Nigeria, the largest consumer of soybeans in sub-Saharan Africa controls a share of international market worth $85 million. Majority of that consumption is dominated by usage in soy milk production and specially food formulation to tackle malnutrition in infants. As a cheaper source of protein

compared to beef, poultry or eggs, the nutritional demand is projected to grow at par with population expansion. Also, Soya bean condiment called Dawadawa is exported to Cammeroon. And even when producers focus on the local market alone, they might not go wrong with soya beans. Already, cultivation is found suitable in most northern states and recently in the south east, South-South and South-West regions of the country. It commences between May and June while harvests runs through October and November. Harvesting can begin for early-maturing types of the grain 70 days after planting 180 days after for late-maturing. But there are other moneyspinning aspects to soya beans than production which Uwala says are overlooked. He said areas of aggregation, input sup-

ply, equipment provision for farming operations were largely underserviced but investors can be certain of reasonable return. The most rapidly growing aspect he emphasised is the market structuring, similar to mini model of a warehouse receipt system. “People now have locations where farmers that can’t travel can drop their crops. You give them a ticket which is as equal as having money,” he explained. “In most of the areas where they are producing, farmers are very conscious that selling very highly would not be profitable. They can create centres where farmers who are not ready to sell can keep their harvest and be ticketed. If the price goes up and the farmer is ready to sell, the difference between the old price and the new price would be shared by the store keeper and the farmer. The farmer will even gain more. So there is still an opportunity for lucrative production.” In terms of equipment provision, investors can also leverage on low capacity for mechanisation among soya beans farmers to provide tractors and threshers for commercial production. With a tractor capable of at least eight hectares per day, Uwala says a renter can make about N50, 000 a day. Leasing of threshers on the other hand can also hold a steady market as farmers still grapple with loss of harvests. However, for Okafor, soya beans still holds prospect of price appreciation considering that production conditions might not change rapidly. That, by extension will ensure investments in forward contracts or spot contracts remain profitable, even if their market entry is with a metric tonne.

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BUSINESS DAY

Cover Story

Cement makers shrug off January market rout

OLUWASEGUN OLAKOYENIKAN & DAVID IBIDAPO

2.78 percent fall in the Nigerian Stock Exchange (NSE) broad index in January did not only wipe off the 1.80 percent gain recorded in the previous month, it also dampened the benchmark index. In spite of this, the NSE Industrial Index stood tall among its peers, gaining 5.78 percent in the review month with a total volume of 60.97 million shares traded in one month, even as four other major sectors sank into losses. Of the five major sectors on the NSE, two – Industrial Index and Banking Index – outperformed the NSE All Share Index (ASI) in January, just few weeks before the nation’s general elections, where ruling President Muhammadu Buhari of the ruling All Progressives Congress (APC) will be contending with former Vice President Atiku Abubakar of main opposition party, Peoples Democratic Party (PDP), and other candidates for the office of the President. This makes investment decision more challenging as Nigeria progresses into the election month scheduled to kick-off on February 16. But according to analysts, while some equities are most likely going to sustain their positive momentum regardless of the current political events, while some others would likely have their values washed off in the short term. In February, analysts see market’s reaction to bad news in the political space to be elevated as it would determine the market direction. Relative peace in the country before, during and after the elections is seen to inhibit further declines in share prices. With this in mind, the performance of stocks going forward as the election month begins

remain a concern for investors willing to take positions now for long-term returns, but BusinessDay analysis and outlook from analysts as presented below would help guide investors in this dilemma. Industrial Sector While other sectors wallowed in losses in January, the industrial stocks flourished with 5.78 percent gain, its best monthly surge since January 2018, thanks to the cement makers – Cement Company of Northern Nigeria (CCNN), Dangote Cement and Lafarge Africa – that made it happened in that order. Paul Aluko, a research analyst at MBC Securities said investors were attracted to the

cheap valuations of Dangote Cement and also an impressive share appreciation of CCNN last year having emerged the best performing stock for the year. “The price –Dangote Cement – has really gone down to a point that investors feel it is ridiculous for them to be trading at the level,” Aluko said. CCNN and Dangote Cement “have good records of dividend payment and they have been consistent over the last five years.” We expect CCNN and Dangote Cement to continue in this trend on strong fundamentals and market penetration. However, political sentiment will likely play a major role in the short term as Nigeria goes to

the polls. We are likely to see mild downward pressure on prices. Banking Sector The first month of the year saw increased investors’ appetite for mid-tier banks as they dominate advancers’ chart. But losses in the tier-one banks pulled the sector index down by 2.49 percent, even as they continue to top analysts’ ratings for long-term investment owing to their resilience, particularly Zenith Bank and Guaranty Trust Bank. “We have seen them – Zenith Bank and Guaranty Trust Bank – deliver good dividend over a long period of time,” Ayodele Akinwunmi, head of research, FSDH Merchant Bank. On what triggered the appreciation in the tier-two banks,

Akinwunmi said the effect of the appreciation in Diamond Bank shares on account of announcement of the merger and acquisition with Access Bank have its multiplier effect on other tier-two banks, while Gbolahan Ologunro, an equity research analyst at Lagos-based CSL Stockbrokers attributed the gains recorded by the mid-two lenders to dividend expectation as declared earlier by some of the banks. The gains imply “early positioning for their full-year earnings that would be accompanied with dividend.” “For the banking stocks generally, what we are going to be seeing is a zigzag change in their prices. That is due to a likely tussle between the bulls who want to position in these stocks for their full-year dividends, that would also be seeing the bears

booking profits on the back of a rally in their share prices, more importantly, because of high political risks in the economy,” Ologunro said. Oil & Gas Sector The Oil & Gas sector recorded the worst decline among its peers in the just-concluded month, dropping 7.27 percent largely driven by a 16.41 percent plunge in Seplat shares. Seplat operates in the upstream sub-sector of the Oil & Gas industry and analysts have attributed its share performance to the dwindling crude oil prices which have impacted negatively on the oil firm’s earnings. Recently, Seplat’s shares fell to a oneyear low of N520. “What I see affecting the sector, especially for Seplat is oil price,” said Ayodele Ebo, Managing Director, Afrinvest Securities Limited. But in

February, Ebo said political developments will shape investor sentiment and performance in the month is “going to be scenariobased.” “All the companies in the Oil & Gas sector that are into production – Upstream sub-sector – will naturally do well if oil prices are up,” said Henry Obuaku, head of asset management at GDL. Consumer Goods Sector The consumer goods stocks trailed their peers in the Oil & Gas sector in share devaluation, as the sector index dipped 6.77 percent in January largely triggered by declines in Nestle Nigeria, beer makers, particularly Nigerian Breweries and Guinness Nigeria, and Dangote Sugar. Vitafoam emerged the lone

gainer in the sector for January having gained 9.09 percent. Paul Uzum, a Lagos-based stockbroker at the Nigerian Stock Exchange attributed the decline to the drop in the share prices of Nigerian Breweries, which dominates the sector, and other brewers to their recent unimpressive finance results, causing investors to dump the stocks in anticipation for further contraction in their earnings. “If anything happens to Nigerian Breweries, it will affect the consumer goods sector,” Uzum said. “Not just the Nigerian Breweries, the brewery sector has been seriously challenged since the incoming of this administration.” The brewers’ poor finan-

cials were largely driven by sales plunge and shrinking profits, no thanks to the recent excise duty imposed on alcoholic products by the Nigerian government. The stockbroker said “this is just the beginning,” the decline might continue “except there is a revision on sales caps policy on alcohol.” However, Uzum noted that Nestle is the only exemption in the sector because of its nature of products which enjoy continuous demand. “No matter how bad things are, they will still make sales.” Insurance Sector Gains in Cornerstone Insurance, Custodian Investment, Mutual Benefits Assurance,

Prestige Assurance and AXA Mansard Insurance were not enough to sustain last December’s appreciation in the NSE Insurance Index, this is as a result of heavy depreciation in NEM Insurance, Linkage Assurance and Law Union & Rock which combined to weigh on the index, pushing it down by 3.26 percent in January. The outlook of the insurance sector of the NSE will be largely dependent on the fundamentals of the company when they release their full year 2018 financial report. Also, macro-economic factors and industry specific factors will play a significant role in determining if these companies will see increase in premium income.

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Monday 04 February 2019

Equities What blue-chip stock investors should look out for amid heightened political risk OLUFIKAYO OWOEYE

he heightened political tension has no doubt sent jitters down the spines of investors in the country. For smart retail and institutional investors, this period of a relative drop in prices of some blue-chip companies offers an opportunity to take position and own a stake in cheap but fundamentally-sound companies. A retail investor should always gun for stocks with the dual capacity of regular dividends payment and attract capital appreciation. This week we bring you a list of some bellwether stocks which investors can take advantage of a slight drop in their prices and possibly own a stake. Zenith Bank Plc Tier one lender, Zenith Bank is the largest bank by asset base in Nigeria, and one of the most consistent dividend payers out there. It has consistently delivered profits for over 20 years and continues to remain a reliable financial institution. However, its dominance in the industry has not translated to dominance in capital appreciation for investors. Zenith Bank remains up in there with the others and hasn’t done badly either. At its current share price of N22.95 as at Friday, it trades at a price-earnings ratio of 3.94x. The bank pays dividends twice a year ( Full Year and Interim Dividend) and hopefully this year will not be different. GTBANK GTBank at a share price of N33.70, and its Price-Earnings ratio at 5.2x and a consistent dividend payer over the years. The bank has been able to define its market, focusing on the youthful population. The model of the bank is very clear and

they have a well-articulated strategy they use in actualising goals associated with this model. The bank’s corporate governance culture is worth emulating by other quoted companies. Guaranty Trust Bank also has a good risk assessment framework which has enabled

the bank to keep its NonPerforming loan (NPL) ratio lower than the for most of its peers, although in H-1 2018, the NPL was some 5.8 percent which was above the regulatory benchmark of 5 percent. In addition, the tier one lender has one of the lowest

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Beta Glass Plc, one of Nigeria’s glass makers, has provided shareholders with a larger return on their investment inform of dividend and share appreciation. The company is among the thirty most capitalized firms-NSE 3O firms- in Africa’s largest economy

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costs of funds in the industry buoyed by its large customer base of the youthful working class population who have also contributed to the growth of its non-interest income which has been on the back of improved transactions over GTB’s digital channels. NASCON Allied Plc A member of the Dangote Group, Nascon has paid dividends to its shareholders for over six years now and just last year it proposed a dividend of N1.50 per share up from 70Kobo in 2017 representing an increase of 115 percent. Currently, trading at N17.90 as at Friday, Nascon is not only a good dividend stock, it also rewards investors in terms of capital appreciation. 5 years ago, this stock was trading at N9 per share, thus it has also demonstrated a capacity to reward shareholders over a long period of time. BETA GLASS Beta Glass Plc, one of Nigeria’s glass makers, has provided

shareholders with a larger return on their investment inform of dividend and share appreciation. The company is among the thirty most capitalized firmsNSE 3O firms- in Africa’s largest economy. It was one of the best-performing stocks in 2018, gained by 33.1%. Beta Glass Company Nigeria Plc recorded a dividend growth rate of 145% in 2017 after paying a dividend of N0.98 per share compared with the N0.4 dividend paid in 2016. The growth in dividend continues for this company into 2018 with a dividend of N1.07 paid in June 2018. OKOMU OIL Currently trading at N82.00, Okomu Oil Palm Plc paid a dividend of N3.00 in 2017 as against its 2016 dividend of N1.50 resulting in a 100% dividend growth. Thanks to favourable government policy. This growth rate is exceptional and it does look like investors should expect such growth to continue in 2019

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Data

Federal government Eurobond Nigerian Sovereign Eurobonds yield which has been on a southward trend in the New Year maintained trajectory last week. Across all the tickers on the curve, yields contracted by c2.23bps as the FGN 21s and 41s dropped the most, shedding c2.89bps and c4.98bps respectively while FGN 27s has dropped the least so far, shedding 1.21 percent from its opening yield of 8.29 percent at the beginning of the week. With Foreign Investors returning to EM on the back of a dovish US economy and weaker dollar, political uncertainties remain on the front burner for Nigeria, especially with the controversial ousting of CJN Onnoghen by Muhammadu Buhari weeks back.

Corporate Eurobond Across board, yields on Nigerian Corporate Eurobonds fell by an average of c.84bps last week. Yields on Zenith Bank fell the most by c4.98bps as both Access II and UBA followed with a 2.71 and 2.68 percent decline respectively. On the other hand, Yields on Diamond Bank rose 6.58 percent with Access III remaining flat at a yield of 7.31

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Grants

Week Ahead

Grants and Fellowship Opportunities George Onyewuchi (Leverage Impact) Dalai Lama Fellowship 2019 Application Deadline3 February 2019 Grant Award- Fully Sponsored Fellowship to United States About the Grant – The award is year-long Fellowships to next generation leaders that are working on social change projects in local communities to address one or more of the following areas: mitigating economic disparity, diminishing violence,

gender inequity, improving cross-cultural and interreligious cooperation, facilitating new and more holistic educational approaches, and enhancing environmental sustainability. Website- www.dalailamafellows.org/#apply-1 World Press Institute’s Fellowship: Inviting Journalists across the World Application Deadline15 February 2019 Grant Award- Fully Sponsored Guided Tour Over 8 Cities in USA About the Grant –

QUESTIONS OF THE WEEK 1. Which apartment size is suitable for young couples, and which location?

2. How much should you spend on your child’s education?

Through an immersive program, you will learn how the U.S. founding principles of a free press and journalistic best practices help foster transparency and accountability of government institutions, businesses and organizations, including the most powerful ones. Website- www.worldpressinstitute.org/fellowships/program-overview/ National NGO Program on Humanitarian Leadership Application Deadline15 February 2019 Grant Award- Fully Sponsored Fellowship and Training About the Grant – The NNPHL curriculum will focus on three key areas that have been identified as critical to successful humanitarian program-

Monday 04 February 2019

(4th – 8th February, 2019) ming: Leadership, Coordination, and Strategic Vision. All participants will engage in a blended learning program, which will include in-person and online, distance learning. Website- www.concernusa.org/nnphl Call for Proposals for Innovative Renewable Energy in Africa Application Deadline26 February 2019 Grant Award- Full Execution of Solution About the Grant – Africa Opportunity Platform seeks to bring African businesses, startups, entrepreneurs and projects into a global marketplace allowing for project capital funding from investors all over the world. Websitewww.africaopp.com/contest/

Chart of the week

Commodities Wheat prices to be bullish in the near time due to arid weather conditions in Australia

Currency Naira to remain stable this week on the Investors and Exporters Window, following the commitment of the apex bank to sustain exchange rate stability.

Fixed Income Treasury bills worth N315.5 billion will mature this week in the secondary market.

Data Release The National Bureau of Statistics will release Telecoms Data: Active Voice and Internet per State, Porting and Tariff Information for Q3 and Q4 2018.

Source: Bloomberg Shoprite Last week, Shares of Africa’s biggest retail outlet Shoprite, slumped by 17%, the most since July 1999 after its first-half earnings dropped as much as 26%, and the stock is down 34% over the past 12 months, compared with a 10% retreat on the FTSE/JSE Africa Food & Drug Retailers Index. Shoprite in a trading statement released after the market close last Tuesday said it expects headline earnings per share (HEPS) including an adjustment for hyperinflation to fall by as much as 26 percent to 388.6-441.1 cents for the 26 weeks which ended on Dec. 30.

Events A Colloquium on Forex, Crypotcurrency, Stocks and Commodities will hold on Thursday, February 7 in Ikeja, Lagos. The conference aims to educate participants on how to trade forex, precious metals, stocks in local and international financial markets etc.

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NEWS YOU CAN TRUST I MONDAY 04 FEBRUARY 2019

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Insight

Buhari: The deception of a ‘converted’ democrat GLOBAL PERSPECTIVES

OLU FASAN

uhammadu Buhari, onetime military dictator, once said that he became a “converted democrat” after seeing the collapse of the Soviet Union. But he has internalised none of the key lessons from the collapse. For instance, the Soviet Union fell because of the failure of its communist ideology, but Buhari remains wedded to the same command-and-control philosophy. Second, the Soviet Union was dissolved following agitations for self-determination by constituent states, such as Georgia and Ukraine.Yet Buhari responds to such agitations in Nigeria with brutal force. Thirdly, the collapse of the Soviet Union was hastened by Mikhail Gorbachev’s policies of glasnost (“openness”) and perestroika (“restructuring”).But Buhari is averse to openness and viscerally rejects political restructuring. So, his claim of a Soviet-induced Damascene conversion is very dubious. But assuming Buhari, indeed, converted to democracy, the conversion was superficial, as evidenced by his authoritarian recidivism. Leopards never change their spots. Dictators who become “democrats” tend to, as someone puts it, “eat out democracy from within”. The London Times recently wrote that “strongmen operate according to their own rules”, which explains Buhari’s statement last year that “Rule of law must be subject to the supremacy of the national interest”, as he alone defines it. He prefers personal rule to the rule of law! In his recent article in the Financial Times, entitled “The rise of the populist authoritarians”, Martin Wolf, the newspaper’s chief economics commentator, referred to a book entitled “Authoritarianism: What Everyone Needs to Know”, written by Professor Erica Frantz of Michigan State University. According

to Wolf, citing from the book, personal dictatorships have the following features: a narrow inner circle of trusted people; installation of loyalists in positions of power; and the creation of security services loyal to the leader. Wolf went on to describe other characteristics of strongmen. First, they are populists, who argue that they alone can solve their country’s problems. They assert that their opponents are corrupt, and that experts, judges and the media must be distrusted. Voters are asked to trust in the strongmen’s intuition as they are a living embodiment of the people. Wolf concludes that such arguments are used to “justify the repression of ‘enemies of the people’, making genuine democracy impossible”. Think about the above features and characteristics. Do they not describe President Buhari? Of course, they do. His inner circle consists of “trusted people” who, as he said, have been with him through “trying times”. Virtually all the heads of Nigeria’s security and military agencies are from his ethnic group. Buhari is also a populist, who believes he is the only person who can solve Nigeria’s problems. For him, his opponents are corrupt, and experts, judges and the media are unpatriotic. Buhari’s supporters tell Nigerians to trust in his intuition and present him as a living embodiment of the people. And, of course, because he believes he is on a messianic mission, and because he believes he embodies the national interest, he justifies suspending the rule of law and undermining democracy to crush the “enemies of the state”, such as “corrupt” politicians and judges. Thanks to the Wolf-Frantz framework, we can now explain Buhari’s disdain for the rule of law within the context of a pseudo-democratic personal dictatorship or populist authoritarianism. I mean, only an authoritarian would suspend and replace a country’s chief justice weeks before a general election without considering the potential impact on the credibility of the election. Of course, if, as alleged, the Chief Justice of Nigeria, Walter Onnoghen, is corrupt, that’s terrible, and he can’t be above the law. But the issue is about constitutionality, process, timing and motives. A president must act constitutionally.

But even if President Buhari has the constitutional power to suspend the CJN, the legitimacy of his decision can still be undermined by flawed process, timing and motive. But the process of the suspension was flawed. The haste with which Buhari acted, within days, on the Chief Justice’s case, rightly raised concerns about procedural fairness. This was the same Buhari who took over a year before reluctantly suspending the former secretary to the federal government, Babachir Lawal, accused of corruption. Buhari said he acted on a court order in the Chief Justice’s case. But he has disobeyed several court orders, including those granting bail to the former National Security Adviser, Sambo Dasuki. The timing of the suspension was also wrong. If an incumbent seeking re-election removes and replaces, during the election, the chief justice who would ultimately decide post-election cases, it would be seen, first, as intimidation and, second, as replacing independent judges with potentially friendlier ones. Such perceptionscan undermine the credibility of the election. Of course, Buhari’s real motive is to weaponise corruption and make it the issue in the election. Indeed, his party, All Progressives Congress, said last week that, “This election is a referendum on corruption and integrity”, and APC’s slogan “Don’t let the treasury looters return to power”is designed to dissuade Nigerians from voting for Buhari’s main opponent, Atiku Abubakar, and his party, People’s Democratic Party, who are widely perceived to be weak on corruption. But in a bid to ride on the crest of an anti-corruption wave to win the election, Buhari is trampling on the rule of law and making genuine democracy impossible. Indeed, throughout his presidency, Buhari has made his anti-graft war a personal vendetta, using it to attack his opponents. In her book, Fighting Corruption is Dangerous, the former finance minister, Dr Ngozi OkonjoIweala, narrates how, in 2017, the Buhari government sent police officers to search her house for “illegal currency holdings”. However, when they found only bags full of old newspapers, a police officer asked Okonjo-Iweala’s son to tell his Mum “to

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Only an authoritarian would suspend and replace a country’s chief justice weeks before a general election without considering the potential impact on the credibility of the election

keep calm”, saying: “It was nothing but politics.” Recently, Dr Obadiah Mailafia wrote in his BusinessDay column about how the security services harassed him regarding a “missing $7billion” when he was Deputy Governor of the Central Bank, even though, as he explained, the Directorate he headed didn’t “handle money”. At one point, one officer asked him why he wouldn’t support Buhari and the APC “so that everything would be alright”. Of course, as everyone knows, several PDP leaders who were previously named and accused of corruption by the EFCC stopped being treated as corrupt immediately they joined APC and started supporting Buhari’s re-election campaign. That’s the iniquitous way Buhari is fighting his anti-corruption war: using it to extract loyalty from opponents. President Buhari’s double standards and hypocrisy are indeed beyond belief. Last week, the presidency said that Buhari’s public support for Governor Abdullahi Ganduje of Kano State, who was caught on video allegedly collecting bribe, didn’t diminish his stance on corruption. Really? How could a president fighting corruption publicly associate with and defend a governor caught on video allegedly receiving bribe? Last year, Buhari’s wife, Aisha, ordered the arrest of her ADC for allegedly collecting N2.5billion from politicians and business people in her name without giving the money to her. Nothing has since been heard about the case. Was Buhari’s wife lying? And if she wasn’t, who are the politicians and business people who gave the ADC the money? Buhari said he and his ministers are not corruption, but can they publicly declare their assets and the sources of their wealth? Lack of transparency and double standards are precisely why, despite nearly four years of Buhari’s much-hyped “anti-corruption war”, Nigeria’s position on the Transparency International corruption perception index hasn’t improved, ranking 144 out of 180, or scoring 27 out of 100, according to this year’s index? Continue online @ www.businessday.ng

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

Side effects of the Onnoghen shenanigans ECONOMIST

NONSO OBIKILI

nless you have been living under a rock recently you probably heard of the fiasco with the chief justice of Nigeria. A couple of days ago Justice Walter Onnoghen was “suspended” by the presidency with a new chief justice sworn in. Cue outrage by many. In democracies the executive branch should not be able to unilaterally remove the head of another arm of government, in this instance the judiciary. I am not a lawyer and therefore will not comment on the constitutionality of the action, although the speed with which the entire job was implemented raises a lot of red flags. Still, there are consequences for these types of actions on the economy mostly around the perception of Nigeria as an investment destination.

Of course, this is not the fist big government action that inadvertently put Nigeria in bad light. The MTN fiasco was just as bad in terms of perceptions of Nigeria. If you recall, MTN was fined, or asked to refund, about eight billion dollars for what looked like a simple bureaucratic matter that happened years earlier. The matter has since been settled with MTN refunding a minimal amount, maybe even to itself. The wording of the press release was not clear. Still, the damage had been done with another addition to the list of reasons why Nigeria is a difficult investment destination. Why does this all matter? Last week the United Nations Conference on Trade and Development (UNCTAD) announced global foreign direct investment trends for 2018. For Africa as a whole FDI increased by 18 percent to $40bn. For Nigeria though, FDI fell to a thirteen year low of $2.2bn.To put that into perspective, Nigeria accounted for just 0.1 percent of global foreign direct investment. Or to put it in other words, Nigeria is insignificant as far as international investors are concerned. In fact, Ghana, whose entire population can fit inside Lagos got 50 percent more foreign direct investment that Nigeria did.

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The silver lining, if there is any, is that this chief justice fiasco gives us the opportunity to demonstrate that we are country where the rule of law applies to all, regardless of position

When discussing events like the Onnoghen issue or the MTN fiasco we always tend to view things in terms of how they reduce FDI or reduce portfolio flows. The more difficult thing to conceptualize is how it further discourages those who were thinking about investing in Nigeria. Given that we are near the bottom of the investment ladder, the list of things we need to do to convince the rest of the world to take a chance on us just got longer. If we continue to shoot ourselves in the foot we probably won’t see FDI get that much smaller as it is already very low. But there are consequences, nonetheless. Given our economic position, no one needs to be convinced on the need for FDI, especially in sectors outside the oil industry. Analysis of the National Bureau of Statistics capital importation reports suggest that the lion share of FDI goes into banking and finance with little to labour-intensive sectors which, given our unemployment issues, should be our focus. If we are to reverse the trends in unemployment and aim for more inclusive growth then we need investments in sectors that employ people. If we take into account the quality of labour in terms of human capital then

we need investment in sectors that employ low-skilled workers. Domestic investment in these sectors is important but as we see from the data, the scale for foreign investment is much larger. Foreign investments also tend to come with skills and knowledge which are probably just as important as the investments themselves. There is a rich literature on the impact of foreign investments on knowledge spill overs and technology transfers. To cut the story short, we lose a lot by not attracting foreign investments and we should be doing everything in our powers to change that. The silver lining, if there is any, is that this chief justice fiasco gives us the opportunity to demonstrate that we are country where the rule of law applies to all, regardless of position. If we are able to resolve this issue amicably then it shows the world that our judicial system is a bit more credible, and that no one is above the law. If it all gets swept under the carpet and we carry on as if nothing happened, then that’s another nail in our perception coffin. Dr. Nonso Obikili is Chief Economist at Business Day.

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