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news you can trust I **WEDNESDAY 04 JULY 2018 I vol. 15, no 89 I N300

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BD INVESTIGATIVE SERIES

Nigeria’s cocoa processors squeezed as debts hit N50bn

Josephine Okojie

espite the Federal Government’s export drive initiative, Nigeria’s cocoa grinding has slumped to less than 20 percent of installed capacity of processors, as a N50billion debt burden cripples activities in the subsector, BusinessDay investigations have shown. The once thriving industry that once had eight cocoa processing factories with a combined installed capacity of 150,000MT, now has only five factories functional with a combined utilisation capacity of less than 30,000MT per annum. Some of the challenges faced Continues on page 37

World Cup Result Sweden 1 - Switzerland 0 Colombia 4 - England 5

industry operating less than 20% capacity

President Muhammadu Buhari welcoming President Emmanuel Macron of France at the Presidential Villa in Abuja yesterday. With them are: Gov Ibikunle Amosun of Ogun State (r) and Minister of Foreign Affairs, Geoffrey Onyeama (l) / NAN

overnor of Osun State, Rauf Aregbesola, has laid the cornerstone for a N2.7 b i l l i o n s h o p p i ng c o mp l e x

Dangote Cement issues N50bn in commercial papers MICHEAL ANI & DIPO OLADEHINDE

frica’s largest Cement producer and Nigeria’s largest listed company, Dangote Cement plc has issued N50 billion Series 1 and 2 Notes under its N150 billion Commercial Paper Programme which will be

Continues on page 37

Nigeria gets $475m grants from France Tony Ailemen, Abuja

igeria and France Tuesday signed agreements for the provision of development grants to fund various projects worth $475 million, about Continues on page 37

Aregbesola lays foundation of N2.7bn Osun Shopping Mall in Osogbo REMI FEYISIPO

fgn bonds

Treasury Bills

Inside

... as state signs deal to build 30MW solar power farm Glencore facing (Osun Mall) that will comple- generate 30MW of electricity. sits on a 5,000 square metres money laundering ment the modernisation of Speaking at the corner- of land is a private venture of Osogbo, the state capital, the stone laying ceremony of the Independent Shopping Mall investigation in US same day he signed a deal Mall in Osogbo, the governor for Nigerian deal P. 2 with a private company to said the Shopping Mall, which Continues on page 37

2 BUSINESS DAY NEWS

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Nigeria’s June oil exports fall most in 1 year on supply disruptions … export stood at 1.51m barrels per day ISAAC ANYAOGU

xport of Nigeria’s crude suffered the most decline in a year last month as major crude grades fell to 1.51m barrels per day (b/d), from 1.55m b/d in May largely due to disruption to Shell’s Bonny Terminal. Vessel tracking data compiled by Bloomberg shows that major crude grades including Akpo, Agbami, Bonga, Erha, Escravos, Forcados and Qua Iboe saw huge declines in production. This decline is a fallout of the May 17 force majeure on exports of Bonny Light crude and a similar disruption to the Forcados terminal when it was shut on May 25 following discovery of leaks on the Trans Ramos Pipeline in the swamps of the western Niger Delta. Oil companies often declare force majeure, a legal clause that allows cancel or delay deliveries due to unforeseen circumstances, in situations where contract obligations may not be met. The biggest decline came from Bonny Light and Brass grades which lost 45,000 b/d from the 132,000 b/d recorded in May and 56,000 b/d from supplies in May respectively. Agbami crude grade export fell from 220,000 to 197,000 b/d, Erha lost 3,000 b/d to from 95,000 b/d in May, Escravos lost 21,000 b/d fall from 169,000 b/d, Forecados declined from 195,000 b/d to 155,000 b/d while Qua Iboe saw supply slip from 253,000 b/d to 184,000 b/d. Akpo condensate shipments fell to 95k b/d from 123k b/d in May. As a result of these, combined

crude and condensate exports fell to 1.603m b/d from 1.677million. Ayodele Oni, energy lawyer at Bloomfield law firm says the disruptions may not have material effect on Nigeria’s crude revenue due to expected return to full capacity in the short term. Oni told BusinessDay by phone that there are positive things happening including arrangements by the Nigerian National Petroleum Corporation (NNPC) and some oil companies to replace wells producing below their capacity. This is expected to help grow production. The NNPC in a release on Sunday said it had finalised a crude oil production financing deal it negotiated with Schlumberger for the Anyalu and Madu oil fields under Oil Mining Licences (OMLs) 83 and OML 85, offshore Nigeria. It said approval was given over the weekend in London with the execution of the final contractual agreement between it and the company under a joint venture agreement it has with First E&P. Under the agreement, the NNPC said Schlumberger would provide $724.14 million out of the required project cost of $1.082 billion while the balance of $358.79 million would be funded with cash flows generated by the project. According to the NNPC, the Anyala and Madu fields were projected to have 193 million barrels of crude oil and 0.637 trillion cubic feet of proven gas reserves with production plateau of 50, 000 barrels of oil per day (bd) and 120 million standard cubic feet of gas per day (mmscuf/d).

Wednesday 04 July 2018

BD DEEP VIEW

Julius Berger: Is construction giant’s cyclical rebound sustainable? DIPO OLADEHINDE

fter being at the receiving end of Nigeria crushing economic recession which started mid-2015, the country’s largest constructions giant Julius Berger will be hoping recent introduction of a new technology to the construction of roads in the country will also cause a boomerang effect on the company financials performance in 2018. CEO of Julius Berger Wolfgang Goetsch recently announced it has introduced a new technology to the construction of roads in the country which would grind the old asphalt and introduce more lasting and enduring roads with an asphaltic concrete. Last year ended on a positive note for the company as it recorded a 2 percent revenue increase from N138 billion in 2016 to N141 billion in 2017 and a profit before tax of N3.7 billion

in 2017 compared to N1.4 billion in 2016. Also, Earnings per share (EPS) for the group increased from N3.36 in 2016 to N3.61 in 2017 as the company also declared a final dividend of N1 per share. BusinessDay investigation revealed that despite the country’s exit from recession Julius Berger is yet reach the heights attained before 2015 as its full year 2017 revenue declined by 28 percent to N141 billion compared to N196 billion attained in 2014 as its Market capitalization also dropped from N80 billion in 2014 to N36.9 billion in 2017. Return on assets (ROA) which is a financial ratio showing the percentage of profit a company earns in relation to its overall resources increased slightly from 1.76 percent in 2016 to 1.79 percent in 2017 however it crashed to 0.70 in 2015 from the heights of 3.41 percent in 2014. Also, Return on Equity (ROE) the measurement of a company’s profitability which reveals how

much profit a company generates with the money shareholders have invested, reduced slightly from 17.91 percent in 2016 to 17.25 percent but also failed to reach the peak of 35.82 percent in 2014. EBITDA margin, an assessment of a firm’s operating profitability as a percentage of its total revenue dropped in 2017 to 11.74 percent compared to 14.21 percent in 2016. Net profit margin which calculates the percentage of profit a company produces from its total revenue increased to 3.36 percent in 2017 from 3.19 percent in 2016, however it dropped to drastically to 1.31 in 2015 from the heights of 4.19 percent in 2014. “The delay in the passage and implementation of Nigeria’s budgets might have played a role in this as majority of Julius Berger contracts comes from governments,” Ayodeji Ebo, CEO at Afriinvest securities Limited said. Continues on wwwbusinessday online.com

Glencore facing money laundering investigation in US for Nigerian deal ISAAC ANYAOGU

wiss-based commodities trading firm Glencore which has featured consistently on Nigeria’s crudeterm lifting contracts for over a decade is being investigated in the United States for possible corruption and money laundering for its activities in Nigeria, Democratic Republic of Congo and Venezuela. The world’s biggest commodity trader admitted Tuesday that it has been subpoenaed by the U.S. Department of Justice to produce documents with respect to compliance with the Foreign Corrupt Practices Act and United States money laundering statutes sending its shares down 10 percent to a two year low according to Bloomberg data. “Glencore Ltd, a subsidiary of Glencore plc, has received a subpoena dated 2 July, 2018 from the US Department of Justice to produce documents and other records with respect to compliance with the Foreign Corrupt Practices Act and United States money laundering statutes. The requested documents relate to the Glencore Group’s business in Nigeria, the Democratic Republic of Congo and Venezuela from 2007 to present,” the company said in a release. It further said that it is reviewing the subpoena

… shares drop 10% and will provide further information in due course as appropriate. Last year, the company was named in US court processes that suggested involvement in paying bribes to fund Diezani AlisonMadueke, former Petroleum Minister’s luxury lifestyles in exchange for lucrative oil deals. Court documents filed in Houston by the US Justice Department in the assets forfeiture proceedings against former Nigeria’s former petroleum minister, Diezani AlisonMadueke, and her business cronies, Kola Aluko and Jide Omokore, revealed that Glencore, along with other companies Taleveras and Arcadia paid $1.2 billion into Kola Aluko’s account in Switzerland, proceeds from crude oil lifted from Aluko and Omokore’s company. Notwithstanding, Glencore has consistently featured on NNPC’s crude term lifting contracts including the list for the current year, which the Corporation later disowned. But even the NNPC’s crude lifting operation is fraught with allegations of corruption. NNPC sells crude oil on behalf of the Nigerian government, holds stakes in various oil leases on behalf of the government but is often accused of not remitting the full value of oil and gas sales to the Federation Account.

L-R: Paul McGrath, chairman/managing director, ExxonMobil Nigeria; Nigeria’s minister of state for petroleum resources, Ibe Kachikwu; group managing director of NNPC, Maikanti Baru, and OPEC secretary-general, Muhammad Barkindo, at Shell Stand during the opening of the 2018 Nigeria oil and gas conference and exhibitions in Abuja on Tuesday. NAN

Moody’s sees Africa – China trade threatened by shift to consumption growth Omobola Adu & David Ibidapo

he trade volume of about $170 billion between China and Africa in 2017 makes China the largest trading partner of Africa. According to China customs statistics, China-Africa trade grew from $114 billion to $170 billion on a year-to-year basis representing a 49 percent increase. However, the shift in focus from investment induced growth to consumption induced growth by China is likely to cause the trade volume with Africa to flatten. China’s obligation to quality of growth and technology will cause African exporters of Oil

and ferrous metals to see demand for their products stagnate as the consumption pattern of Chinese firm’s changes from primary manufacturing commodities to being a leader in the digital market and in the production of advanced manufacturing goods. Other factors, such as increased international competition from commodity products like the U.S. Shale oil will further put a strain on the exports of oil by African countries like Angola, Congo and Nigeria thereby reducing their market share. However, the report from Moody’s suggests that exporters of non-oil and non-ferrous metals will likely experience increased demand for their commodities. This can be linked to The Made in

China 2025 initiative to make China one of the leading advanced manufacturing economies, which will increase copper demand to an additional estimated value of 232,000 tonnes. If this viewpoint materialises African countries like Congo and Zambia are likely to benefit as one of Africa’s largest exporters of copper to China. Although, major oil exporting countries like Angola and Nigeria will likely see a reduction in their trade volume causing income to decline, the expected decline can be offset by changes in oil price. BusinessDay expects that Nigeria’s trade deficit with China is likely to widen as the demand for oil by the worlds second largest economy continues to decline.

Wednesday 04 July 2018

BUSINESS DAY

Wednesday 04 July 2018

BUSINESS DAY

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Wednesday 04 July 2018

NEWS Recyclable waste prices up by double-digit 2019: IBB likely to endorse Atiku for president ... fingers point at monopoly of dumpsites CHINWE AGBEZE

rices of recyclable wastes such as PET bottles, nylon, copper, aluminium and bronze have gone up significantly in the past 18 months. This is due to the monopoly of dumpsites by individuals who placed restrictions on sites thereby preventing scavengers from accessing the sites to source for waste products. ‘‘Most of the dumpsites have been contracted out to people to manage. The managers prevent people from gaining access into these sites,’’ Cynthia Saka, CEO of T.cynthia Nigeria Limited, a 29-year-old recycling company in Lagos, said. ‘‘They (managers) do the collection and crushing all by themselves and also sell to end-users. We buy whatever waste people bring to us but we also have people who go round to pick waste for us,” Saka said. BusinessDay findings in Lagos metropolis reveal that the prices of recyclable wastes are going up markedly, as a

kilogram of nylon, which sold for between N40 and N45 in late August 2016, now goes for between N100 and N150. As of Friday, 1kg of PET bottles was between N30 and N40, as against N10 in August 2016. Similarly, 1kg of bronze increased to between N700 and N1,000, from N300 in August. A kilogram of aluminium now sells for N150-N250, from N100 within the same period. ‘‘I have ready buyers, but getting these products is not as easy as it was before,’’ Bashiru Ahmed, a scavenger in Lagos, said. ‘‘Three days ago, I sold 329kg of bottles and I’m out again trying to gather some.’’ However, Mohammed, another scavenger prefers to trade some of his goods outside the country to make more profit. ‘‘Whenever I pick bronze, I kept them and when I have lots of it, I take them to Cotonou and sell at N2,300 N2,500 per kilogram,’’ he said. According to Lagos Waste Ma n a g e m e n t Au t h o r i t y (LAWMA), Lagos State generates about 13,000 metric tons of waste daily and recyclers say only 10 percent of the

waste is being recycled. In 2015, the global plastic recycling market was valued at $31.5 billion, according to a report by Transparency Market Research, and it is expected to reach $56.8 billion by 2024. ‘‘We clean, treat, crush and palletise plastics and sell to Sumo plastics, Dana plastic and Chinese companies who use them to produce shopping bags, bowl, buckets, plastic components in travel bags and other plastic products,’’ Amaka Raji, a recycler in Lagos, said. Some recyclers who spoke with BusinessDay listed epileptic power supply, capital and access to raw materials as their major challenges. ‘‘We spend a lot of money on diesel to power our generator because power supply is not reliable,’’ Raji said. ‘‘We don’t separate our waste in Nigeria and it’s usually a huge problem cleaning wastes that are mixed up. With dirty products, we end up running the waste four times in the machine instead of once. If we dispose our refuse properly, we won’t be asking for supply.’’

INNOCENT ODOH, Abuja

ormer Vice President Abubakar Atiku’s bid to lead Nigeria as president in 2019, received a massive boost at the weekend as the Turakin Adamawa received strategic support from former military President, Ibrahim Babangida popularly called IBB. A source, who was privy to the meeting, told BusinessDay on Tuesday that the meeting in Minna, Niger State, was very “fruitful in furtherance of Atiku’s continued engagements and consultation, which hasfurther strengthened thepresidential bid of the former Vice President.” The source added that the meeting with IBB has the potential to draw all other democratic forces angling to unseat President Muhammadu Buhari in 2019, especially the coming Grand Coalition of political parties and interest groups, which are said to be looking at Atiku’s direction to provide the political clout needed to oust what he called the “the unbelievable incompetence and clannish leadership of President Buhari and

the ruling All Progressives Congress (APC).” “Some of those angling for grand coalition have started looking at the direction of Atiku and I think it is the culmination of the interplay of forces, and the preponderance of opinion both of politicians and common people is that we are desirous of change and the person best wired to provide leadership is Atiku,” he said. The source stressed that Atiku’s appeal cuts across regional and party lines and all manner of diversities adding that “Atiku is not a man you can pigeonhole in just one enclave; he is suited for the general desire of the Nigerian people to extricate the country from the backwardness the APC has plunged Nigerian masses.” On the recent visit of another political heavy weight, Rabiu Musa Kwankwanso to Atiku, the source noted that the politics of the former Governor of Kano and his massive followership across the country is a plus to the Atiku presidential campaign, adding that Kwankwaso has the intention to back Atiku’s candidature in 2019.

When reminded that Kwankwaso isalso said to be eyeing the Presidency and could pose as a formidable rival of Atiku, the source noted that “Atiku does not see Kwankwaso as a rival, he can provide support for an Atiku candidacy in the general election.” On the widely reported feud between former President Olusegun Obasanjo and Atiku, the source dismissed the purported feud is a “media creation”. He said “politicians don’t make enemies, they do not discountenance another. I think Obasanjo has realised the direction the pendulum is swinging and as a man who truly loves and has passion about Nigeria, he is also desirous to cast his lot with Atiku, who is best suited and best wired to extricate Nigeria from the pit into which the Buhari administration has thrown Nigeria politically, economically and socially.” Atiku also met former President Olusegun Obasanjo at a recent function at the Gusau Institute on “A New Era for China-Africa Cooperation,” in Abuja, which pundits said is a boost for Atiku’s campaign for 2019.

AU Heads of Govt Meeting: Obaseki, Okonjo-Iweala mobilise support for anti-corruption fight

do State governor, Godwin Obaseki, and the former coordinating minister of the economy, Ngozi Okonjo-Iweala, have made a strong case for Nigerians to support the effort of President Muhammadu Buhari to stamp out corruption from the country. In separate interviews on the sideline of the justconcluded 31st Ordinary Session of the Assembly of Heads of Government of the African Union in Mauritania, with the theme: ‘Winning the Fight against Corruption, A Sustainable Path to Africa’s Transformation,’ Governor Obaseki and the former minister urged Nigerians to back President Muhammadu Buhari’s anticorruption fight for a prosperous Nigeria. According to Obaseki, “The African continent has not given up hope on us because they see in our leader someone who has the willingness to tackle this problem, which we have as a country and so I urge Nigerians to understand that it is not a personal battle.” He emphasised that the fight against corruption “should not be a solo effort. It is about us, as we have one more opportunity as a country to deal with this cancer, this cankerworm that has held us down.”

Okonjo-Iweala said: “We are here at the African Union because the AU is very concerned about corruption on the African continent. Obviously, the body has asked our President to lead the fight against corruption. What that means to me is that in Nigeria we also need to strengthen our effort, work very strongly to make sure that we set an example. “I think all of us should be involved. I want to repeat that fighting corruption is a task for every Nigerian. I believe that majority of Nigerians are honest, hardworking people who just want to get on with their lives. So we must not allow the majority to be overtaken by the minority of people. We must fight them, we must put in place the systems and these should be done by all of us.” However, the governor enlisted the support of the AU in the state’s industrialisation drive, in a spirited effort to attract Foreign Direct Investment (FDI) to the state. The governor, who was part of Nigeria’s delegation to the 31st Ordinary Session of the Assembly of Heads of State and Government AU, stressed the friendly investment climate in the state and the support structures put in place by the state government to promote and protect investments.

Front Row, L-R: Gbenga Oyebode, former chairman, Access Bank plc; Pascal Dozie, facilitator, his wife Chinyere; Julius Adelusi-Adeluyi, chairman, Juli Pharmacy plc, and Stella Okoli, founder/CEO, Emzor Pharmaceutical Industries Limited, Back Row, L-R: Michael Moquette, chairman of the advisory board, Africa Wealth Partners; Martin Emodi, founding partner, and Chiekezi Dozie, executive director, Kunoch, during the family business leaders roundtable in Lagos, yesterday. Pic by Olawale Amoo

Nigeria security architecture must be reviewed - Saraki SIKIRAT SHEHU, Ilorin

enate president, Bukola Saraki, has stressed the need to review security architecture of Nigeria. Saraki, who lamented incessantkillingsinpartsofthecountry, especially the recent wanton destruction of lives in Plateau State, said the unfortunate incidents require drastic action from both the National Assembly and the Presidency. The Senate president spoke withjournalistsinIlorin,theKwara State capital, after an assessment tour of some ecological prone areas in the metropolis at the weekend. According to Saraki, the National Assembly under his leadership would not shy away from

its responsibilities, “As you know very much so, that the National Assembly under my leadership many months ago had seen the danger. We had called for security summit to address the issue of security architecture. “We had seen the need for us to review the security structure. We had invited service chiefs on the matter. You are all very aware that some service chiefs decided in their own wisdom that there is no need for them to work with the National Assembly to address these issues. “We are beginning to see the wisdom in some of the things we weresaying.Wehavealwaysstood for what is believed is good for this country. We always politicise everything in this country. “There is no society that con-

tinues to experience incessant killings as it is and then we think it is business as usual. It requires drasticaction.Itrequirescollective collaboration of all agencies and all arms of government for us to be serious. “WeonourpartattheNational Assembly will not get frustrated but we have been sounding this alarm. A society where gunmen could go in, shoot for seven hours and nobody is caught. That is not a normal society. ”As we resume, we will continue on our part as parliament to ensure that those who have the responsibility of protecting lives and property are accountable to the people. It cannot continue it is not something to be politicised. If somebody is not capable he should give way for others that are

competent. “We have heard that security personnel are working at cross purposes. A is not talking to B, and B is not talking to C. They don’t attend meetings jointly. Things need to be done. “Let us forget about party these are people’s lives. It is not about the Speaker of House of Representatives or the Senate President it is about Nigeria. The sooner we see that and address this the better. More of these could have been prevented since we have been shouting about this. “Until we sit down all of us both the presidency and legislature to thrash out the issues. We must discuss the issues. Something needs to be done. Something is wrong. This cannot continue.”

Wednesday 04 July 2018

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NEWS

FG targets 1bn barrel annual oil production to shore up revenue

… minister leads efforts to address concerns of high oil production costs FRANK UZUEGBUNAM, OLUSOLA BELLO & HARRISON EDEH, Abuja

ederal Government has revealed plans to shore up oil revenue resources by increasing annual oil production to 1 billion barrels per day, according to Emmanuel Ibeh Kachikwu, Nigeria’s deputy minister of petroleum resources. Kachikwu, while speaking at the ongoing Nigerian Content Seminar in Abuja, said the Federal Government was determined to increase production and stabilise the economy, while also taking advantage of stability offered by the Organisation of Petroleum Exporting Countries (OPEC). The minister said Nigeria had 36.18 billion proven reserves of crude oil and condensates, as of first quarter of 2018, adding, “Our current production level of 2.15 million barrels per day is encouraging us for a production that is stable.” Speaking on the increased global demand in oil production, Kachikwu said the truth was that oil demand continued to increase, saying, “When we talk about electric cars, it only represents 2 percent of mobility globally, and oil demand continues to increase.” He further urged oil produc-

ing African countries to firm up regional oil markets, while also focusing on global participation by taking advantage of their regional strength. On the current efforts at revamping Nigeria’s refineries, he said, “We have continued working on refineries which has continued to be a big challenge for all of us. NNPC is currently with three or four refineries that the government owned, hoping to get the sign off financial from what was needed to commence operations.” On the updates of the modular refineries, the minister said, “We have made a lot of successes on the modular refinery stage, and out of the 40 that were licensed, 10 have commenced work, and have started construction and we are expecting them to crystallise their production, hopefully by the next quarter of next year.” He pointed out, “If there is one legacy we would leave for our people, it would be to ensure our refineries are working optimally, while dissuading exportation of raw crude from Nigeria. It takes time and lots of financial commitments, but we are very committed to that.”

While speaking on the commercialisation of flared gas, “Our works on gas flare reduction and LPGS are also great. It is now reduced to 9 percent, which was 25 percent when we came in. “Flare is an issue. It should not be a tolerable index, it should be non-existent index. We have set the 2020 time line to exiting flare. Statistics continuously show that we are exiting flare, but we have also directed oil companies in Nigeria to find third party firms that could help exit flare and entrench commercialisation.” Kachikwu, who also spoke on government’s efforts in addressing concerns of production costs, said, “We are determined on reducing cost of oil production.” While raising concern on high cost of oil production, he said the Federal Government was determined to ensure lower prices working with international oil companies. “Oil production in Nigeria continues to be extremely high, and one of the highest among quite frankly some OPEC countries. It is important that our focus on dragging down cuts must not just be driven by the government and other stakeholders, but must be driven by business sense,” he said.

BUSINESS DAY

TEXEM discusses what it takes to build Edo, security agencies to go after fake high performance organisations recruitment agency eaders in Nigeria under- is used on every ATM card

stand their roles as drivers of growth and excellent results. But in this challenging socio-economic landscape, there is an urgent need for them to lead differently to achieve their organisational goals efficiently. Based on this increasingly turbulent and roller-coaster paced operating landscape, Texem presents its forthcoming programme designed to equip executives with the requisite skill sets to develop relevant, essential and actionable frameworks for driving organisational and people capabilities, which will in turn facilitate innovation as well as enhance financial and operational performance. Rodria Laline (visiting professor of Harvard, Insead and IESE, and chair of Intrabond Capital) will lead the discussions at the forthcoming Texem programme in Lagos. Laline has been CEO of global research and development collaborations with IBM, ING, Hewlett-Packard, Digital Equipment Corporation, Honeywell Bull, Elsevier Science, Oracle Corporation, Siemens, and Philips. She was co-founder of the Global Chipcard Alliance and Board member of the Open Software Foundation and developed the intellectual property that

globally. The programme is titled Developing and Leading High-Performance Organisations for Superlative Results, and will hold on July 18 and 19, at Eko Hotel and Suites, Victoria Island, Lagos. Discussions will be around building and nurturing organisational culture for success, positioning companies for future success by developing a growth strategy and honing long-term strategy, the role of the leader in driving successful change and stimulating innovation, developing and disseminating the organisational vision and inspiring focus in turbulent times and CSR as a source of generating a competitive edge and sustaining it Gbenga Adebayo, CEO, Communication Network Support Service Limited, said he enjoyed the “training particularly the areas talking about how to turn around business in a recession. It has been educative, informative and also interactive. I recommend this programme to any executive who wants to turn around his business in time of crisis. And anyone who wants to meet people of timber and calibre should participate in Texem programmes.”

do State government has distanced itself from the illegal activities of a consulting firm, KAI Environmental, which has been collecting money from unsuspecting job seekers in the state with a promise to offer them jobs in the Ministry of Environment and Sustainability. Special adviser to the governor on media and communication strategy, Crusoe Osagie, said the state government was working with security organisations to bring the perpetrators to justice. “We received a report that KAI Environmental, a consulting firm, has been defrauding unsuspecting Edo people and residents by posing as a recruitment agency for the Edo State government. “We have informed the police and other relevant security agencies to arrest the people behind the scam and bring them to justice,” Osagie said. He explained that “EdoJobs is the only platform that recruits workers for the Edo State government,” and advised that “any other company that parades itself as a recruitment body or company for Edo State is out to scam job seekers.”

Police teargas angry National Assembly protesters OWEDE AGBAJILEKE, Abuja

Babatunde Fashola, (m), minister of power, works and housing and guest lecturer; Benjamin Chukwuma Ozumba (r), vice chancellor, University of Nigeria, Nsukka; Eze Kingsley Emeka (l), president, Faculty of Civil Engineering Students Association, presenting a souvenir to the minister shortly after delivering the Special Herbert Macaulay Memorial Lecture organised by the University of Nigeria, Nsukka at the Princess Alexandra Auditorium(P.A.A) Nsukka, Enugu State.

FG commits to changing face of aviation in Nigeria IFEOMA OKEKE

inister of state for aviation, Hadi Sirika, has restated Federal Government resolve to change the face of aviation in Nigeria by putting in place all necessary facilities that will enable operators in the system perform to their optimum. The minister said this while inaugurating a Project Team for the construction of the proposed new office complex and staff quarters for the Federal Airports Authority of Nigeria (FAAN) in Abuja. According to Sirika, it is an irony that the Authority that has the mandate of building and managing airports in the country does not have a befitting

office complex in the federal capital, just as its staff lack adequate and befitting residential quarters. This, he said, has had the tendency to impede on their performances. He said the decision to construct the office complex and residential quarters through the Public Private Partnership (PPP) arrangement was to ensure that what would be delivered would be of quality representing value for money. Addressing the Project Team members, the minister charged them to ensure that the most suitable designs for the office complex and staff quarters were respectively delivered. Among the team’s terms of reference is to identify and confirm the proposed loca-

tion for the office complex and staff quarters, and recommend means through which the Public Private Partnership can be fast-tracked. He disclosed that the team also hasdthe mandate to source for, and identify prospective PPP partners, and to also consider an unsolicited proposal by a firm, Elysium Integrated Development Company to invest $27 million in a mass transit ground transportation structure at the Murtala Muhammed Airport, Lagos. He urged the team to be diligent and speedy in carrying out the assignment, and directed that his office be briefed on a weekly basis on the progress of the task. Responding, Saleh Duno-

ma, managing director, FAAN, and leader of the project team, said the team identified with the minister on his commitment towards addressing the infrastructure gaps in the sector, and promised that the team would be meticulous and swift in carrying out their assignment. Dunoma said the team members view the assignment as another call to national service, which demanded commitment and efficiency. Membership of the team is drawn from the Ministry of Transportation (Aviation), FAAN, the Infrastructure Concession and Regulatory Commission (ICRC), Federal Ministries of Finance, Justice and Budget and Planning.

rmed policemen on Tuesday teargassed protesters at the entrance of the National Assembly in Abuja while trying to forcefully enter into the parliament. The protesters in their hundreds were protesting against constituency project in the national budget. Trouble started after some of the protesters allegedly tried to force their way into the Complex after they stopped motorists and pedestrians at the main entrance from accessing the building. Some staff of the National Assembly caught in the face-off were affected. Angered by the development, Barnabas Gemade (APC, Benue State) raised a Point of Order on the floor of the Senate, saying no amount of blackmail would stop the National Assembly from approving money for constituency projects. He said unlike heads of Ministries, Departments and Agencies (MDAs), senators now “go with cap in hand to beg ministers to finance their constituency projects. This is shameful and this has to stop.” The deputy Senate president, Ike Ekweremandu, who blamed the protest on unemployment and poverty, supported his position. Ekweremandu said: “There is unemployment in Nigeria. This has given people the opportunity to create jobs. That is why we now have professional beggars. What they do is just to approach a government official who doesn’t like the Senate. He will ask for funding and they will collect N1,500 for each protester. “In the end, they give only N500 to each protester. I feel

sad when I see these people at the gate protesting. They protest what they don’t believe in. And this protest against constituency projects is very embarrassing.” Other lawmakers who spoke in favour of Gemade’s motion include: Aita Aidoko (PDP, Kogi), Kabiru Marafa (APC, Zamfara) and Isah Misau (APC, Bauchi). In his remarks, Senate president, Bukola Saraki, said the sponsors of the protests were known, but however failed to name them. In its reaction, a pro-democracy group, Centre for Credible Leadership and Citizens Awareness, said sponsors of the protest do not mean well for the country. According to the group, the protesters are determined to plunge Nigeria into a state of fascism or totalitarianism. The group in a statement signed by its chairman, Gabriel Nwanbu, said: “It is most unfortunate that a group of hoodlums seen fighting over a stipend of N2,000 distributed by their sponsors who obviously do not mean well for Nigeria and Nigerians by trying to mutilate the high integrity of the National Assembly which is practically the only arm of government that is still vibrant, defending Nigerians, asking pertinent questions on the checks and balances of government as provided by the doctrine of checks and balances in any democratic state. “It is most unfortunate that despite the gruesome killings of Nigerians going on in Taraba, Benue, Nasarawa, Plateau, Adamawa, Zamfara, Delta, etc. and kidnapping all over the nation, the sponsors of the faceless group are not asking the right questions, but has the National Assembly as its point of attack.”

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Wednesday 04 July 2018

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COMMENT SMALL BUSINESS HANDBOOK

EMEKA OSUJI Dr Emeka Osuji School of Management and Social Sciences Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

f late I have been writing on how difficult life must have become for microfinance institutions in some parts of Nigeria, especially the war-ravaged areas of the northeast. I had wanted to shift my focus to some protective measures that operators may need to adopt as they continue to support the active poor in such areas. However, that is not to be, at least for this week because while I was researching the subject matter, the issue of Nigeria becoming the headquarters of poverty exploded. The usual angry comments that characterize such reports began to fly in the media towards the Brookings Institution for stating the outcome of their research, an outcome, by the way, that is not so hard to validate or disprove with facts. I therefore decided to say a few words on that new position, into which according to the Brookings Institution, Nigeria was recently promoted – headquarters of world poverty. Nigeria is a country of incongruences, contrasts and perplexities. It

EMEKA GBULIE Gbulie, a public affairs commentator, wrote from Abuja

he desperation and rate at which this government is doing everything to save face before election is alarming. This rush we didn’t see after President Buhari spent 6 months before appointing ministers, calls for worry and concern We cannot make progress as a nation if we continue to rely on politicians and governments who make progressive decisions for the benefits they will get in return. Only recently, and as a result of the wide criticism that greeted the President’s description of the Nigerian youths as lazy, the President hurriedly signed the Not too young to run bill. While many see this as commendable, some still believe that the president should have signed and shown his commitment to the bill by not contesting next year’s election considering his age and achievements which to many, is below par. The President also took a very commendable but also ‘hasty’ decision, when he announced June 12 as Democracy Day and posthumous conferment of national honours on Abiola , the

Wednesday 04 July 2018

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Poverty in Nigeria and the Brookings Institution is only in Nigeria you find people fighting people who give them advice. In the area I come from, they say that sensible people do not respond to advice beyond a word of appreciation to the giver. That may sound like an age-old or piece of wisdom but I think some of its values still remain, and may never be completely wiped out by modernity and the effects of a changing world. I believe in the value of a second opinion and it may be wise to consider every piece of advice as a second opinion, which can be laid over the opinion we already hold to see if there is a confluence. I understand the irritability of some public officials, whenever someone tries to say in public what they know and keep private. They know that the things we are doing to reduce poverty are not working. The things that would make any country poorer by the day are all present here. The population is growing faster than the GDP, more people get thrown out of their farms into IDP camps every day. And public resources are openly stolen by public officials. Farmers can no longer farm; from Kaduna to Enugu and Akure, and therefore cannot feed themselves. Yet, we disagree with those who are gracious enough to do research on us to find solutions. What is the result of our own research? The financial condition of the research institutes will tell you the future we are creating. In any case, what is so big about being the world headquarters of the abject poor for a country that runs an extractive economic

And I think it is preposterous for Nigerian leaders to be mad on hearing that our socio-economic conditions have gone down so much so that we could host the largest number of the abjectly poor in the world. It means they don’t get the message system and puts back little or nothing to grow the economy? Or one that makes no cars but uses Range Rovers and Land Cruisers as official cars for its unproductive officials. Or one where the national budget has become a ploy for the transfer of public resources to the private coffers of those trusted with the public weal through phony community empowerment programmes foisted on the budget. When India held that record (assuming without conceding that they have hived it onto us) did the world boycott them? Did Nigeria tighten immigration checks on Indians who flow in, father, mother, children and cousins piling into tiny flats in Ilupeju and other cities? We did not stop sending our government officials whose kidneys have been damaged by the luxuries of public office. Instead, we embraced them the more and as though in a sweep of solidarity, provided them the foreign currency support against

poverty. Now, if they have found a fall guy in Nigeria and passed on this undesirable mantle so what? I thought the challenge should rather be to see what went wrong. And trust me, you won’t look too hard to see the foot prints of the large animal that stepped on our ankle bones, making it impossible for Nigeria to run away as India tried to dump the toxic waste (poverty headquarters) on us. And I think it is preposterous for Nigerian leaders to be mad on hearing that our socio-economic conditions have gone down so much so that we could host the largest number of the abjectly poor in the world. It means they don’t get the message. Even without a Brookings report, what did you expect was happening to poverty as your citizens, in their thousands, scurry to safety in IDP camps as refugees almost daily, leaving behind every iota of their economic activity? What did you expect when those villagers, yet to be sacked by herdsmen are too afraid to go to their farms? It is a sign of the times really that anyone would imagine that the palliative measures we have been administering would douse the mind-bugging fire of destitution ravaging the country. Every piece of advice or even adverse comment ends up making the receiver stronger. Assuming (without ever suggesting) that the Brookings Institution, a wellacknowledged non-profit decided to lie that Nigeria has overtaken India in abject poverty, should our reasoned reaction be a rejection and an attack? We are a country

with our own institutions, even if they are run down by our legendary corruption, nepotism and mediocrity. Let us commission a study to disprove the Brookings Institution. It is becoming a tradition in Nigeria never to accept any view that is critical of us, foreign or local. Ask the microfinance institutions operating outside Lagos and Abuja what they think about poverty in Nigeria. Short of passing a vote of no confidence on themselves by admitting that they themselves are being overwhelmed by the fire of poverty, they would admit it is worsening. Even blind people can tell you they “see” the trend. What we need is a productive economy that employs its young people. That is impossible when state governors remain incapable of protecting life and property in their states as it is now. The dubious excuses against state police remains central to the fraud against this nation. The current structure of Nigeria in which a federation is run as a unitary state guarantees that everyone pockets their own ideas and wait for the federal government. Nothing creative will ever happen in any part of the country until we release the energies of our people through freedom to think and act. Everybody knows that the only direction we can go under the present political structure is south. Declining poverty is incompatible with a political structure that prevents competition and penalizes hard work. Send reactions to: comment@businessdayonline.com

National carrier as 2019 strategy? winner of the 1993 election, his running mate Babagana Kingibe and late Chief Gani Fawhemi. This decision has drawn flak from within the President’s party as illegal and unconstitutional as the president did not consult or table the matter at the National Council of State. The leading opposition party PDP, has also been quick to describe it as a ‘’Greek gift’’ and an attempt to win votes and sympathy of the south west after sidelining Tinubu and ignoring the concerns of the nPDP in his party. From the forgoing, it is clear that all the decisions highlighted earlier in this article are all attempts by the administration of President Buhari to save face before the election next year. Also believing that Nigerians are suffering from perennial gullibility and forgetfulness, the FG has also given December deadline to the aviation agencies to set up a national carrier. Is this government for real? Is this a political statement or fact? Considering the array of unaddressed issues plaguing the industry from warped bilateral agreements, to multiple taxation, high cost of aviation fuel, obsolete

facilities at the airport, and cries from the AON, the umbrella body of airlines, will this national carrier be formed on this very suspicious foundation? This government seems to have just woken from its slumber after 3 years of snail-like movement. Is this another strategy to win votes in 2019? You can’t just set up a national carrier so quickly because you want to have something to campaign with in the coming elections! The AON had earlier in a statement warned against setting up a national carrier with tax payers money as this is not the standard in other parts of the world. The AON also succinctly stated that a national carrier at this time will be a ‘’drainpipe’’ to our treasury and that the agenda is not clear. I will agree with the airlines on this one, because government has never been a good business manager. More so, the fact that we are just exiting recession means that our resources are still lean and must be used judiciously to create urgent infrastructures as the national carrier is not our problem at this time. Inasmuch as the idea isn’t a bad one, I have a problem with the ‘’hastiness’’ in the decision! Have you asked questions why

the former Nigerian Airways failed? Have the workers been paid? Have we addressed the multiplicity of issues plaguing the industry? Are we getting a well established airline to manage for us? Is it going to be private sector driven or strictly government? Is the new national carrier going to defray the over 45 billion it owes it former staffs? What is the plan for sustainability? These are too many questions that the Buhari administration needs to address, without this clueless and hasty attempt to set up a carrier on a shaky foundation. Presently, the airlines that we have are struggling and most have not been able to survive 5 years with the harsh policies. We need to commend airlines like Dana Air, Aero and others that have been there for about 10 years serving the Nigerian flying public, and covering the lacuna created by the government’s inability to create a standard carrier. These airlines need to be supported and strengthened to compete favorably as they have proven to be very strong and well-managed. The government must also ensure a level playing field for all the carriers to avoid loss of jobs

and mass exit of these patriotic investors who have supported our economy for this long while the government was sleeping. I know this hasty and ill-timed national carrier idea is a political strategy and not a well-thought out, altruistic and nationalistic idea. We cannot rush into creating a national carrier that will die in some years and we are back to the basis. The government must look critically at other contemporary airlines that commenced operations with Nigeria airways and how far they have gone, what they have be doing to still remain relevant, the manpower capability and expertise. Dana Air and AERO have been there for more than 10 years and how they have been grappling with the multiple taxation and obsolete infrastructures at the airport is admirable. Both airlines must have a management model that is worthy of emulation to have been able to exhibit this level of staying power and the government needs to look in their way and not just encourage them but seek expert ideas from them. Send reactions to: comment@businessdayonline.com

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A role for the middle-class FRANCIS IYOHA Professor Iyoha is of the Department of Accounting, Covenant University and Research Fellow, the Institute of Chartered Accountants of Nigeria (ICAN). He wrote viafoiyoha@ican.org.ng

ot many Nigerians today are encouraged that some segments of the middle class have become albatross instead of moral forces in the affairs of Nigeria. In dealing with issues that affect us as a country, thoughtful and insightful positions ought to be the norm. But instead, issues are often caught up in the endless and so-called religious and cultural wars. This is not the situation in sane societies where the middle-class is the mainstream in terms of education and understanding of political, economic, social and other issues. In those societies, the middle-class represents the ‘buffer zone’ for the confrontation between the upper and the lower classes. This results in the middle-class in those societies being an influential and beneficial element in society with discernable roles. Unfortunately, this is not the case in Nigeria where the middle-

class, on account of greed and lack of esteem, is tossed here and there as a wave of the sea, thus lacking the ability to be the stabilizer of society. The reason for this scenario is not farfetched. There has been the willingness and readiness of some elements in the middle class to be used as tools of ‘mass destruction’ of the national structures and resources by political parties in Nigeria. These self-seeking elements corrupt those in leadership by flattering speeches; crafty and greedy measures aimed at crude accumulation of wealth. It is unfortunate that the so-called political parties in Nigeria are formed not on the basis of ideology but by what Lande (1965) called “particularistic distribution of spoils through dyadic relations in accordance with each individual’s contribution to election victory.” It is not surprising, therefore, that participation in the activities in this country by a critical mass of the ‘no head for enviable height’ elements in the middle-class has been to the detriment of the masses. This situation has reached a crescendo such that even the civil service (which ought to be apolitical) has been incorporated into the patron-client relation through the penetration of the spoils of office. It is no longer secret that any voice dissenting the status-quo is crushed in the rudest manner by the patronclient driven networks without positive net-worth in favour of society.

Without controversy, the middle-class has the potential to fitly bind the higher and the lower classes into a well-organized society based on truth. It is known that governments everywhere have the instruments and oath of telling lies. It is therefore, imperative that the middle-class should as a matter of urgency assume the role of sharing difficult truths in a gentle, kind and inoffensive manner in the fear of God at all times and in all circumstances What a tragedy that these elements have become instruments of cruelty and adders in the path of progress! There is no indication that the demented elements in the middleclass are ready to depart from their iniquitous life style. However, there are still some credible Nigerians who desire the best of every good thing for Nigerians now and in the future. These credible Nigerians are calling for restructuring of the country,

erasing the age-long distrust among the various tribes, among others. These initiatives are laudable and to achieve them, there is a condition precedent. As a nation, we realize that the middle class has sullied itself by sordid examples in public and private dealings. Consequently, the timehas become auspicious to define a distinct, credible and predictable role for the class. Without controversy, the middleclass has the potential to fitly bind the higher and the lower classes into a well-organized society based on truth. It is known that governments everywhere have the instruments and oath of telling lies. It is therefore, imperative that the middle-class should as a matter of urgency assume the role of sharing difficult truths in a gentle, kind and inoffensive manner in the fear of God at all times and in all circumstances. Truth shared in love and fear of God is the root and principle of all religions and beliefs. Truth is eternal and cannot be subject to any weapon of mass destruction. The more truths we share, the better for each and every one. It is, therefore, instructive that until the middle-class ‘bells the cat’ of telling the truth, there is no narrative that will mitigate the moral drought we are into. The killings in every part of Nigeria can’t be stopped without truth being told in love and fear of God. The age-long distrust among the various ethnic groups cannot be

erased without the truth being told in humility. In allowing truth to lie buried in Nigeria, the demented elements in the middle class do not fear God. These elements have become too blind to the haste with which events are hurrying on. Terrorism, kidnapping, arson, robbery, alleged cases of under-aged voting among others are rocketing across the country and leaving trails of sufferings behind. Truth can be used to stop the youths from eating ‘bread of wickedness’ and drinking the ‘wine of violence’. Truth told appropriately, will help us adhere to instructions and preserve our heritage because ‘truth’ is life. Truth is what enables a people to rise above conflicts that plague them daily and not ‘State Police.’ Imagine a rising tide of absolute truth sweeping across the country today! What would be the effect? Except we want to remain wise in self-conceit, let the middle-class seek first the truth and the herdsmen will lay down their arms and all other vices that daily confront us would disappear from our midst. Truth is potent and free of financial or any other costs. No loan is required to be obtained to tell the truth. Truth is truth and does not become obsolete. No replacement is required. It stands the test of time. I sincerely recommend it.

Send reactions to: comment@businessdayonline.com

Accelerating access to finance and other essential services

GBENGA ADEBAYO Gbenga Adebayo is the Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON)

inancial inclusion is a critical element for inclusive economic growth. However, while there is worldwide agreement that access to financial services is a fundamental requirement for all, the assumption that we must have access to a bank account is one of the main reasons that financial inclusion is on the decline in Nigeria despite the reverse being the case in other parts of the continent. This is particularly telling when you consider that despite the discourse, policies and drive towards financial inclusion in Nigeria. The percentage of our population with access to financial services reduced to 40% in 2017, down from 44% in 2014. This is a cause for concern especially when compared to the inclusion rates in other African countries; 84% in Kenya, 78% in Uganda and 58% in Ghana. It is safe to say that Nigeria is playing catch-up when it comes to achieving inclusion and must look to learn from success stories like Ghana and Kenya if we are to achieve our goal of 80% inclusion by 2020.

In Kenya, mobile money was birthed a decade ago, led by Safaricom- allowing Kenya to achieve an 84% financial inclusion, up from 27.9% in 2007. Almost all Kenyans with a bank account also have a mobile money account and MPesa (Kenya’s mobile money transfer service) is now arguably the most widely accepted form of payment in the country. Kenya’s success can be attributed to the inherent advantages that come with a new industry - limited and unrestrictive regulations as well as rapid growth. A similar success story can be told of Uganda, where boosted by limited regulatory oversight 78% inclusion rates have been achieved. In Ghana, mobile money was first launched in 2009, with significant exclusions on the role of telecommunications companies. By 2014, recognising that financial inclusion rates were unsatisfactory, the Central Bank of Ghana made a decision to allow the telecoms industry to play a greater role. That decision resulted in a 73% increase in registered mobile money customers in just one year. Another influential decision taken by the Bank of Ghana in 2015, was the decision to allow interest to be accrued on mobile money deposits. Financial inclusion rates in Ghana have improved from 41% in 2014, to 58% in 2017, also reflected in mobile money usage, which grew from 13% to 39% in the same period. Today, in rural Nigeria and across much of the North West and North East, the only way to make

or receive payments is to use cash, limiting people to trading with those with whom they are in close proximity. Apart from the obvious limitations to broader trade, economic independence and growth within these regions, the daily reliance on cash-based transactions means that ‘access’ to cash has become an industry in itself. Anyone who has spent time in larger towns which usually have bank branches and/or ATM machine(s) will be familiar with the industry that has sprung up around this. The long queues at ATMs in sub-urban areas have resulted in shops performing cash-out or cash-back from PoS terminals at a huge premium. This practice, which inevitably leads to the entrepreneur taking considerable time at an ATM to withdraw cash in multiple transactions, has led to the banks creating ‘dedicated’ ATMs to serve this market and the emergence of service providers who collect cash on behalf of bank account holders. This process only works if the person requiring access to cash has a bank account- and by extension, a BVN number. At the last count, there were about 33 million BVN numbers in Nigeria, compared with the most recent estimates for the size of the bankable population, put at 98 million to 100million. This process also has two other fundamental flaws; the first is that the transaction takes time (from the request for cash, to it being in your hand can be a day or more) and the second is that it requires total trust in the service provider who you need to give direct access to your bank account, undoubtedly creating more

problems that the solutions it provides. Clearly there is still a long way to go before we can claim that every Nigerian has Over the last decade, banks have recognised that the traditional bricks and mortar approach to banking, is not a commercially viable proposition outside cities of a certain size and level of economic activity. If we analyse the number of bank branches in Nigeria using the World Bank’s financial access survey, we see a high of 6.5 branches per 100,000 adults in 2010, falling to under 5.5 branches per 100,000 adults in 2016. It is clear that traditional banking is not the answer to the financial inclusion conundrum, a fact now acknowledged by the banks themselves. The commonly accepted solution to financial services for the poorest people, in the remotest locations, is to find service providers who already serve the bottom of the pyramid, who already have geographic proximity and to allow them to leverage this access to provide financial services. This is what has worked in Kenya, Uganda, Rwanda and Ghana. It is unlikely that the telecom service providers would threaten the banks, which may be a concern and a source of resistance. But if they are allowed to use existing infrastructure to provide additional services to those people they will benefit from economies of scale, heavily reducing the cost of customer acquisition and customer service. This is true whether you are a beverage company like Coca-Cola or Pepsi, whose

distribution systems are commonly acknowledged to touch every corner of the country, or a telecommunications company like Airtel or MTN whose coverage is far reaching. The solution is to provide a level playing field for these types of providers to deliver limited financial services, such as deposit taking (up to a low fixed limit) and payment services. If every potential provider is given an opportunity, then those best placed to offer the best service, to the broadest number of people, will be successful, addressing the problem and offering Nigeria the fastest route to an inclusive financial system. An inclusive financial system will transform the wider economic landscape and all stakeholders in the system, the excluded, who gain access to desperately needed financial services, the banking system, who will pick up significant volumes of new deposits, the telecommunications sector who can deliver a range of additional services to its existing customer base (and so incentivise further infrastructure investment), other service providers in rural areas, who suffer because a lack of payment infrastructure and the government, whose ability to distribute benefits and collect duties from its citizens is drastically improved. The sooner we take action that to implement the necessary changes that will see a reduction in exclusion rates in the country the sooner we will start to reap the benefits listed above, and much more. Send reactions to: comment@businessdayonline.com

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EDITORIAL PUBLISHER/CEO

Frank Aigbogun

EDITOR-IN-CHIEF Prof. Onwuchekwa Jemie EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, SALES AND MARKETING Kola Garuba EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole MANAGER, SYSTEMS & CONTROL Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

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

Clarity on border control

he federal government recently announced that it plans to close Nigeria’s border with Benin Republic to tackle the menace of rice smuggling into the country. The minister of Agriculture, who announced the move, said shutting the borders had become necessary to encourage local production and sustain the economy of the country. The federal government and even the president had been claiming that Nigeria was on its way to self-sufficiency in rice production as the country’s rice import was down by 90 percent. The president also boasts that rice import will be completely stopped later this year to encourage local production. We l l , r i c e i m p o r t a t i o n through the ports have been technically banned since 2015 as a discouraging 70 percent tariff more or less effectively dissuaded importation through the ports, while it remained totally banned through the land borders. The reality though, as BusinessDay findings have shown is that, as legal importation to Nigeria drops drastically, neighbouring countries such as Benin, Cameroun, Niger and others have seen their parboiled rice imports increasing. Ironically,

these countries mostly consume white rice (another variant of the staple), whereas they import more parboiled rice, which, consideration their population, can last them for a decade. However, they continue to import parboiled rice every year while legal imports continue to decline in Nigeria as smuggling increases exponentially. Data by the Thai Rice Exporters Association shows that Benin Republic’s rice imports from Thailand from January to November 2017 stood at 1.64 million metric tonnes, a 32 percent increase from 1.24 million metric tonnes within the same period in 2016, and an increment of 104.45 percent from 805,765 metric tonnes exported to Benin republic in 2015. Cameroun also imported 663, 667 metric tonnes of parboiled rice from Thailand between January and November 2017, a 47.64 percent increase from 449, 513 within the same period in 2016, and 449, 297 metric tonnes in 2015. It is safe to say that most of the imports to these countries end up in the Nigerian market through smuggling. An investigation carried out by BusinessDay some months ago also shows that smuggling is rife along the official border points and despite the fact that rice importation is banned through the borders, traders continue to import the commodity through

official border points usually after settling customs officials. What is more, the prices of the smuggled rice are way lower than those of locally produced rice. Consequently, poor Nigerians have continued to patronise the imported rice, which they feel is also of higher quality than locally produced rice. Now that the reality has dawned on the government, it is planning to shut the border with Benin Republic and also use drones to monitor smuggling so as to prevent or stop them. But we need to ask: does the government also plan to shut the borders with Niger Republic, Chad and Cameroon also? Does it plan to expel all the custom officials at the borders that connive with smugglers to bring in the rice? We must stop chasing shadows. We cannot at one instance, be advocating free trade and be putting barriers to free trade all over. Secondly, the government cannot be stifling competition just so to support and protect some inefficient but big cartels of local rice producers. The government cannot be claiming to be interested in addressing poverty and at the same time encouraging or supporting monopolies that always results in higher prices. Imported rice have continued to appeal to Nigerians because they are way cheaper and of more quality than

the local ones. Instead of fighting the wars of the local rice cartel, the government would do well to improve their operating environment to be able to compete favourably with imported rice. Also, reports emerging recently indicate that the Nigerian immigration or Ministry of Interior has been violating laid down processes on the Visa on arrival programme by charging foreigners coming into the country $110 even when those foreigners have paid the visa fees to our embassies in their countries. A breakdown of the fees shows an additional $90 fee as Biometric Visa-OnArrival charge, apart from the visa fees they had already paid in their respective countries before embarking on the journey to Nigeria and another compulsory $20 as service charge to the Federal Government through the concessionaire that the service was concessioned to. This is most shameful. Thankfully, the irrational charges have been suspended for now. We urge the government to provide clarity on the Visa on arrival programme and official fees charged, which must not be too divergent from what other countries also charge Nigerians for entering their countries. Anything short of that may mean we are not yet ready to improve the business environment in the country.

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Wednesday 04 July 2018

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Time to build or buy houses: Homebase in market with 18%, 20-year mortgage

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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

Chinese firm mulls investment in Nigeria’s renewable energy HARRISON EDEH, Abuja

Chines e fir m, Shenzhen Kang Ming Sheng Technology Industry Incorporation, said it is planning to invest in the building of a renewable and clean energy manufacturing plant in Nigeria to help address the epileptic power situation in the country. Speaking at the launch of the Kamisafe innovative safe reading lamp at the ongoing Conference and Annual General Meeting of the Nigerian Optometry Association in Abuja, Goodluck Mbam, marketing manager, Kamisafe, said building the plant, which is a medium to long term plan, would support its products deployment in Nigeria and other countries in Africa. Mbam disclosed that the plant, which would produce affordable solar panels, solar streetlights, energy-saving bulbs, rechargeable lamps and fans among other clean energy products, would also help promote clean and renewable energy usage in Nigeria. He noted that the company is set to enter into partnership with some companies in the

deployment of solar streetlights in some major cities across the country, while it is also partnering with some major supermarkets in Lagos, seeking to acquire its affordable 7.5 KVA solar panels to power their outlets. He said, “We are planning on setting up a manufacturing plant in Nigeria that would produce products like solar panels and solar streetlight. Specifically, we are in the process of entering into various agreements with different individuals and organizations, to set up solar street lights in some parts of the country, especially in Lagos, Onitsha, Kano among others. “The world is tilting towards environmentallyfriendly energy and there is no cleaner energy than what we offer. Instead of using generators and its attendant noise and air pollution, with your affordable solar panel, such as our 7.5 KVA panels, one can power his or her whole household. It can also power a supermarket. “There are some supermarkets in Ikeja, seeking to acquire our 7.5 KVA solar panels, instead of using generators. Again, instead of using generators, we have lights and

L-R: Bernhard Schlagheck, German ambassador to Nigeria; Ingo Herbert, German consular-general in Nigeria; Gbenga Adebija, director-general/CEO, Nigerian -German Business Association; Izebe Egwaikhide, managing director, Sutergy Limited, Germany, and Alexandra Herr, German deputy consular-general in Nigeria, at the 2018 German-Nigerian Business Forum.

rechargeable bulbs that can illuminate the whole house.” Also speaking, Collins Nnaji, product development director, Kamisafe, said the company had been in Nigeria for about 15 years and had made significant investments in Nigeria over those periods. He added that the company presently have depots, distributors and sub-distributors all across the country and had

NERC lauds Mojec strategic drive to bridge 5m metering gap KELECHI EWUZIE

he Nigerian Electricity Regulatory Commission (NERC) has lauded the contribution of Mojec International Limited to bridge the over 5 million identified metering gap in the country. NERC observe that as an indigenous smart meter manufacturer, the quality of facilities and infrastructure being put in place by Mojec international limited to support the take-off of its Meter Assets Provider (MAP) programme is commendable. James Momoh, chairman, Nigerian Electricity Regulatory Commission speaking shortly after an assessment of Mojec’s facilities and infrastructure at its head office in Lagos over the weekend observe that the company has clearly demonstrated the capacity to support government effort in bridging the metering gap through the level of technical capabilities of it

equipment and facilities. Momoh encouraged that the company should continue working in support of the government, especially NERC to provide best-in-class smart meters for consumers. “I am really impressed with what I have seen so far. I am grateful that corporate organisations like Mojec are trying to contribute to the development of our electricity industry. The Meter Assets Provider (MAP) Programme is a new initiative of the Federal Government under the Ministry of Power and the Nigerian Electricity Regulatory Commission (NERC) to bridge the metering gap by fast tracking the supply of meters to Distribution Companies and other customers. MOJEC is on our radar and it is one of the best we have seen and visited. We can assure that they will have all the support they require to take us to the next level of industrialisation in this electricity revolution. Chantelle Abdul, man-

aging director, Mojec International Limited in her remarks, express the company’s enthusiasm on the support and encouragement received from the government thus far. “We are glad that the government appreciates the role local manufacturers of smart meters play in reducing the over 5 million metering gap in the market. This visit has proven that capacity exists and that we can locally design world-class standard meters that would work for the Nigerian environment.” “Mojec as a company has over the years demonstrated the readiness to support government initiatives which would help address the metering gap in the market and solve power supply challenge in the country,” she said. She further noted that achieving the reversal would go a long way in boosting employment opportunities, knowledge transfer and consequently boost the country’s Gross Domestic Product.

been selling clean, safe and renewable energy products over the years. Commenting on the Kamisafe safe reading lamp, Nnaji said the product does not have bad effect on the eyes, because it is coated with LED bulbs, unlike some other torches in the market. He said, “We also have this new design and innovation we are bringing to the market. Unlike other products, the

LED bulbs in it are coated, not allowing direct contact with the product. In usage, one does not feel pain because the rays of the light are not directly coming to the eyes.” Speaking in the same vein, an Esegine Ogheneovo, an Optometrist with Unimind Eye Care, Benin City, Edo State, said the Kamisafe safe reading lamp is great for the eyes, can be rotated up to 360 degrees, while the Lumen is quite high

and very mild for the eyes. He said, “I also observed that the rate at which it is emitting its ultra-violet rays is quite mild compared to a lot of others. “It is unattractive to insect, meaning some particularly frequency range is being emitted that is not allowing insect to draw closer. Hence, it is a very good product. This would help me in my engagement with my patients.”

Odu’a shuts Lafia Hotel in Ibadan AKINREMI FEYISIPO, Ibadan

he management of Odu’a Investment Company Limited has shut down one of its subsidiaries, Lafia Hotels, Ibadan. The hotel located along Abeokuta Road, Apata in Ibadan was closed down following the hotel’s financial

challenges which include backlog of workers’ salaries, huge debts, and non-remittance of statutory commitments, such as VAT and WHT utility bills. Victor Ayetoro, head, Corporate Affairs of the Company, said in a statement that the closure became necessary to enable the Group kick starts a new strategy to reposition the hotels in the conglomerate’s

chain. “Odu’a Investment Co. Ltd, which is the sole owner of the hotels, had on many occasions rescued the hotels by releasing funds for renovation purposes and settling some of the outstanding hotel debts in past years” he noted. The interventions did not yield fruits in the case of Lafia, the statement added.

NASSI seeks improved infrastructure, funding for MSMEs GODFREY OFURUM, Aba

he Nigerian Association of Small Scale Industrialists (NASSI) has appealed to Governments at all levels to allocate 25 percent of the land available at all Industrial corridors for micro, small and medium enterprises (MSMEs) at different rate slabs and for acquiring models. They said this will help MSMEs to start their business

ventures at affordable rates in key industrial parks and clusters in the country. NASSI in its position paper presented at the national stakeholders’ workshop on review of MSME policy, held recently in Aba, the commercial hub of Abia State, urged Government to provide world class infrastructure at national, State and industry sector specific clusters for MSME in public, private partnership (PPP) model. This model according to

NASSI, comprises physical infrastructure, knowledge infrastructure (Creation of tool rooms), e-platforms, technology and innovation support for MSMEs. They said that it will further link all stakeholders in the MSME eco-system, namely, bankers, global markets customers, equity investors, skill development, research and developments institutes, trade associations, among others with the clusters and MSME participants in the States.

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COMPANIES & MARKETS

Time to build or buy houses: Homebase in market with 18%, 20-year mortgage CHUKA UROKO

ime has come and opportunity is beckoning on people who want to build or buy their own homes as an affordable mortgage which requires as ‘low’ as 18 percent interest rate and allows as ‘long’ as 20 years repayment tenor has been introduced into the market by Homebase Mortgage Bank. A frontline primary mortgage bank (PMB) in Nigeria, Homebase has, by this singular action, raised fresh hope for Nigerians who want to buy or build their own homes through mortgage loan. Though this is not ideal, it is about the best the market has seen in recent time by reason of its ‘low’ interest rate. Mortgage in Nigeria, where it is available, is neither accessible nor affordable by low income earners who need it the most, because of its numerous and near-impossible requirements, low income level of of subscribers and the high interest rate which makes it too expensive relative to income. But Homebase assures all

prospective loan seekers who have all the requirements that they can access up to N50 million from the bank repayable in 20 years once there is proof and guaranteed monthly income that can repair the loan. Loan seekers must also be able to provide 20 percent equity contribution while the properties they want to buy have good or mortgage titles. The Nigerian Mortgage Refinance Company (NMRC), from its inaugural N8 billion capital raise, disbursed N500 million to Homebase by way of refinancing the bank, making it the second bank to be refinanced after Imperial Homes Mortgage Bank which was refinanced to the tune of N1 billion late last year. “We are going to use this money as mortgage loan to Nigerians. Our core business is enabling people to own their own homes. So, whatever money we get, we are going to loan it out to people who have viable income to buy their homes”, Femi Johnson, Homebase MD/ CEO, assures. Johnson said they would be catering to all Nigerians because, “we are not a mortgage bank for the rich, middle class

L-R: Juan Visser, director, Sub-Saharan Africa, Cambridge International; Efua Asiedu, manager West Africa, Cambridge International; Marniee Nottingham, country exams manager, British Council Nigeria, and Khanyi Mamba, marketing communications manager, Sub-Saharan Africa, Cambridge International at the British Council Recognition and Outstanding Cambridge Learner awards in Lagos.

or the poor alone; we cover all strata of the society even though we have our bias for the low and middle class because, at this level, the money can touch more lives and more Nigerians”. To qualify for the N500

million loan, the CEO revealed that NMRC had to look into their books critically, scrutinized their processes, corporate governance, risk management structures, internal control processes, among others, stressing, “they

Shoprite plans Africa’s biggest clean-up event

he Shoprite Group is staging Africa’s biggest clean-up at which over 6000 people in nine countries are expected to participate in almost 500 events from 14-18 July to remove waste from communities. In Nigeria the retail giant is partnering with Nigeria’s pioneer recycling outfit, Wecyclers to execute this huge initiative. Omobolanle Olowu, head, Business Development of Wecyclers, an environmentalist and recycling champion explains: “The hope is to launch a movement of active citizens

who act for change by cleaning and keeping clean public areas. Plastic waste is putting the environment under considerable pressure with the equivalent of a garbage truck of plastic being dumped into our oceans every minute.” She further adds, “Recycling is central to this initiative, hence Wecyclers’ decision to partner with Shoprite Nigeria on some of the 45 clean-ups planned in the country. Those organising clean-ups are encouraged to partner with local recyclers to ensure that most of what

is collected gets recycled.” With this focus Shoprite aims to highlight the business opportunities available through the recycling of paper, glass, plastic and other material. The retailer also launched a mobile community in which anybody can join via the website www.actforchange.africa. The site was developed in partnership with volunteerism organisation Brownie Points. This digital platform enables users to create their own clean-ups or join an existing one in their area. It also contains information about the nearest recycler or waste man-

agement company. On the platform clean-up organisers are given guidelines on what their duties are as hosts, how to market their event and what to do on the day and after the cleanup. Participants are to share their experience on social media. In the words of former UN secretary-general Kofi Annan: “All of us have to share the earth’s fragile ecosystems and precious resources, and each of us has a role to play in preserving them. If we are to go on living together on this earth, we must all be responsible for it.”

Corporate governance important for organisation growth - ICSAN

resident and Chairman of Institute of Chartered Secretaries and Administrators of Nigerian (ICSAN) Samuel Kolawole has tasked both the public and private organisation across the country to promote corporate governance as it remains integral part of any organisation to move forward. Kolawole who made the appeal at the 44th Annual General Meeting of the Institution, said that any organisation that

promotes good corporate governance is helping to build the country’s economy. “To attract foreign investments into the country, they want to be sure of what we are doing and confidence that they are safe. So, any organisation that is involved in promoting good corporate governance is helping to build the economy because corporate governance helps to build the trust in the economy that when they bring their money

there won’t be issues of mismanagement. “In the institute, corporate governance is one of the modules that confer the right to be a member. There are numerous members of the institute holding several key positions in the private sector and are putting to use, the key elements of good corporate governance. “We are trying to make sure that the public service understands what proper corporate

governance is because corporate governance is not just about private companies and institutions. “We are engaging government, civil service across the country to ensure that those who are in charge of the affairs in this country understand what corporate governance is all about and they’re encouraged to apply the corporate governance practices to ensure that the nation moves forward,” he said.

also reviewed all these thoroughly before the money was released to us, and that was because they don’t disburse money to some people because their processes are not clean”. Johnson believes that in

order for mortgage operators to do mortgage origination and do mortgage the way it should be done, they need a minimum of 20 year-type money at affordable interest rate, saying it was this belief that made his bank invest in NMRC.

24-year-old wins Opera News brand new car DAVID IBEMERE AND ANGEL JAMES

kinpelumi Oladayo, a 24-year-old student has smiled away with a brand new 2018 Kia Rio in the Opera News Shake Contest. The Rio car was the first of two to be given out by Opera News. The car which was given away by Opera News in collaboration with Jumia at an event in LASCOFIS Bar, Lagos during the public viewing of the match between Nigeria and Argentina. Oladayo gave herself a chance along with other users of the app after collecting nine pieces of a car puzzle to win the major prize after random selection from the raffle draw. At halftime when Nigerians were still dreaming, it was a dream come true for Oladayo, as opera handed away the keys to her, who couldn’t hide her excitement for being the winner of the contest. “I was shocked. I didn’t expect it and now I’m winning myself a car. I can only say that this is a dream come true and

it is unbelievable. I’m so happy right now. Thank you, Opera News.” “Opera News is informative and entertaining. I would definitely recommend it to everyone,” Oladayo who had been on Opera for some months added. The car was the biggest prize of them all,” said JørgenArnesen, Global Head of Marketing and Distribution at Opera. “There is one more car that we will be giving away in Nigeria so we suggest for people to keep playing with the app and to keep an eye on our social media channels.” Meanwhile, organisers of the event revealed that more prizes are to be given out. Since the start of the 2018 football World Cup, Opera News introduced a fun, new feature called “Shake” in which users only needed to shake their phones to win amazing prizes every day. “We are happy to partner with Opera News to deploy such a truly innovative solution across several of our key markets in Africa,” said Stanislaus Martins VP of Growth Marketing.

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BUSINESS DAY

COMPANIES & MARKETS Suru Group urges investment in real estate to reduce poverty rate in Nigeria IFEOMA OKEKE

uru Group, a company focusing in accommodation, hotels, properties and real estate developments has called on the federal government to invest in real estate in order to reduce the country’s current poverty rate. This call is coming at a time when findings by the Brookings Institution, a nonprofit public policy organization based in Washington published a recently indicated that Nigeria has overtaken India as the country with the largest number of extreme poor in early 2018 with six persons becoming poor every minute. The report said, “At the end of May 2018, our trajectories suggest that Nigeria had about 87 million people in extreme poverty compared with India’s 73 million. What is more, extreme poverty in Nigeria is growing by six people every minute, while poverty in India continues to fall.”

Speaking during a press briefing in Lagos last week, Edward Akinlade, chairman of Suru Group, said one of the ways government can address Nigeria’s current poverty rate is to build homes. Akinlade explained that if federal government decides to build 100,000units per year in every State in Nigeria, this will amount to 3.6million new homes every year, adding that the effect of this is that it will lead to employment and create nothing less than 2million jobs every year. “The federal government has the money to do this. Bonds were raised and oversubscribed, so we had to return the money to the subscribers. If you bring that money into the country, we are not bringing it for recurrent expenditure but for capital project only. “We have nothing less than 25million shortage of homes in Nigeria and the bulk of the problem is in Lagos. If we build more homes for people, we will reduce this. The people will use a mortgage system to pay the money back,” he said.

He suggested that the federal government should encourage companies like Suru Group to deliver 10,000 units within a period of time. To do this, he said, “The government can give us the land. We will develop and split the accommodation. The total unit will end up in the housing port; it is just the ownership that will be different. It will be a winwin situation. We will make money, the government too will make money and because we are getting the land from the government, the price will be low. “Nigeria can be transformed with homes. People can also use the security of their houses to get more loans to do business. It has a multiplier effect. Expanding investments in homes can take us out of poverty in one year.” Akindele further disclosed that the group is developing about 40 flats in Ikorodu, which will be completed by December. He said buyers can pay half the value of the home and pay the remaining sum within a period of two years.

FBNInsurance rewards outstanding salesmen in retail segment

n line with her corporate strategy and as a show of her continued commitment to growing retail insurance market, the management of FBNInsurance has rewarded her top retail agents during its annual Retail Awards held in Aba, Abia State. At the event, Ndubueze Onyekachiof the Aba Sales Region, won a brand new car as the overall winner in the financial advisor category; Ikenhi Wisdom got an all-

expense paid trip to Dubai as first runner-up while Iyogwoya Roseline, last year’s winner, won a 55” OLED TV as the second runner-up. Speaking at the event, Odinakachi Umekwe, head, Retail Distribution, FBNInsurance, acknowledged the support of the Board and Management of the Company while encouraging the winners not to relent in their sales drive. “Winning is not the end of it, there is always more work to be done. Congratulations for

winning this time, but remember, many others want to win too; so, work harder,” he said. Headquartered in Marina, Lagos, FBNInsurance is widely acknowledged as the fastest growing insurance company in Nigeria and indeed Africa as evidenced by her announcement as the Insurance Company of the Year at the recently held AIO/Africa-Re Insurance Awards. Incorporated eight years ago, the company has relied on a robust retail strategy to grow its business over the years.

NASME rues CBN’s stringent conditions on MSMEs’ access loans RAZAQ AYINLA, Abeokuta

egun Agboade, president and chairman of Council, Nigerian Association of Small and Medium Enterprises (NASME) has decried stringent terms and conditions which the Central Bank of Nigeria (CBN) imposed on credit facilities provided by Federal Government to stimulate the nation’s economy through Micro, Small and Medium-scale Enterprises (MSMEs). Agboade confirmed that about 12 credit facility windows are currently provided for MSMEs, Agriculture, Industry, among others, by Federal Government to boost the economy, but Central Bank of Nigeria which serves as

clearing house of such funds are making the accessibility of the fund tough and difficult through stringent terms and conditions attached to the credits. Akinwunmi Alonge, president Nigerian Association of Small and Medium Enterprises, (NASME), Ogun state chapter who spoke at his inauguration in Abeokuta, declared that the tough and stringent conditions attached to the loan are seriously affecting MSMEs operators in the country, asking President Buhari-led Federal Government to intervene in order to save the country’s economy. He said, “I’m aware that there are some credit facility interventions at CBN. In fact, they are about 11 - 12 windows, cutting across MSMEs,

Agriculture, Industry, among others, but little or none of these credit windows is available for operators of MSMEs. Since we can’t draw the money, the money is there at CBN seated. “The question is that, why can’t we draw it? The conditions listed for drawing are very tough and difficult. But, we are telling the Federal Government that let’s have set aside, let’s have waivers as regards the credits and interest rates. “What we are asking for is funding that has single digit interest rate. Anything short of that, MSMEs cannot survive. What business do you do that you will take loan and pay 22 -24% interest rate? How much is your profit that you will take that. It is not possible, government should help us to survive.”

Business Event

Yemi Osinbajo, vice president , Federal Republic of Nigeria ; Oluwatoyin Ogundipe, vice chancellor , University of Lagos (UNILAG);Taiwo F. Ipaye , registrar , UNILAG, and Nonny Ugboma, executive secretary, MTN Nigeria Foundation, at the Student Innovation Challenge 2018 which was held in UNILAG recently.

L-R: James Slaughter, sales director, Fueltrax; Bene Okorie, West Africa manager; Votoria Cantu , sales/ marketing manager; Wisdom Nwagwu, business head, marine services, C&I Leasing Plc, and John Donovan, global operations director, Fueltrax , at the electronic fuel monitoring symposium hosted by Fueltrax in Lagos.

L-R: Joel Yohanna, representing the commissioner for health, Adamawa State presenting the award for Health Maintenance Organization (HMO) of the Year to Kola Oni, chief marketing officer, AXA Mansard and Ifeoluwa Ojo, business development officer, AXA Mansard Health Ltd, at the Nigeria Healthcare Excellence Awards (NHEA) held recently in Lagos.

L-R: Sanusi Garba, vice-chairman, Nigerian Electricity Regulatory Commission (NERC); Chantelle Abdul, managing director, Mojec International Limited; James Momoh, chairman, Nigerian Electricity Regulatory Commission (NERC), and Mojisola Abdul, chairman, Mojec International Limited, during a courtesy visit by the Nigerian Electricity Regulatory Commission (NERC) to the Head Office, Mojec International Limited in Lagos.

BUSINESS DAY

Wednesday 04 July 2018

Politics & Policy

Nnaji to Nigerians: If you are better off now than four years ago, return APC to power 19

Wednesday 04 July 2018

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BUSINESS DAY

Why I am in the presidential race by Kabiru Turaki ...laments APC has eliminated Nigeria’s middle class ONYINYE NWACHUKWU, Abuja

ormer Minister of Special Duties, Kabiru Tanimu Turaki on Monday said he joined the presidential race because of his concerns for gross inefficiency of the All Progressive Congress (APC), particularly the increasing level of injustice and absolute disregard for the rule of law by the ruling party. Turaki, a presidential aspirant under the People’s Democratic Party (PDP), said he is concerned that the APC government has grossly discriminated against some Nigerians, particularly those that neither voted nor support them contrary to the constitution. “We need a government that will be fair, respect human right and rule of law,” he stated, speaking to journalists in Abuja. Turaki, a former banker and minister under the previous administration of President Goodluck Jonathan blasted the Bugari government for “tending to look at crimes from the perspective of the background of those perpetrating them. And that is why there is a lot of disaffection in the country,” he stated. “In Benue State for instance, some people were arrested and charged on court for killing certain individuals. But for goodness sake, what is happening to those

Turaki

accused of daily killing farmers in their farmlands? He queried. “For as long as you don’t see them as mere criminals and that is what they are, then there will be problem,” he said. He assured that “shielding people who commit crime because they belong to our party or religion or ethnic group should never be tolerated. “When I get elected, whatever crime that is committed by individuals will be taken on the basis of a crime. I will look at the Act and deal with those criminals according to

2019: Southeast deserves additional state- Turaki CYNTHIA EGBOBOH, Abuja

abiru Tanimu Turaki, PDP presidential aspirant has said that there is need for an additional state in the South Eastern region of the country. In a statement signed by Sola Atere, Director Media and Publicity Kabiru Tanimu Turaki, Presidential Campaign Organization, Turaki affirmed that he would set up a committee from the first day of his presidency to look at the issue of an additional state for the South East, if given the opportunity to become the country’s president in 2019. Addressing PDP members including delegates to the party’s national convention at the state secretariat in Owerri, IMO State Turaki said emphatically that he believes in restructuring that will ensure true federalism, resource control, devolution of power and additional state for the South East. He further said that, his administration, if given the opportunity to become the president, he will look at the issue of state police, stressing that the Nigeria Police is being overstretched in carrying out its constitutional duties. Tanimu said “my presidential as-

piration and that of other aspirants in the PDP is not about individual interests, but it is about the bigger picture of salvaging Nigeria from the shackles of insecurity, poverty, economic strangulation and pervasive injustice and intimidation which the APC has subjected Nigerians to”. Sam Anyanwu (PDP IMO State) described the presidential aspirant as a man of conscience for addressing fundamental issues that are troubling the nation, while the chairman, PDP Imo State, Charles Ezekwem noted that Tanimu’s antecedents has put him in a strong contention for the mandate which he is seeking. Emmanuel Iwuanyanwu, receiving the presidential aspirant on a courtesy visit assured him that he is ‘not difficult to market in Igboland’ considering his integrity, dynamism, depth of knowledge of Nigeria’s problems which he promised to address, and his capacity to build bridges of friendship across the country. “I regard you as a serious candidate judging by your pedigree and the quality of your campaign team,” Iwuanyanwu told Turaki. He noted that Nigeria is a great country, adding that nobody will support the breakup of the country.

law. Whether Hausa, Fulani, Kanuri, for me it is secondary and immaterial,” he added. On the economy he said his government would restore the confidence that Nigerians and economy was known for and create enabling environment that would attract investors, through laws and policies. “This government has wiped out the middle class we created earlier and we would create them again by encouraging people to start businesses and also employ others, if elected.”

He said his government would liberalise the economy, looking at solid minerals , agriculture using science and technology. In addition and to give the economy a quick start, he would bring the vibrancy of the private sector into the public sector. “I assure you that we would carry out a multifaceted approach to revamping and then giving serious impetus to the economy not only through looking at economic policies themselves, recreating confidence of economic players. “These are the things that we would do but I want to assure you that any person that is elected as the president of Nigeria would have the first responsibility of starting everything from the scratch because the APC-led federal government has really destroyed the Nigerian economy and the system. Turaki, however, would strongly support anyone that emerges as the party presidential flag bearer if he fails to get the ticket, because according to him, the mission is to salvage the country from APC misrule. He said he has been able to meet all other presidential aspirants under the PDP and that there is a general consensus that whoever gets the ticket would be supported by the others. “If I don’t get the ticket, I will support whosoever emerge with all my resources and all members of my campaign team because what

we have before us is larger than any individual interest,” Turaki noted. He however, believes that he still have good chances of clinching the PDP ticket considering his qualities as a “bridge builder, integrity and credibility, well educated, do not have any excess baggage, and not in fight with anybody.” He said his experience both within the private and private sector, being a former director of a bank, member of the council of legal education, chairman of the Nigeria copyright commission and having managed relationships of government, coordinating and mediating the three arms and tiers of government of as a minister of special duties qualify him for the job. “As a one -time supervising Minister of Labour, when there were 19 subsisting strikes and industrial tensions in the country, I was able to resolve every single dispute, both in private and public sector. “These are my strengths and I am sure that at the end of the day, these will give me an edge,” Turaki stated, also emphasizing his youthfulness and dynamism that comes with it. Responding to why the government which he served under could not improve the poor power situation, the country, Turaki emphasized that the fact that investment in the power sector, takes some time to yield dividend.

2019: We need coalition of progressives to unseat Buhari - Nwosu INNOCENT ODOH, Abuja

he National Chairman of the African Democratic Congress (ADC) Ralphs Okey Nwosu, has declared that Nigeria needs the alignment of progressive and patriotic forces to oust President Muhammadu Buhari and the ruling All Progressives Congress (APC) from power to restore hope from the damage Buhari and his party allegedly inflicted on the country in the last three years. Nwosu made this declaration during the recent 60th National Executive Council (NEC) Meeting of the party held in Abuja, even as he warned Nigerians against voting President Buhari describing him as“clueless and vengeful”. “May I remind us that our nation is under the most bizarre, parochial, dictatorial and mindless government ever. Being clueless and vengeful, the APC government took propaganda, lies, and cruelty too far. We are in very unusual time in Nigeria. As a result we need the alignment of progressive and patriotic forces and political parties to deal with the APC monster. Our national and international coordinators, facilitators and mentors are doing the strategic networking that will ensure that we rescue our

fatherland. “We have set July deadline to conclude all negotiations with all interested parties. I am sure that all the well-meaning players will see the sense in our insistence in having something new and refreshingly different and exciting, and also be willing to align their politics to the ADC’s guiding principles,” he said. He noted that the ADC is determined to produce the next president and majority of the elected officials in the 2019 general elections. He urged Nigerians not to pay attention to the propaganda and brinkmanship of those who play money politics stressing that their power depends only on money and brute force. He pointed out that recent survey/poll on the most trending Political party in Nigeria confirmed that the ADC is the number one in three categories: new members, public discourses, and exciting grassroots activities. “The adoption of our party by CNM, Arise Nigeria, Grassroots Initiatives, and other groups and political parties, their decision to fuse into ADC, and the generosity of prominent statesmen and women have truly made ADC the number one party. This therefore places a lot of responsibilities on all members

of our party executive committees from wards, local government, state and National. We have earned the trust, and we have to live it. “Living the trust means work, work, work; and being selfless and working with integrity like the patriots that we are. We have not done badly. We have always been committed to changing the ugly politics that seem to pollute our environment, and government. And we must now not lose focus. Again I beg you all, it is not about position,” he said. Nwosu disclosed that in line with the ADC spirit and culture, he will relinquish his position as National Chairman very soon, once things in place adding that he will work until his party delivers on their mission. “The electorates are wiser, and will not expect anything less. We have a brand new ADC, everyone is equal in this party. The idea of superior or inferior partners does not exist. However, we must all evolve the missionary spirit in us in our politics and nation building engagements. “We shall overcome, and we are ready to work with all patriots and politicians who are well disposed to the values we offer. Our guiding principles are well framed.

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Politics & Policy

How Gov Okorocha took his pound of flesh from Izunaso JAMES KWEN, Abuja

mo State Governor, Rochas Okorocha has finally taken his pound of flesh from Osita Izunaso, the immediate past National Organising Secretary of the All Progressives Congress, APC. This is as Okorocha has apparently used his vantage position as a member of the committee that conducted the APC national convention and chairman of the party’s Governors Forum to stop Izunaso from being reelected. Izunaso had contested for a second term as APC National Organizing Secretary alongside other aspirants including the current occupant of the position, Emma Ibediro believed to be Okorocha’s anointed candidate. According to the election results for the position declared by the Chairman of APC National Convention, Governor Atiku Badaru, Ibediro won with 1749 votes while Izunaso followed closely with 1459. Okorocha has in the last three months been in a political war front with Izunaso and his lieutenants such as Senators Hope Uzodinma, Ben Uwajumogu among other APC chieftains in Imo and beyond. The Izunaso group under the ageis of Imo APC Stakeholders Forum had spared no effort and means to throw Okorocha off balance in the scheme of things in the party which he is by all standards a recognized chieftain. Prior to the APC congresses and subsequently national convention, the Izunaso group has been on

Rochas

pilgrimage to the party’s National Secretariat, Abuja at several times and called for Okorocha head. In each of their visit to the APC headquarters, the stakeholders accused Okorocha of many political ‘sins’ particularly his alleged anointing of his Son - in law, Uche Nwosu to succeed him as the next Imo State Governor. Okorocha’s adversaries had told the then APC National leadership that; “today, all is not well in Imo State. If you don’t do something to rescue the situation it will be a miracle for APC to win Imo State in the forthcoming elections.

“It will not only be Imo State but the damage that has occurred in Imo State will affect the other states in the South East. “As we tell you today if you conduct a poll on all the APC members in the South East less than 10% will support the continuation of what Rochas has imposed on Imo State and in the South East and there is no way one can incarcerate and deprive every members of this party their hope ad and aspiration in 2019” While the leadership of APC was yet to respond to their demands, a golden opportunity presented

itself as the party’s ward, local government and state congresses were held. The Izunaso faction of APC hijacked the exercises and installed the party’s leadership at these levels leaving Okorocha with no structure in the party which he is a leader. Also the Okorocha rivals gained another ground in the build up to the APC National Convention when the South East APC Zonal caucus unanimously endorsed National officers of the party from the zone for a second term including Izunaso, the then National Organ-

izing Secretary. In apparent reaction to this development, Okorocha allegedly sponsored Emma Ibediro his close political confidant and aide who eventually toppled Izunaso at the convention. Some days to the convention there were permutations that Okorocha was using his position as Chairman of Screening Appeals Committee of the APC National Convention to dislodge Izunaso at that stage but that did not happen. Izunaso and his cohorts were already inching to victory as they had from all indications hijacked the delegates from the entire south east thinking that Okorocha and his candidate were defeated before the election commenced. Unfortunately for them, Okorocha had only allowed them to waste all efforts and resources to the dying minute before he released the political thunder strike on the Izunaso group. This was as the APC National Convention Chairman, Governor Badaru announced that Ibediro and Izunaso had reached a consensus that for peace to reign the Imo delegates would not be voting. This was a thunderbolt to Izunaso and ultimately culminated into his defeat! According to a press statement by the Izunaso favoured Imo APC Stakeholders Forum in reaction to the outcome of the election; “all efforts to make Governor Badaru rescind the announcement proved abortive as he cleverly and artfully evaded all efforts to engage him in any further conversation”. Therefore Okorocha finally took his own pound of flesh from Izunaso!

Gana chides President Buhari over incessant herdsmen killings INNOCENT ODOH, Abuja

ormer Minister of Information and National Orientation, Jerry Gana, has castigated President Muhammadu Buhari over his failure tame the increasing insecurity across states of the federation, allegedly perpetrated by the Fulani herdsmen, resulting in the deaths of hundreds and the displacement of thousands more. In a statement, the Professor of Geography said the severe deterioration and very disheartening level of insecurity in the nation today has reached an intolerable height that calls for a total condemnation by all lovers of peace, security, democracy and harmony. “Mr. President, the buck stops completely on your table. Nigerians expect you to offer the citizens strong assurances backed by concrete actions as a practical demonstration of your sincerity. “The senseless and incessant butchering of human lives and the attendant destruction of homes and properties of the ordinary citizens of Nigeria, from Plateau, Benue, Nasarawa, Kaduna, Taraba, Adamawa, Zamfara, Kogi, Enugu, Ebonyi, Cross River, States, etc. have gone on for too long, with no

concrete plan and clear roadmap to suggest that the federal government has the will and the capacity to resolve these challenges to peace and security. “Yet, as our Constitution provides, that “the security and welfare of the people is the primary purpose of government” (Section 14 (2b), 1999 Constitution As Amended). This indeed is the bitter truth facing all people of honour and conscience throughout the Federal Republic of Nigeria. The quantum of these despicable bloodletting attacks makes a mockery of the sanctity of human life. This is totally unacceptable and stands vehemently condemned. “I hereby join similar voices across the land to call on Mr. President to rise to his moral and constitutional responsibility as the Commander-in-Chief (C-IN-C) to protect Nigerians from these ruthless, inhuman and aggressive attacks against law-abiding citizens. This is his primary responsibility as guaranteed by. The C-in-C must take urgent and decisive steps to put an end to these acts of cruelty and inhumanity. The perpetrators and their sponsors must be arrested, and brought to justice. Surely, this is the essence of the Rule of Law,” he said. Gana stressed that the citizens

of Nigeria deserve full proof guarantee of their safety and security adding the Nigerians seek effective and competent actions to rebuild the confidence that their Leader is capable of defending their citizenship as Nigerians. “With the current state of affairs, I fear that our democracy is sliding rapidly into anarchy and hopelessness. As lovers of democracy, we must always be reminded that when truth is absent justice becomes evasive; without justice peace becomes illusive; and without peace genuine democracy becomes impossible. Hence, the nationwide cry for justice, fairness and transparent rule of law, without fear or favour,” he said. He stressed that “the security of our people and the safety of our homes cannot be compromised under any guise; be it political, ethnic or religious. The loss of one Nigerian life is a painful loss to all Nigerians. “While we mourn the unacceptable deaths of these innocent Nigerians, may I express my deep and sincere condolences to the families, the people and leaders of the affected communities. I pray that their death would ignite a nationwide resolution of never again should precious Nigerian lives be so tragically wasted,” Gana said in the statement.

From Left: USAID Mission Director, Stephen M. Haykin and DFID Governance and Social Development Team Leader, Oliver Blake, in handshake after signing amendment at the US Embassy, Abuja.

US, UK to continue joint funding for free, fair elections in Nigeria INNOCENT ODOH, Abuja

he United Kingdom’s Department for International Development (DFID) and the United States Agency for International Development (USAID) amended a Memorandum of Understanding (MOU) to extend their joint funding arrangements to support Nigeria’s electoral processes through 2020 with an increased DFID contribution. A statement issued by the Public Affairs Division of the United States Embassy in Abuja made available to BusinessDay, noted that the additional £5.5 million (US $7.3 million) pledged by the UK brings DFID’s contribution to the joint funding arrangements since 2014 to $26 million, augmenting the $34 million provided by USAID since that time, bringing the total

funding support for free, fair, transparent, and peaceful Nigerian elections through this joint mechanism to $60 million over six years. The amendment update was signed at the U.S. Embassy by USAID Mission Director Stephen M. Haykin and DFID Governance and Social Development Team Leader Oliver Blake on June 22, 2018 and it will continue support for programmes in election administration, voter education, and nonpartisan civil society domestic election monitoring, for the 2019 elections and the postelection period, the statement said. “Today’s signing is a reminder of the longstanding, shared commitment of the Nigerian, British, and American peoples to promoting democracy, in particular, peaceful and inclusive elections,” Haykin said at the event.

Wednesday 04 July 2018

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Politics & Policy

Nnaji to Nigerians: If you are better off now than four years ago, return APC to power The National Chairman of the Better Nigeria Progressives Party (BNPP) Godwill Iheanyichukwu Nnaji, challenges Nigerians to look at their conditions four years ago and now and see if it will be profitable to return the ruling All Progressives Congress (APC) to power in 2019 general election. The Professor of Economics and a former chairman of Inter Party Advisory Council (IPAC), in this interview with INNOCENT ODOH, laments that that APC appears to be chasing shadows instead of focusing on real issues of the economy. He also bemoans lack of government funding of smaller political parties, adding that despite the challenges, the smaller parties remain the fulcrum of democracy. He says further that the Nigerian economy deserves urgent attention, which his party is ready to offer in 2019. Excerpts: What are the challenges of funding for political parties like your own that are not in power? ell, we do anything possible to remain relevant because there is no government funding. You should be asking the government why they are not funding us. We do anything legally possible to get money because we cannot get money overseas and the members cannot contribute because you, the media, have told them already that government gives us money but the government does not give us money. I am at the vanguard of mobilizing the people, the media and everybody so ask the government to do the needful. The needful is that party politics is a very expensive game, if they want a one- party state, so be it but we shall challenge it. Otherwise they should try to provide the funding but if they don’t, we will do everything that we can to stay relevant. And don’t forget that the smaller political parties give relevance to this democracy and ignoring them is at the peril of the nation.

Are there possibilities that the smaller parties can put their resources together to form a more formidable force to challenge the bigger parties ahead of the 2019 election? Don’t tell us what to do because we know what to do. Don’t tell us to merge, don’t tell us to align. We shall do what is needful and whatever happens we shall participate in this election. Whatever it takes, those who want to go solo will do it, and those who want to combine can do so. Those who want to merge will also do so. Does your party stand a chance in the general election especially the Presidential election? It is a public affair. If I sit in my house and crack my head as a scholar for 20 hours out of 24 years, I can come out with the solution to the Nigerian problem but even if I tell you that will you vote for BNPP? The issue is that we expect the public to contribute towards enhancing democracy so that there will be good governance. It is a public arena, so whatever the people want, is what they get. That is why it is said that the government is as good as the people. If things are not working, we did not want it to work that is why we voted the government that is in power now.

Nnaji

We wanted a change and we have tasted it. We shall continue to emerge big or small. Some people have said that the reason we are having the poor economic situation in the country now is because political parties like yours have not sensitized Nigerians enough. What is your reaction to this? Do you sensitize with empty hands? If I come to your village for sensitization now, you will tell me to bring money. What the media should do is to tell the public to deemphasize money, to work and possibly contribute. We are not asking the public to bring money. If I call a meeting, let them come, if I call town hall meeting, let them come , lets share ideas, let the best ideas rule. But if they don’t do that and they begin to demand for money and bags of rice and wrappers, then the highest bidder will get the position. I can fault the government for the violence and the killings but I don’t fault them on the economy and governance because if you spent 10 billion dollars getting a position, the first thing you will do is to recover the 10 billion and pay off your debts and recover the assets that you have expended. But if a community throws up their own son or daughter without a fee into in the National Assembly, that person will not go there to become a billionaire overnight because he or she is indebted to the people that

took him or her there. What is your position on the clamour for the structuring of the federation? The issue is that historically, we know that when we had the federation of North, East and West, the country was doing better without the oil. The regional structure that guaranteed that kind of productivity is no more there because now we are given oil by God but we have not been able to manage it. It is not just in Nigeria but the curse of oil globally and how it makes people not to develop. We could have learned from Nor way, Denmark and Netherlands on how to manage oil because they made their own mistakes. So, it is not necessarily a question of restructuring but the inability to manage our resources well. In Nigeria we don’t pay taxes because we all depend on easy oil money. So, if you ask somebody to go and farm when there is oil money to collect, it is difficult. I can’t ask my son to study computer engineering and when he comes out I will tell him to go and farm. If you want to do that then farming should be made to be attracted otherwise people will not do it. So until we address these matters we are not going anywhere and don’t blame anybody. There is a problem of managing the economy; there is problem of managing the nation.

But we can also remove the government that is not working for us and your party being in the ideological vanguard would it not help to cause this to happen? I told Nigerians in 2002 that I will grow Nigeria’s economy at double digit growth rate and people were laughing and asking me who is my sponsor and I told them that I am my own sponsor because I have the experience as an economist from New York. But as long as we allow these people with money to dictate our politics, we are not going anywhere. Then on the question of ideology I will focus on the economy, we shall change the negative narrative if we are given the opportunity. How would rate the APC government in terms of economic management and insecurity, and what ideas do you have to counter them in 2019? Whatever I say here they will say that I am opposition but I don’t blame them a lot they have not been in government. They have been playing opposition for so long and when we gave them power, they don’t know what to do with it. APC should have adopted whatever that was good in the sixteen years of the PDP and internalize and develop them. Audu Ogbe is trying to continue where the former Minister of agriculture stopped that is why he is getting results. The power sector

man, Fashola should also internalize what is good in the former administration. But if you want to change the direction and you want to leave your own legacy as if is it brand new then you get it wrong. Government is a continuum, those good things in the former administration you can develop them so that we don’t go back to the drawing board all the time. But the APC came to demonise the PDP and even the nation. My New York friends said to me how can I do business with you when your president said that you are all corrupt and lazy? This sound bite cannot help us. The APC raised the decibel on corruption but the solution to corruption is not coming because all hands in government are dirty, nobody got there by Angel Gabriel. I tell people that corruption is fought on the sideline when you are developing the economy. You focus on the real issues so that you can get results. There are some countries that have developed even with corruption, so it is nothing. On the issue of security, I know that some local government used to be occupied by the Boko Haram terrorists but the violence that is facing us in Nigeria today no one is save anywhere in Nigeria, I am not even sure about the Presidential Villa. Some people have decided that cows are more important than other things such that they want to take land for cows and it is causing the herdsmen- farmers crisis and the government is not doing anything about it, they are just talking. The APC don’t want to accept that they did not know what to do when they came to power, they just came in and started planning what to do, and that is the problem. But instead of articulating and facing the problem, they are trying to pass the buck and that made the mess of the whole thing. They should accept the fact that they are learning because you cannot buy experience. Even the governors who did well in their states cannot replicate that at the federal level as ministers because their hands are tied because they don’t have the executive privilege to do as they wish. That is why when people were shouting and asking for ‘change’, we told them to be careful what they are asking for. If I am made a Presidential candidate in 2019, I will tell Nigerians if you are better off now than you were four years ago, return APC to power, if not change it.

BUSINESS DAY

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Wednesday 04 July 2018

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BUSINESS

INTERVIEW

DAY

Impact Investing Alliance is a response to global investing trends - Chukwuma Innocent Chukwuma is the regional director, West Africa of Ford Foundation. Ford Foundation is a founding member of Impact Investing Alliance, a body that is at the fore-front to creating awareness on impact investing practices in the country. In this interview with Businessday’s Innocent Unah and Abisinuola David-Olusa, he talks about the alliance and its key objectives, the impact investing activities of the Foundation and the prospects of impact investing in Nigeria. Excerpts: Talking about Impact Investing Alliance, what triggered the idea of having such an alliance in Nigeria? think, it is partly in response to development around the world. If you look at the way philanthropy has grown or the trajectory of philanthropy, it usually starts with what you might call charity philanthropy. You have people give to solve specific problems that are brought to their attention through family and friends and then go on to be a bit more strategic about what they support and the goal they intend to achieve. Where we are now, people are bringing a bit more of business mind-set into what they are giving and you could also see that in the shift from what is called Corporate Social Responsibility, which is what companies do on the side in order to be seen as being a socially responsible corporate citizen, to now where a lot of companies especially sustainable ones are putting social impact at the centre of the core of their business, are putting environmental impact as the core of their business as part of what they need to do to be sustainable in the longer term. So these are all current happenings around and at the local level or national level, we can’t pretend not to be aware. But for us as a foundation, which is where Ford comes in here, it is a follow-up to what the foundation launched last year from our headquarters in New York, which was mission-related investments and the impetus for that is partly a response from pressures from social movements that foundations spend 5 per cent of their endowments every year to support missions and issues they care about whereas 95 per cent of their endowments are invested in sectors that may not align with the mission because the traditional understanding of endowment building is that you invest in things that would yield more money so that you can give more money. But then there is the realisation that the harm you do with the 95 per cent of your endowment that you are just investing to raise more money and give the 5 per

cent may overwhelm what the 5 per cent can really achieve. So from 2009 or so, the Internal Revenue Service in the U.S. gave an encouragement that a philanthropy could explore the possibility of using the money it gives to invest in things that would blur the line between commercial investment and charity work. So with that green light from IRS and the fact that other donors have started doing it, we came on board in April 2007 when our president announced that Ford was dedicating $1 billion out of its endowment of $13 billion over 10 year period to explore mission-related investments, and it so happened that our president was due to visit Nigeria soon after that announcement was made. As part of the activities lined up for his visit in July, we convened the first meeting in collaboration with African Capital Alliance which was tagged Impact Investing and Social Change in Nigeria. It was very well received; we had participants from across sectors and businesses. At the end of the whole exercise, people said they hoped this will not be a one-off thing. So after the convening, we went back to our partners, ACA and brought in BusinessDay and started talking about coming together to do this on a fairly regular basis and have a platform through which we can also bring other stakeholders on-board.

One of the key stakeholders who joined us was Bank of Industry. So right now, we have these four organizations driving this impact investing alliance, Bank of Industry, BusinessDay, ACA and Ford Foundation. So this in some way is a summary of how we got here, it has organic link to what is happening in other parts of the world, it is also a follow-up to what our foundation launched last year and the reception we got through the convening around the visit of our president led us to series of steps that got us to where we are today. So let me take you back to what Ford Foundation is already doing in the area of Impact Investing. Are there specific projects that the foundation has already invested in? Yes, so we have emissioninvesting committee in the foundation that is driving the plan and part of the first thing they did was to look at areas in the global market that are ripe or capable of attracting the kind of investments we are bringing on board. So, after mapping the market, we made a decision that in the U.S., we would invest on affordable housing because it is a sector the foundation invested in growing through an earlier program we started in the 6os, program-related investments. So in the U.S., we focus on affordable housing but in the rest on the world, we focus on financial inclusion because,

When people think of impact investing, because in these parts of the world we have huge infrastructure deficits, they think just in terms of infrastructure. But the real impact is on impact capital. For those of us who are in Nigeria learning from this, we hope that such sharing would enable us not repeat the same mistakes they may have been made in the course

Innocent Chukwuma

again, it is an issue area that has been raised to the form that why businesses and ideas in the global south do not germinate and thrive is because of the huge cost and barriers to accessing finance at an affordable rate, and the inability to raise the money that would enable them to grow their businesses. So in the rest of the world, we are focusing on financial inclusion and we don’t do direct investment in the market, we use our fund managers. Our fund managers are the experts in the field, who know the market and have track record of what they are doing. Their values are consistent with ours as a foundation, so we place our investments

through them because we have the right balance, we are always insistent in striking the right balance. Profit is good but it is not the primary driver of the investment. It’s the social impact that we seek to make, so, in our choice of which fund managers to place our funds in, we go to a great extent to find out the values of those managers and it is not just what they tell us, it is also a function of what they have delivered that we can look at and also references in the industry about their ethics and values they bring in. So even though we are starting with financial inclusion, we are also exploring other areas that we could invest in. Again, we are using people that are experts in that field to do that mapping and at the appropriate

time, we may expand. Nigeria has large housing deficits and we think much impact capital is needed in that area. So why just lump the rest of the world into financial inclusion even though there are other critical areas where impact investing could help? It is also a function of the level of development in the market. On financial inclusion, we have a history of development in that market, from microcredit to microfinance, so you begin to see areas where there have been track records you can look. Even though our risk appetite is higher than that of the commercial investors, there are still risks that we don’t jump into. So if you come to for instance, affordable housing in Nigeria, the unmet

needs are significant. So depending on which statistics you use, you have figures from one million to two million housing deficits, but if you want to invest in that sector, you will come across challenges around land titles and security of titles, and then you ask yourself, at the federal and state level, what is the nature of security of titles that we have in the country, on the basis of which someone can invest in or buy those lands and build on it with the assurance that that someone will not lay claim on it and regulatory authorities won’t knock it down. Because of lack of security and all these challenges in that market, if we nationals are struggling to invest in housing, it will not be easy for fund managers to come in to invest. Going back to impact investing, this is where you need the participation of critical stakeholders, state actors to play their role. Regulatory authorities, state actors are very important in ensuring a business environment that enables investment, an environment where all the actors are playing at optimal level to deliver the framework that enables investors to come on-board, so that is why we are starting with financial inclusion as a tested area, and returns on investment and security of investment is reasonably guaranteed compared to areas we would ordinarily want to go into. What measures do you think the government can take to create awareness about impact investing? I think we need to unpack what impact investing is about because whenever we come with these new clichés, people think it is something so new that you have to invent ways of making it happen. It is simply having an eye on the kind of investments that would enable you achieve bottom lines that go beyond financial returns - bottom lines that include social impact and environmental impact. The same way that if you are a foreign investor, you have two or three project ideas that you want to invest in and then you go to government authorities to deal with the regulatory approvals that you need to make that happen, a responsive regulator would

look at the projects you want to invest in and ask himself, ‘which of them would yield more jobs?, Which of them would be friendly to the environment?, and which of them would build the skills of Nigerians to be able to do more in that sector and grow it?’ And based on a rational analysis, they can say ‘if you invest in this, this is what we can do to support you but if you are investing in an area where you would bring all the or an automated project that would not generate jobs, or the carbon footprint it would leave behind, we would not incentivize that’. So that is the same thing we hope the government should have an eye on as regards investment so as to attract investors and make the investment environment conducive for more people to come on-board. Look at things like Land Use Decree, which everyone has been talking about to free up the assets people have, many of the land people have are dead assets because they have no transferrable titles. Those are the kind of thing we want state actors to take onboard. There are a whole lot the government can do but it begins by government first being aware of the unintended consequences of all these bureaucratic shenanigans and then start to simplify them. Government should create awareness in its own sector on how all these things add up to persuade or dissuade investors and should be willing to partner with private bodies, philanthropists and the likes to create the ecosystem that will enable impact investing thrive in Nigeria. Please tell us what the Impact Investing Alliance is all about? It is actually the new language especially among players in the sector both in the business world and philanthropic world. Everybody wants to be strategic in his/her investments; everybody wants to invest with impact but up till now actors in this field are still playing in silos, not talking to one another, not aggregating their muscles to persuade role players like government to do what they are supposed to do and simply glorying in that feeling that it is a few people that are doing it.

Whereas, if you want this to really have impact, grow and go to scale, you need to come together and work together to build the ecosystem. Impact Investing Alliance is an effort to do that: to create a platform that everybody who is in this sector can look forward to learning what is happening, the partnerships the person/group might need to do well in the field and also to learn from one another, in addition to rewarding those who are doing well so as to encourage others to come on-board. So, if you look at even things the alliance has set out to do, such as the annual convening where we talk about topical issues in the sector and bring stakeholders to discuss it, whether it is in the publications that come out of the bi-monthly column BusinessDay publishes, whether it is the award, the dinner ceremony where we bring key people to talk to us. All these are geared towards building an ecosystem. Are there any specific milestones that the impact investing alliance seeks to attain in the short to medium term? So let’s talk about the September 20th event, it is the first convening on national day platform we would be organizing and it is sort of the place to align or signpost what the alliance is out to do and building on the activities around that and the traction we expect to get from stakeholders that would be invited. We look forward to a growth on annual basis in terms of the number of people coming on board, the stakeholders who are signing up, and the whole concept of impact investing will be mainstreamed from where it is right now. We hope the over five years we should have the type of convening I saw in Singapore where over a thousand players gathered, you have 200 resource persons, investors looking at bright ideas to invest in and people coming to learn and share ideas. More importantly for me, it is also the opportunity to increase the funds available for investing and get all those who care about this issue or interested in it join us on September 20th in Eko hotel and make it happen.

Looking at Impact Investing and the convening, what would be the significance for the Nigerian Impact Investing space? The theme of this year’s convening is ‘Impact Investing in Emerging markets: Comparative experience”. So a number of mapping and researches have been done to look at how Nigeria and West Africa in general is faring in terms of the growth of impact investing: what are the opportunities that people see? What are the challenges people are facing? So the forum is expected to provide the opportunity to share that and also learn from people beyond Nigeria and beyond the region. We have participants from Asia, Europe and North America, which, in my view, are the more matured markets with respect to impact investing. They will be coming to share perspectives about how they went about it. I remember in Singapore, they said they had the first convening five years ago and it attracted about 200 people but for this last one that held between 4th and 7th of June, they had over a 1100 people in the room. So how did they do that? And beyond the plenary of all those people, they also had breakout sessions where topical issues like gender equity, growing business led by women and all those issues impact investing seeks to address, were discussed. When people think of impact investing, because in these parts of the world we have huge infrastructure deficits, they think just in terms of infrastructure. But the real impact is on impact capital. For those of us who are in Nigeria learning from this, we hope that such sharing would enable us not repeat the same mistakes they may have been made in the course. Beyond the convening itself, we are also interested in the follow-up activities and the kinds of networking that could unleash the kind of accessible or cheap capital that people need to invest in issues that will impact our community. With this we can gain traction and begin to address issues in other critical sectors as well.

BUSINESS DAY

Wednesday 04 July 2018

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In association with

a g @ bu s ines s dayo nl ine. co m

Nigeria’s agric research institutes lag peers as poor funding hurts output JOSEPHINE OKOJIE

esearch institutes are proving to be the weak link in Nigeria’s drive to diversify into agriculture and make exponential gains by way of earnings, employment and other spin-offs, experts say. The institutes are mandated to develop technologies and practices to improve farmers’ yields per hectare and ensure food security in Africa’s most populous nation but they are falling grossly short in this direction and lagging behind smaller peer nations where agriculture is less of a priority. Experts say the key causes of this situation are underfunding, obsolete equipment and a failure to upgrade human capacity. “Less than five percent of the yearly budgetary allocation for agric research institutes goes into core research, while 70 percent goes into salaries and emoluments, with the remaining going into procurements, renovation and overheads,” Baba Yusuf Abubakar, professor of Animal Science, Federal University of Abuja told BusinessDay, in a telephone interview. “We cannot conduct effective research which such stipends. Research plays a pivotal role in transforming the agricultural sector and that is why we must take it very

seriously,” Abubakar said. Data obtained from the budgetary allocation to the agriculture ministry shows that the research institutions got an average of N28 billion ($70m) yearly, in the last five years. Nigeria’s annual spend on its agric research institutes compares with India’s $2 billion, Brazil’s $1 billion and China’s $700 million, BusinessDay findings show. Abubakar, who was also the former executive secretary of the Agricultural Research Council of Nigeria (ARCN), said to address

Farmers express worry over incessant killings, call for stringent action SIKIRAT SHEHU, Ilorin

igerian Farmers under the Zero Hunger Commodity Farmers’ Association of Nigeria have urged the Federal Government to urgently find a lasting solution to the incessant farmers/herders crisis, warning that food shortage is imminent as farmers continue to abandon farms for fear of attack. The association in a communiqué issued at the end of its meeting in Abuja, signed by Tunde Arosanyin, the coordinator of the farmers’ group, made available to journalists in Ilorin, Kwara State recently, however, commended the government for sustaining the Anchor Borrowers Programme of the Central Bank of Nigeria (CBN). Speaking on the welfare of the association, Arosanyin identified late distribution of input to the beneficiaries of the Anchor Borrowers programme to be the major challenge of the scheme. “We commended the ABP of the Federal Government through the Central Bank of Nigeria in accessing credit and input to farmers in the last two years.

“However it was noted that none farmers are also given input and credit as a means of political patronage which may derail the scheme. The meeting also noted late distribution of seed, chemicals and fertilizers to beneficiaries. Some of the inputs are substandard and has expired,” the statement said. It also commended the establishment of the Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) as well as the Nigerian Agricultural Foundation. According to the statement, the two bodies which are in the attendance of the meeting are playing good roles in the agricultural sector of the national economy. The association identified provision of input, credit facility at single digit interest rate and good market prices for farmers as critical factors that government must considered if agriculture was expected to drive the economy. The association frowned at the delay in budget presentation and passage in the country, explained that it was a major constraint to economic performance of the country.

the issues with the country agric research institutes, the ARCN, in collaboration with various stakeholders in the sector, drafted a policy document to amend the act, of which ARCN was established, which is yet to be passed into law by the National Assembly. Rotimi Fashola, senior partner, OIT Fash Consult, said, “Without a d e q u a t e re s e a rc h f u n d i n g , government talk about boosting revenue through the sector will only be a mirage. “Today, most of the institutes

are mere shadows of themselves,” Fashola added. A 2015 ActionAid report shows that Nigeria only invests $0.42 into agric research for every $100 of agric output, as compared to $0.94 and $1.40 in Ghana and Uganda respectively. According to Micheal Oluwole Ajala, professor of Seed Technology, Federal University of Agriculture Abeokuta (FUNAAB) the agric research institutions in the country are underfunded and lack basic facilities needed to conduct

research. Ajala stated that most of the equipment’s are obsolete and cannot be used for modern research work. “Corruption is also a big problem. Most of the money allocated to these institutions in the budget doesn’t get to the institutions. One-third of the total allocations finally get to these institutions. The money gets into private hands instead of the research institutions,” Ajala said. Nigeria has the highest agricultural research system in Africa, in terms of number of researchers, with over 2,000 researchers engaged in research across the various institutes in the country. However, poor funding still limits the institutes from reaching their points of critical need, as they have failed to provide technologies that have boosted farmers’ productivity. Abiodun Olorundenro, operations manager, Aquashoots Nigeria said, “Nigeria still imports most of its seedlings, despite having agricultural research institutes. You cannot go there and get seeds because nothing is happening there.” “The researchers are just there to collect salaries without contributing anything to boost far mers’ productivity,” Olorundenro said. The research institutes have blamed their inability to improve farmers output on failed government structures that do not allow effective and efficient translation of what the researchers are doing to the farmers.

Cross River set to become Nigeria’s cocoa hub …to establish 10 hectares of cocoa seed gardening …starts free distribution of hybrid seedlings to farmers …train farmers on rehabilitation of old trees JOSEPHINE OKOJIE

ross River is set to become Nigeria’s largest cocoa producing state as it flags off a yearly programme to distribute free cocoa hybrid seedlings to farmers of the crop, thereby boosting the state’s production. Also, the state which is currently Nigeria’s second largest cocoa producing state is set to establish a 10 hectares seed gardening of the crop to ensure the continuous planting of new trees in the state. This was made known to journalists during the flag-off ceremony of the distribution of cocoa seedlings to farmers in Ikom local government area of the state. “We are very serious about the cultivation of cocoa in Cross River because of its enormous potential and this is why we would continue to partner with the Cocoa Association of Nigeria (CAN),” Anthony Eneji, Cross River state commissioner for agriculture said. “The state government is ready

to assist any individual interested in establishing a cocoa farm with easy land acquisition, key inputs and technical support to make Cross River the hub of Nigeria’s cocoa production. “We would start with the 10 hectares of seed gardening for free distribution of seedlings to farmers and this is in line with the government efforts to drive export through the agricultural export,” Eneji added. He noted that the state has purchase inputs worth about N30 million for farmers. With this we would boost the production of cocoa in the state as well as the nation’s production. The commissioner said that the state is currently producing 70,000 and 75,000 metric tons and our target is to increase our production to 500,000 metric tons per annum. “Cross River land potential is about 600,000 hectares for cocoa so with a metric ton per hectare we can produce 600,000 metric tons. Until we have planted on all our 600,000 hectares we would not stop giving farmers seedlings,” he further said. He said that the state is participating

in the Federal Government the Accelerated Agric Development Scheme to provide loans with single digit interest rate to maize and cocoa farmers in the state. Speaking also to journalists during the flag-off, Sayina Riman, national president, Cocoa Association of Nigeria and vice president, World Cocoa Producers Organisation said that the private sector in the state has talking it upon itself to boost Cross River state cocoa production. He appreciate the state government for developing a cocoa processing factory in the state, which according to him will improve value addition in the country, create exponential gains by way of earnings, employment and other spin-offs. “The seedlings being distributed are hybrid that can give farmers a ton per hectare. We are also sensitising farmers on rehabilitation of old trees and establishment of new plantations,” Riman said. “We are also distributing the free seedlings it to attract young people into the sector,” he added.

Wednesday 04 July 2018

C002D5556

BUSINESS DAY

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‘Nigeria needs sustained investments to attain rice sufficiency’ Ade Adefeko is the vice president- corporate and government relations, Olam Nigeria. Adefeko tells JOSEPHINE OKOJIE, in this interview, that Nigeria’s rice sufficiency depends on increasing Nigeria’s level of mechanisation use and the provision of improved hybrid rice varieties to farmers. 2020. How realistic is this target? Nigeria’s 2020 rice sufficiency target would not be realistic as the demand for rice grows as the population increases. Our population is increasing very fast and per capita consumption of rice is also increasing. As is evident from the current focused approach, the production and supply to the market are increasing but still would take a few more years for Nigeria to become self-sufficient because of its fast growing population. What is noteworthy however is that the journey has started and at current pace the destination is not far off provided we sustain the momentum.

The Buhari’s administration has focused on increasing rice production through its Anchor Borrowers Scheme (ABS). What is your assessment of the scheme? he Anchor Borrowers Scheme (ABS) has been quite a laudable initiative. There has been a huge effort and focus to increase rice production and productivity to improve farmers’ livelihood. The scheme did reasonably well in achieving its targets in selected states but the recoveries and pay back of loan cannot be said to be at satisfactory levels. This has created doubts on sustainability but a huge step forward nonetheless.

There are reports that Nigeria has increased its local rice production. How true is this and if yes where are the multiplier effects? Yes we have increased our local production and millers are now able to easily buy paddy for their milling operations. Farmer incomes have gone up dramatically especially in the rural areas and is thus commendable. A lot of agro companies are also increasing their production and investment across the rice value chain. How can local rice varieties compete favourably with other imported varieties especially in pricing? Local varieties are well accepted in the market and are as good as any international varieties. Cost of production is unfavorable at present due to infrastructural deficiencies such as high cost of transport, inputs, and low yields among others. Olam is a market leader here with its variants of

Ade Adefeko

Mama’s Pride and Mama’s Choice with 1, 5, 10, 25 and 50kg. What is the problem with the Nigerian rice industry; is it milling or production? Both milling and production are contributing factors. Having said that, both are improving as farmers are producing more and milling capacity is also increasing. The major problem is smuggling from Republic of Benin and Niger. Close to 2 million tons gets

smuggled across the borders thus undermining local producers and millers Lack of higher yielding better varieties is still a problem. Quality of foundation and certified seeds are constraints. Lack of tractors for land preparation and harvesting and threshing are still major issues. These are directly related and are challenges to productivity increase. The government says that the country will be rice sufficient in

season now especially in the above three states. This might negatively impact the 2018 season more on the cultivable areas reducing the area under cultivation.

What impact has Olam had i n b o o s t i n g Ni g e r i a’s r i c e production? Olam has contributed to the selfsufficiency drive through increased production of rice from its own nucleus estate in Nasarawa State (covers 10,000 Ha) and through a well-established out-growers scheme in Benue, Nasarawa, Kaduna and Taraba states. The volume of paddy processed to the capacity of 200,000 MT has given over 100,000 MT of high quality rice for domestic market. This is close to 2 per cent of the supply against demand of rice in the country. This has ensured forex savings as well contributed to the food security agenda of the Federal Government.

How is Olam supporting smallholder farmers in the countr y to boost their rice production? Olam runs a well-knit out-growers scheme in partnership with Central Bank of Nigeria (CBN), Nigeria Incentive-Based Risks Sharing System for Agricultural Lending (NIRSAL), International Fund for Agricultural Development (IFAD), GIZ and farmer cooperatives. Olam also provides farmers with all inputs and train them on Global Agricultural Practices (GAP) and FBS through a decentralized model of buy back at prevailing market prices. The fully supported out-growers scheme had 9,295 hectares cultivated by 6,967 farmers in Benue, Nasarawa, Kaduna and Taraba states in 2017. We supplied N560 million worth of inputs to farmers, bought back 29,492 MT of paddy worth of N3.3 billion paid directly to farmers, and generated 4,648 regular employments during the crop cycle of 120 days. Olam has contributed significantly in generating higher income to the farmers thereby increasing the economic activities resulting in better livelihood in the rural communities where it operates.

How has insecurity impacted on Olam’s rice operations as its rice farms are located in Nassarawa, Benue and Taraba states? The spate of insecurity had partially affected the 2017 wet season procurement but it has greatly impacted on the 2018 wet

How many smallholder farmers are currently under Olam’s outgrowers scheme? We have 6,967 farmers who were direct beneficiaries of Olam outgrower scheme in 2017 and we are expected to have more than 10,000 farmers by end of 2018.

According to him, the unique thing about Growsel is that it does not give cash to farmers but rather provide input and technical support

on global best farming practices for farmers to increase their yields per hectare and improve their livelihood. Growsel only provide farmers with 10 to 15 percent of total fund, which is normally used to pay direct labour for day-to-day farm management. “We currently have over 100 investors who have invested this year but we want to grow the number to 300 or 400 before the end of the year. We need more supporters because we have over 10000 farmers currently and we hope to double the number before the end of the year, while our investors grow their money,” Oketunji said.

Growsel targets 10,000 smallholder farmers for loan JOSEPHINE OKOJIE

rowsel, a leading Ag-tech organisation in Nigeria, is targeting to provide financial support to over 10,000 smallholder farmers across the country in the second half of the year. Oyewole Oketunji, head-business operation, Growsel made this known during the Growsel Supporters Meet Up in Lagos recently. Oketunji said that Growsel objective is to keep empowering farmers with finance to increase the country’s food production and create employment for the Nigeria’s youth population.

“We are planning to reach out to more than 10,000 farmers in the second half of the year and also get more investors that will actually support the farmers,” he said. “We are also starting new platform solution to actually meet the needs of the farmers while improving their livelihood and also for our investors to have a stronger relationship with us and better understand our business model,” he further said. He added that the supporters meet up event was to make the activities of Growsel known to its investors and also give an account of the impact of their investments on the country’s agricultural sector. Oketunji stated that through the

Cross section of Investors

organisations supporters, crowd funded loans are provided for farmers which would be repaid after sales of the planted season.

BUSINESS DAY

Wednesday 04 July 2018

In Association with

‘How we transformed Keystone Bank in 8 months’ Nigeria currently has about 96.4million adults according to EFInA and Keystone Bank is focused on driving an all-inclusive retail growth structure from the underbanked through high net worth individuals, says Obeahon Ohiwerei, CEO of Keystone Bank limited in this interview. HOPE MOSES-ASHIKE Keystone’s stated vision is to “set the pace in financial services delivery, creating utmost value for our stakeholders”. What exactly do you mean by “setting the pace”? he statement referred to above is actually our former vision statement and as part of our re-engineering process it has since been replaced. Our current vision is “to be the preferred platform for delivering convenient and reliable financial solutions”. In doing so we shall consistently leverage people and technology to deliver superior customer experience and enhanced stakeholder value In my view, the word “preferred” takes us above the fray; it elevates the discussion beyond traditional metrics of balance sheet size, asset base and the like, which are still important to us. However, it commits us to delivering such excellent service in all we do that customers repeatedly trust us, desire to do business with us and are always willing to give us the benefit of the doubt. The bank’s Pink Account is a special account for women that gives access to an online digital-marketing network, among other features. What made you believe that such a service was needed? In its Financial Inclusion overview updated April 20, 2018, the World Bank noted that “around two billion people don’t use formal financial services and more than 50 percent of adults in the poorest households are unbanked”. In Nigeria, multiple sur-

veys by EFInA Access to Financial Services confirm that about 36.9 million adults are financially excluded, of which 57.9 percent are female while 42.1 percent are male. Against this backdrop, the Central Bank of Nigeria has in recent years actively pursued a holistic financial inclusion strategy across the country. On our part, the Pink Account is designed to meet the needs of our female working class and SME customers and provides such benefits as access to attractive loans, customized electronic debit cards and access to discounts from partner stores while the pink network is an online forum that empowers our female entrepreneurs with free mentorship and capacity building sessions. I noticed that your corporate-banking division has a sector focus on oil and gas trading. How significantly has Keystone’s earnings been impacted by the slump in oil and gas prices over the last three years or so? In reality the negative headwinds on the sector were two-fold Globally, increased output both from shale oil in the US and OPEC countries impacted negatively on price while domestically the federal government prioritised its re-engineering program in the sector to plug income leakages and improve overall accountability This additional level of scrutiny though laudable, brought with it a major downside risk to the banking sector in general, with the recurrent spectre of delayed payments to oil marketers and their resultant inability to effectively service their loans Prior to this, Keystone Bank had significant loan exposures in the petroleum downstream sector and a strategic decision was

Obeahon Ohiwerei, CEO of Keystone Bank limited

taken to consciously wind down these exposures and diversify actively into other trade sectors. Overall, while the slump in oil prices had some impact on our earnings, our cautious and largely bearish approach to risk asset creation in the sector moderated this as well. Keystone Bank has recently partnered with CeLD Innovations Limited, a Cash Reward as-a-Service Company, to launch the product CashToken. What are the main benefits of this product? At Keystone Bank, we already know that today’s businesses are not only susceptible to technology disruptions but are under a bigger threat when they fail to place a premium on their share of the consumers’ “emotional equity”. Across all sectors, consumers are forcing the

narrative that achieving customer-centricity is no longer a differentiator, but a key determinant of business survival or leadership. This informed our partnership w ith CELD to launch the Cash-Rewardas-a-Service product named the “CashToken” which can be won by new and existing customers that activate accounts on our Mobile App or USSD and actually execute at least five Fee-Earning Transactions (Instant Transfers & Bill Payments). As I understand, Keystone aims to partner with more than 50,000 SME sector players as part of its strategy to become the fastest growing retail bank in Nigeria. How exactly does the bank go about partnering with such a large number of companies? Globally, SMEs are established drivers of even the

strongest economies and Nigeria cannot be an exception. With over 15 million SMEs dotting the Nigerian landscape, we are poised to ensure our customers in this segment actively grow their businesses through our partnerships and focused initiatives in the segment. We shall continue to partner with the government and other developmental agencies in making intervention funds available to the segment. Our SME proposition is the “Growbiz Account” with three variants that address their cycles of growth from infancy through maturity and stability. We are also empowering SMEs through our Agency Banking initiative by signing them up as agents for basic off-site cash-in/cash-out services How does the bank strive to differentiate its customer-service strategy from that of its competitors? As earlier noted, our customer service strategy is to deliver such unique customer experience at every touchpoint that it engenders customer loyalty, repeat business and ultimately greater customer lifetime value Ours is a paradigm shift from simply a transactional mind-set to one that is focused on achieving enduring relationships with our customers at the attendant financial benefits. Our major drivers for this are: digital channels and platforms, particularly our Mobile App and Internet Banking, our Interactive 24/7 Contact Centre, Customer loyalty and reward schemes, Metrics and Information-Driven Feedback Processes that help us tap-in effectively to the voice of the customer Part of your retailbanking strategy appears

to be aimed at the country’s underbanked and unbanked populations. How do think access to finance can be improved for the underbanked and unbanked in Nigeria? What specific measures are you taking to attract these groups? Financial Institutions, Fintech companies, government and other developmental partners need to sustain the momentum by: continually driving and funding research into relevant behavioural dynamics of the unbanked and underbanked segments; creating incentives for the unbanked to see value in being part of the formal sector; developing suitable savings propositions and appropriately-priced micro-loan products that realistically address their ne e d s ; and le ve raging the extensive geographical spread of government agencies to co-locate and in the process bring financial services within reach of the populace I understand that the bank is also focused on enabling greater financial inclusion during the coming months. What specific measures are you taking to improve access to finance? Nigeria currently has about 96.4million adults (EFInA) and Keystone Bank is focused on driving an all-inclusive retail growth structure from the underbanked through High Net Worth Individuals. We are currently deploying a range of solutions to serve the unbanked population which include deployment of ATMs to locations with little or no access to financial services; deployment of our Agency Banking solution under our direct plan called KeyServ Agency Banking and in partnership with the CBN and other federal government agencies.

Wednesday 04 July 2018

C002D5556

Pension Today

BUSINESS DAY

In Association with

Answers to contributors,’ retirees’ concern over new multi-fund structure The Multi-Fund Structure recently introduced by the National Pension Commission (PenCom) in the newly amended Regulation on Investment of Pension Fund Assets for the Pension Industry became effective 1st July 2018. Here, experts at Stanbic IBTC Pension Managers Limited provides insights and clarifications on some of the concerns of contributors and retirees. Excerpt: What is the multi-fund structure? h e Mul t i - Fun d structure is a framework that aims to align the age and risk profile of RSA holders by dividing the RSA Fund into four distinct Funds. The current RSA Fund will be sub-divided into three separate Funds, while the RSA Retirees Fund would be the 4th Fund. What is the difference between the 4 Funds? What are variable income instruments? Variable income instruments are investments that generate income or returns that cannot be pre-determined from the date the investments were made. In addition, the prices of such instruments fluctuate daily. Instruments in this category include Ordinary Shares, Collective Investment Schemes (“CIS”) such as Mutual Funds, Real Estate Investment Trust; Infrastructure Funds and Private Equity Funds. Such investments have potentials to generate high returns over the long term but could be risky owing to uncertainty and fluctuations in market prices and returns. What has age and risk profile got to do with how my pension funds are invested? In investing money, everyone has a limit to the amount of risk that they can take and the amount of uncertainty they can handle. This is known as risk tolerance. Typically, younger people tend to have more capacity for risk because they still have time to recover from loses (if any). Once a person is nearing retirement, it is advisable that they limit the amount of risks they take and reduce exposure to uncertainty as they would start drawing down on their pensions within a short period. Consequently, the allowable exposures to variable in-

come instruments have been designed such that Fund I has the highest allowable limit, followed by Fund II, III and IV respectively. This reduces the risk and uncertainty of contributors in line with their ages. Can I decide which Fund Type to be assigned to? On the day of commencement, a default mechanism shall apply. According to the default mechanism, all active contributors that are 49 years and below would be placed in Fund II while active contributors that are 50 years and above would be placed in Fund III. Subsequently, an active contributor can make a request to his PFA to move between Funds subject to certain restrictions. An active contributor of 49 years and below can opt for Fund I, while an active contributor in Fund III may elect to be assigned to Fund II. However an active contributor in Fund III is not allowed to opt for Fund I while an active contributor in Fund II is not allowed to opt for Fund III. Fund III is strictly for active contributors above 50 years. To be assigned to any fund based on the preceding,

an RSA holder must make a formal request to his/her PFA. How often can I move between Fund types? An active contributor may switch from one Fund type to another Fund type within a PFA, once in 12 months without paying any fees (subject to a formal application). Any additional requests for switches among Funds within a 12 month period by the active Contributor shall attract a fee, of an amount not less than a minimum value, to be determined by PenCom from time to time. When will the 12 month period start counting, will it be from the date of commencement or from the date of my first switch? PenCom will provide details on the 12 months period in the operational framework that would guide the transition to the Multi-Fund structure. Are there any benefits in this multi-fund structure? Of course there are. The new structure allows RSA holders more control over how their pension funds are invested based on their risk tolerance. For instance, an

RC634453

Diamond Pension Fund Custodian Limited 1A, Tiamiyu Savage Street, Victoria Island, Lagos State. Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com

RSA holder in Fund III owing to the default classification based on age, may have more tolerance for risks and uncertainty and could opt to be assigned to Fund II. Can I be assigned immediately? No, PenCom is yet to provide the operational framework to guide the transition to the Multi-Fund structure. Once the framework is released, there will be proper guidance regarding when contributors can be assigned based on the default age classification. Contributors will subsequently have the option to be assigned to a Fund of their choice depending on their risk tolerance. Who takes the ultimate switch responsibility between the contributor and the PFA? Whilst the contributor has the right to switch between funds depending on his or her preference, the PFA will be responsible for affecting the switch upon receipt of a formal request from the contributor. The PFA is also in a position to provide financial advice to contributors to assist in assessing risk and making

an informed decision. What are the impacts on my pension balance when my PFA moves into the multi-fund structure? The balance in your RSA will not change due to the movement to the multi-fund structure because the entire balance would be moved to the appropriate fund without charges. However subsequent growths in your balance would depend on contributions such as the mandatory monthly contributions, voluntary contributions as well as returns generated by the PFA on that particular fund. What is/are the requirement(s) for switching from one fund type to another? In order to switch from one fund type to another, a formal request must be submitted by the contributor to his or her PFA. Do I need to seek an advice from external financial advisor or my PFA before taking a decision to switch? Whilst you are at liberty to seek advice from external financial advisers, we would make information available on the fund performance and indices to enable you take an informed decision. If my date of birth is wrongly captured, which Fund Type will my PFA profile me? You still have the opportunity to check and update your records with your PFA before the commencement of the transition. Will I be able to move back to the preferred fund free of charge after my date of birth correction (especially when my date of birth was wrongly captured by my PFA)? Yes, you will be able to move free of charge given that a contributor has the option to move for free once within 12 months. However, you still have the opportunity to check and update your records with

your PFA before the commencement of the transition. Can I split my voluntary contribution in a separate Fund Type while my mandatory goes into another Fund Type? Every RSA holder is entitled to only one Pin for all types of contributions. Consequently, your voluntary contribution will be in the same Fund as your mandatory contribution. Will the RSA and VC funds have separate fund price or the same? The RSA and VC will have the same fund price because they will be invested in the same fund the contributor selects. How will the Fund Prices under the Multi-Fund Structure be determined at the point of crossing over to the new structure and what would happen to the Old Fund Price and units? PenCom would provide guidance to how the fund price and units would be treated in the operating framework that would guide the transition. What are the multi-funds options for Approved Existing Schemes? Approved Existing Schemes are governed by the Board of Trustees who have the right to structure the portfolios in the best interest of the beneficiaries subject to PenCom’s approval. Consequently, the BOTs of contributory AESs can amend their agreements and restructure them along the lines of the Multi-Fund structure. What impacts does MultiFund structure have on my future pension assets at the point of retirement? The Multi-Fund structure provides more alignment between your retirement goals, risk appetite and age. Consequently, there will be a better chance for your pension assets to meet your expectations when you retire.

This section is created to increase awarness and deepen knowledge about the contributory pension scheme. If you have enquiries or contributions, send to this e-mail: diamondpfcbusday@yahoo.com

BUSINESS DAY

C002D5556

Wednesday 04 July 2018

E-mail: insurancetoday@businessdayonline.com

Embrace technology, adopt global best practice Saham Unitrust records 28% to remain relevant – Kari tells brokers growth in gross premium …as Tinubu urges Uyo Govt. for patronage Stories by MODESTUS ANAESORONYE

o remain relevant and take advantage of growth opportunities open in the industry, insurance brokers have been urged to embrace technology and global best practice. Mohammed Kari, commissioner for Insurance made the remark at the 2018 Insurance Brokers Retreat held in Uyo. He said beyond creating the enabling legal and regulatory environment for insurance business to thrive, the prospects and sustainability of the industry heavily depends on the ability of operators to develop the right products that suit the needs of the identified market. This must be efficiently and effectively distributed to the various target markets, create adequate awareness to realize delivery of services and meet expectations of the target customers. “For the “Future Broker” in particular, it is imperative to note that the prospects for achieving your important objectives will be more than ever before, enhanced by technology and harmonization of global best practices.” Kari said to continue to remain relevant in the insurance valuechain, the broker must be prepared to change its old toga for a new one that is innovative and technology driven.

Mohammed Kari, commissioner for Insurance

Shola Tinubu, president, Nigeria Council of Registered Insurance Brokers

“You must evolve new ways of accessing prospective insurance consumers while at the same time keeping and maintaining existing consumers, ensuring their protection and satisfaction. This is a proven way to guarantee repeat businesses.” Kari further stated that NAICOM over the years had taken steps to create the legal framework and enabling environment for insurance business to thrive in Nigeria. “The Commission had evolved several market development initiatives and platform to upscale insurance awareness and access, channels of distribution, product development to guarantee a stronger and viable insurance sector in Nigeria. The Commission expects the industry operators particularly, Brokers and Underwriters to continuously take advantage of these initiatives

to grow not just their respective business but the industry.” Shola Tinubu, president, Nigeria Council of Registered Insurance Brokers (NCRIB), in his earlier remark appealed to the Governor of Akwa Ibom State, Udom Gabriel Emmanuel to ensure the inclusion of insurance brokers in all its insurance transactions. He said “There are a lot of benefits the State could derive from patronising registered insurance brokers in placing all her insurances with them. The importance of insurance brokers in the insurance value chain cannot be overemphasized. “It is important to state that insurance brokers are the professional arm of the industry. We know the nitty-gritty of insurance business and their engagement gives the client opportunity to maximize their insurance placement without any extra cost to the client”

Babington-Ashaye redefines role of women in corporate world ...calls for increased investment in girl-child education

unmi Babington-Ashaye, the 48th president and chairman of council, Chartered Insurance Institute of Nigeria (CIIN) has emphasised the importance and increasing role of women in corporate and economic driven activities, stating that it is helping to complement their core role as wife and mothers in the family. She said this has become very critical when you consider the dynamics of the society and the need for more economic powers to achieve stability in the home, while also calling for more investments in girl–child education. Babington-Ashaye made the remark at the Women Ignite the Power (WIP) Seminar held in Lagos where she was the chairman. She said “the dynamics have changed. And so the women must

wake up to the reality that there is nothing wrong in being economically independent and ambitious. There is nothing wrong in making a career in addition to managing your home. You can combine both successfully and stand out in the crowd. Indeed, God created a woman as amulti-talented specie so that she can play her various roles satisfactorily and effectively.” According to her, there is nothing wrong for a successful woman to financially contribute to the building of her home/family. This is one of the best ways to secure the trust, support and enjoy the love of their husbands. Where this rule is observed, the family and home will be not only at peace, the woman would be able to strive for greater professional fulfilment outside the home. In my view, if you succeed at home, you will certainly succeed in the cor-

porate world.” “Accordingly, the woman must constantly demonstrate expertise, diligence and integrity to earn her position on merit in Insurance, Accounting, Banking, Medicine, law, broadcasting and other disciplines. Anything short of this is unacceptable. As a woman, does not court favour? Strive to earn your position through dint of hardwork and the world will celebrate you.” Babington-Ashaye further stated that the key to this is education and investment in the girl child which is an investment in the future of the nation because of the long-term impact of this on society. “For the uneducated adult woman, economic empowerment opportunities should be provided. For working young mothers, there is need to make the working hours flexible such that their career path is not affected.”

nderwriting firm, Saham Unitrust Insurance Nigeria Limited has recorded an increase in gross written premium by 28 per cent from N1.92 billion in 2016 to N2.486 billion in 2017 financial period. This was disclosed in the firm’s 2017 audited financial statement which was approved by the National Insurance Commission. In the report, its gross premium income also rose by 11 per cent from N2.08 billion in 2016 to N2.3 billion in the year under review. The company said its profit after tax stood at N425.44 million in 2017 from N786.9 million in 2016 financial period. It’s total asset rose from N11.54 billion in 2016 to N12.75 billion in 2017 period, while its total liabilities was N4.9 billion from N4.02 billion the period under review. Saham Unitrust’s shareholder’s fund rose slight from N7.52bn in 2016 to N7.76bn while its solvency margin rose from N6.35bn in 2016 to N6.8bn in the period under review. Its net claims expenses reduced to N291.94m in 2017 from N355.2m in 2016. Saham Unitrust revealed that its underwriting expenses stood at N651.02m in the year under re-

view from N458.59m in the previous year. In 2017, the company’s net operating result was N814.5 million from N1.3 billion, while the management expenses stood at N631.61 million from N447.53 million John Ijerheime, managing director of the company, said that despite the challenges in the country’s economy, the company emerged with improved results compared to last year’s figures. While reiterating its passion for excellent service delivery, he said that the company will continue to be prudent in the underwriting business. He also said that as part of its promise to honour all genuine claims, Saham Unitrust continued to ensure prompt claims settlement. Ijerheime assured the public that the company will continue to deploy cutting-edge technology to provide the best services in the insurance industry. The company underwrites motor, marine, aviation, engineering, bonds, fire & special perils, burglary, money, goods in transit, personal/ group personal accident, employers’ liability, fidelity guarantee, including oil and Gas insurance.

OAK Pensions promises better returns to contributors

ension Fund Administrator, Oak Pensions Limited has promised that its contributors will continue to enjoy better returns in their Retirement Savings Account. Chairman, OAK Pensions Limited, Awa Ibraheem gave the assurance during the Company’s 12th annual general meeting in Lagos. Ibraheem said, “Our duty is to manage the funds on behalf of our contributors by ensuring that the funds grow so that when they retire, they benefit more than what they contributed. Our retirees are happy with us with the rate of return on investment.” That chairman explained that it is a different thing for the rates on return to be very high, and another thing for the risk to be minimised. He said that OAK Pensions tries

Awa Ibraheem, chairman, OAK Pensions Limited

to balance the return with the risk, by making sure that the interest of its retirees is well protected, and balancing the high returns with low risk. To get closer to its stakeholders, he said that the company has extended its call centers so that its interaction with retirees will be more efficient and effective. “We have also gone far by improving on our ICT, we have completely computerised now, and on the feedback we are getting from retirees, it is much easier for them to be served than in the past,” he said. The chairman also said that OAK was motivating its staff, and that the company had been able to retain the best hands that were also doing well to cater for the contributors. He said that the company was preparing to welcome the informal sector into the company when the micropension scheme eventually commences. While observing that most of the contributors of the Contributory Pension Scheme were from the government and private sector, he said that the informal sector were actually the drivers of the economy. “What we are doing now is to expand our informal sector department, to provide them with more facilities,” he said Ibraheem said that the company was committed to protecting the financial future of the Nigerian workers and will continue to enlighten the informal sector on the need to key into the CPS.

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E-mail: insurancetoday@businessdayonline.com

Keying into financial inclusion will help deepen insurance penetration - Hassan The 2018 National Insurance Conference (NIC) being organized by the Insurance Industry Consultative Council (IICC), which focuses on financial inclusion underscores the industry’s new commitment to deepen penetration and create value for the larger population of Nigerians. Femi Hassan, chairman, Planning Committee of NIC in this interview with Modestus Anaesoronye looks at the position of the insurance sector today, efforts to increase relevance and how to harness growth opportunities in the industry. Excerpt: Tell us about NIC and why the IICC is excited about this year ’s programme? his edition of the conference which is slated to hold between Ju l y 8 t h a n d 10th, 2018 in Abuja is the fourth in the series to be held since its conception by the Insurance Industry Consultative Council (IICC). It is one of those established channels aimed at fostering intellectual and professional development of insurance practitioners and further creating a platform for networking and exchange of ideas between industry operators and critical stakeholders in the nation’s economy. The 2018 Conference would also highlight the enabling roles of the insurance industry in achieving financial inclusion and by so doing, accelerate its contributions to Nigeria’s Gross Domestic Product. The fact that access to financial services is concentrated in urban areas has limited the people from the rural areas from contributing maximally to growth and development of the nation’s economy. The Strategy recognizes various stakeholders and apportioned roles and responsibilities to them on the basis of their comparative advantage. To the insurance industry, financial inclusion should be the pursuit of making insurance services accessible at affordable costs to all individuals and businesses irrespective of net worth and size respectively. Financial inclusion there will strive to address and proffer solutions to the constraints that exclude people from participating in the financial sector. Looking at the state of the insurance industry in Nigeria, what is the future looking like? The future is looking bright. The insurance in-

Femi Hassan

dustry desires to be among the top 20 by 2020 as projected. But with the present state of things, this expectation may ship a little further while the industry tries to takes advantage of the financial inclusion strategy that the whole financial services sector are keying into at the moment. This financial inclusion is going to help penetration into the rural segment of the population, which is where the number is. Insurance premium income need to improve through increase in market penetration by insurance companies. So, I believe that by 2025, insurance industry in Nigeria would have taken its rightful position as projected, not in 2020. What gives you the hope that insurance industry could attain the height by 2025 as you have predicted? From the angle of financial inclusion, the youth occupies about 70 percent of the population. With the youth, technology would be ‘brought to play’ because they are technology driven. Similarly, recent government projects and

policies have been towards economic improvement. An example is the rail line along Lagos – Abeokuta Express Way. This rail line will provide opportunity for insurance companies because there will be travel insurance. The aviation industry may also provide another opportunity for insurance if the government invests in national carrier again as being planned. The government has been the catalyst for business growth and such efforts will bring about development in the

insurance industry. A lot of investments have come into the insurance industry and the economy in recent times. What do you think operators could do to harness these opportunities? Operators need to cooperate amongst themselves to enable them take advantage of the emerging opportunities. With resources put together by operators, there will be strong industry with higher capacity to deliver quality insurance services to the larger of Nigerians.

The overall aim is to empower people, promote savings, increase the level of investment by diverse economic groups, catalyse increased productivity, improve income, reduce poverty and also promote a sound, safe, vibrant and stable financial system

In recent times, foreign investors have continued to increase their interest in the insurance industry. What is the impact of this on underwriting companies, brokerage firms, and also the loss adjusters? Insurance industry has had new insurance companies come in with their own technology and better operational models. One of the new companies identified a way of encouraging clients in the form of an incentive i.e., if a client does not have claim for 12 months, such a client would be given a return premium as a gift, which is an incentive. So clients are induced when informed that without a claim for 24 months, a portion of the premium will be refunded. This way, other insurance companies will be emulating this better way of attracting clientele rather than under cutting prices. There should also be cooperation among the brokers in other to avoid rate-cutting. Hence, with the involvement of the government, there should be development in brokerage firms. The local content policy of the government has been of helpful, as insurance companies, brokers and adjusters are all leveraging it to improve their business. Maximization of local content i.e., technology transfer would aid increase in the capacity of insurance companies. For example, oil and gas and energy have been involved in technology transfer and they have really benefitted from it. This has also increased the capital base of most of these oil, gas and energy companies. What is behind the choice of this theme? The theme of the conference, ‘Insurance Industry and Financial Inclusion’ is quite apt, in view of the policy direction of government towards including all segments of the society within the financial safety

net. As at 2012, according to a survey by the Enhancing Financial Innovation and Access (EFInA), about 39.7 percent or 34.9 million adult Nigerians were excluded from financial services. So, in order to reduce the number of the excluded population, the Central Bank of Nigeria (CBN) on behalf of the Federal Government launched the National Financial Inclusion Strategy (NFIS) in October 2012. The strategy focuses on. interventions that will increase access to: payments, savings, credit, remittances, pension, insurance; under affordable terms and conditions The overall aim is to empower people, promote savings, increase the level of investment by diverse economic groups, catalyse increased productivity, improve income, reduce poverty and also promote a sound, safe, vibrant and stable financial system. The theme bothering on financial inclusion was as a result of the realization of the gap in insurance penetration in Nigeria given our population. If you look back, there has been clamour for insurance to deepen penetration and impact the individual population particularly in the grassroots. Likewise to increase investment in technology, which would help bring out the benefits in financial inclusion? But the federal government on its own would need to help the underwriters in the area infrastructure. Hence, for insurance industry to enjoy full benefits of financial inclusion, it needs to deploy a lot of resources towards attainment of this objective i.e., the federal government should brace up either by way of subsidy or connectivity with telecoms and the banks, or other ways to achieve this objective of financial inclusion.

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‘Hasten track laying on Lagos-Ibadan rail project’ Page 31

How pilots cut corners to make up for lost time

Probation licence reprieve granted to Uber

Page 30

‘AC’ concept accommodates freight on passenger trains

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Page 31

Kia’s ‘PMP’ renews confidence in brand ownership ... Offers customers hassle-free service

Stories by MIKE OCHONMA

n an effort to constantly enhance the customer experience through hassle-free end-to-end service offerings, Kia Motors Nigeria unalloyed has launched an annual ‘Prepaid Maintenance Package’ (PMP) to Kia owners. Equipped to offer a cashless service and complete car maintenance, from periodic maintenance services to wheel alignment and balancing amongst other value-added services, the PMP is in tandem with company’s drive to make Kia ownership affordable, flexible and above all delightful. The global auto market is undergoing rapid changes while customer demands have become more diversified and competition more heated. In particular, with the narrowing gap in commercial value and quality between carmakers, customer service is emerging as a key competitive trait. Making a remark on the service offering, Sanjay Tatpati, chief operating officer, Sanjay said that the prepaid maintenance package will help provide peace of mind to owners, as the costs involved will be discounted and affordable. The package covers the standard maintenance schedule and includes wear-and-tear items such as brake pads, brake discs, and windscreen wipers in addition to other valueadded services. “With this package in place, owners need not worry about the maintenance of their Kia cars. This also reaffirms the commitment we have towards our customers of not

just in strengthening our after-sales service, but also the Kia ownership experience for our owners,” added Sanjay. Kia’s ‘PMP’ service initiative will offer benefits as per the vehicle age to cater to the requirements of different customers and will offer car check-up with the examination of the engine, transmission, electrical system, under-body, AC, exterior etc. Speaking on the initiative, Olawale Jimoh, marketing manager, Kia Motors Nigeria said, “being a customer-centric and a caring brand, Kia has always laid a strong emphasis on unique service initiatives. These efforts have made us real in quite a number of awards and provide exceptional service delivery to customers. The prepaid maintenance package is a step further to make Kia ownership a delightful experience, he assured. The new prepaid maintenance package is aimed at offering special

discounts to the customer making their ownership experience worryfree and affordable. Kia Motors sources in Nigeria said that customer service is germane and remains a critical factor for the brand’s success. For this reason, the prepaid maintenance package is one of the offers from the company to display best-in-class customer service offerings and to provide satisfactory services to their respective customers. Tagged as ‘Pay Less, Get More’, customers will only pay once at a discounted price and enjoy one year or four free services. The management of the dealership assured that it will develop a service identity unique to Kia in order to provide customers with the same dedication, caring and dependability that is given to family members. Currently, the worldwide service network is pursuing an innovative campaign called ‘Promise to Care’ to realize unrivalled customer service

Visitors savour 70 years of LR’s authentic fabrics quality

and satisfaction and through the campaign, the employees will serve customers by treating customers as a family member, carry out our responsibilities to the fullest and provide exceptional service. With this model, customers around the country will be able to experience Kia’s personable and considerate service through the ‘Promise to care’ campaign at all service network points, even as it is committed to creating a lasting experience to customers on the new and improved Kia-brand of service at our service centres nationwide. The prepaid maintenance package is designed for aftersales service delivery excellence and creates the consciousness in the industry to go beyond paying lip service to customer service by establishing a closer connection with customers through a truly valuable value-added service and long-term benefits.

and Rover and the London Design Museum are inviting visitors to take a seat to commemorate 70 years of the Land Rover brand. The atrium seating at the London museum has been re-upholstered with 18 original materials used in the brand from 1948 to 2018 for the Material Innovation installation. They include the original fabric from the first 1948 model, the cloth designed with Paul Smith for his special edition Land Rover Defender in 2015 and an innovative, sustainable textile developed by Kvadrat for the Range Rover Velar (2017) as a premium alternative to leather. Visitors are invited to discover and experience the different qualities of these authentic fabrics marking a change from the usual ‘don’t touch’ rule at museums. According to Deyan Sudjic, the director of the Design Museum, said: “The Land Rover is one of the great design success stories. This installation is a great opportunity for our visitors to see seven decades of new thinking about textiles in the context of vehicle design. And this is one part of the museum where we are definitely saying please touch.” And for Gerry McGovern, Land Rover chief design officer, stated that, “Land Rover materials and fabrics are rigorously tested to meet the exacting standards of our customers. This installation reflects the history of our seating from cloth to leather and includes our latest technical materials from Kvadrat in the new Range Rover Velar.”

Porsche freaks gather to celebrate 70 years of sports car

nthusiastic Porsche owners defied the rains as they converged on Porsche Centre in Victoria Island, Lagos to commomerate the 70-year storied past of the brand, marking the day the first-ever Porsche 356 was registered as an automobile. Tagged ‘Sportscar together day,’ the event which excluded the mooring journalists in a very memorable event like this as it been witnessed outside Nigeria attracted high profile Porsche owners in the country despite that participated in the driving exercise mark the birthday of the iconic brand. The Porsche obsessives later journeyed in a convoy of approximately 88 kilometers to the Epe Resort & SPA ; a tourist suburb on the outskirts of Lagos, where the brand enthusiasts were hosted to a sumptuous breakfast. This is the first time the iconic sports’ car owners are meeting to

share experiences and be feted in union with the six-year-old Porsche dealership. Majority of the drivers are also from indication, for the first time, putting to the test, the potency of their iconic cars at a seeming racing encounter that reaffirmed Porsche’s supremacy on the road. One of the drivers who preferred anonymity said: “This is the first

time ever I will be putting to test, the agility of my Porsche 911,” which had barely gone pass 3,000 kilometers in four years. The celebration continued in the afternoon at the Porsche Centre showroom after the drivers returned from the exhilarating drive, where they feasted and relaxed. Patrick Mgbenwelu, a proud owner of Porsche 911 Carrera cut the

anniversary cake, and while congratulating the brand at 70, he commended the local dealership for taking the marque to a deserving height in Nigeria. Porsche has for 70 years revolved around what could be described as a fascinating sports car and a rare attraction of discerning drivers. Anurag Shah, Porsche Centre Lagos Head of Sales and Marketing said: “this special anniversary exhibition was held to commemorate the June 8, 1948 birthday of the brand, when the first prototype with chassis number 356-001 received its general operating permit.” He said the event was undoubtedly unique to both the dealership and Porsche drivers, who are meeting for the first time to share rare experiences and discuss salient values and versatility of their cars. “The cars drove effortlessly in flooded roads, which ordinarily, wouldn’t have inspired the driv-

ers - but thanks to the anniversary exhibition, which allowed the dealership to also instruct the drivers of the various capabilities of their Porsche vehicles. “In other words, we didn’t only celebrated the birth of this iconic sports car, but also reassured the owners that their vehicles can be in everyday situations,” Shah noted. About this time 70 years ago, Ferdinand “Ferry” Porsche turned his dream of a sports car into a reality with the birth of the 356 which later inspired icons including the Porsche 550 and Porsche 911, and without the 356, there would be no Mission E, the automaker’s latest leap into the future. The range of “Sports cars today” is illustrated with a Panamera Turbo SE-Hybrid Sport Turismo, which, as the flagship of the model line, demonstrates the possibilities of alternative drive technology in a virtual reality scene.

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odern

Discover Qatar launches digital overhaul of services

How pilots cut corners to make up for lost time MIKE OCHONMA

o m e t i m e s f l ig ht d e lays pile up and push back the times of lateafternoon and evening flights, which can be incredibly frustrating. Once you’re finally on board and ready for take-off, your pilot might announce that they’re going to try to “make up for lost time” during the flight. But shaving some time off is not as simple as just flying faster. Pilots have to stick to airtraffic regulations, speed limits, and the route set in place. Within the aviation industry, experts say the most common way for pilots to shave some time off their flight duration is by simply shortening the route. Flight paths between airports aren’t usually straight lines, but an indirect, weaving

path that forms a “connect-thedots-type pattern that follows a long series of waypoints.” If pilots are strapped for time, they might ask control whether they can literally cut a few corners or skip some of the waypoints. Doing so, he explained, “can sometimes save several minutes.” Air-traffic control can plan routes and schedules, but on the day it always comes down to the wind. While this quick fix is great for shorter journeys, another pilot explained to the making up for lost time is significantly more complicated on long-haul journeys. Simply speeding up is not an option because of the drastic effect this would have on fuel consumption. While the Dreamliner B787 is meant to fly at about 640 to 647 mph, for example, cranking this up to around 654 mph (just 7 mph faster) increases

the aircraft’s fuel consumption by about 500 to 1,000 kilograms (1,100 to 2,200 pounds), depending on the length of the flight which is a huge cost to shave a few minutes from a long-haul flight. Similarly, it is explained that planes can arrive late even when they do manage to leave on time. This is not down to speed or route but caused by natural air movement, wind, and the strong wind paths that encircle the globe, known as jet streams. “In long-haul, the situation is more complex,” as flight schedules have to second guess what the worldwide jet stream systems will be doing in each season and build a schedule accordingly. Sometimes the world’s weather systems will be different ‘on the day’ and hence it is possible to leave on time and still arrive half an hour early.

Probation licence reprieve granted to Uber

temporary licence for a probation period of 15 months to operate in London has been granted to ridesharing and taxi company Uber after the company won a court appeal against a Transport for London (TfL) ban. TfL acted after a court ruling in September last year that Uber had failed to report serious criminal offences and carry out background checks on drivers, but Dara Khosrowshahi, the Uber chief executive responded by saying he would “make things right”. TfL refused to renew the licence when it expired in September, saying the taxi app was not a “fit and proper” operator. Uber,

which had been seeking a fiveyear renewal, appealed and has now been awarded the temporary licence. Responding on the development, London mayor Sadiq Khan said: “I believe everyone must play by the same rules, no matter how big or powerful they are’’.

Uber has been put on probation in which their 15-month licence has a clear set of conditions that TfL will thoroughly monitor and enforce. TfL said it was considering the court’s decision and that the conditions would let it take action if Uber failed to meet standards.

iscover Qatar, the destination management subsidiary arm of Qatar Airways, has announced that it has launched a digital transformation project. The company hopes to implement innovative digital technology to enable Qatar’s growing inventory of hotel rooms and services to connect with global tour operators and travel providers on one digital platform. The system, provided by technology company Illusions, will allow global tour operators and passengers to have an enhanced and seamless journey when searching for and booking their perfect Discover Qatar experience. Additionally, as an inclusive project, it will empower all relevant and regulated suppliers and service providers in the Qatari market to offer their products globally via the Dis-

executive, Akbar Al Baker, said: “At Qatar Airways, we continue to raise the bar and innovate across all areas of our business as part of our five-star product offering. “Discover Qatar’s technology is one of the finest destination management company digital solutions in the world, and will provide our travel partners and our passengers with not only a flexible, reliable and scalable platform, but also access to the full range of services, experiences and accommodation that our beautiful country holds, in a seamless digital experience. “As the national carrier of the state of Qatar, we are very proud to be playing a key role in the growth of Qatar’s tourism industry. “Qatar Airways is connected to more than 30,000 travel companies globally, and this

cover Qatar system. Discover Qatar is the first destination management company to use this unique exchange technology platform in the region, marking another milestone for Qatar Airways. One of the major benefits of the new technology is that it offers the destination immediate connectivity to more than 140 global travel partners already connected to the Illusions IWTX exchange platform. Qatar Airways Group chief

new technology will make every process easier for those global travel operators wishing to offer Qatar as a destination of choice to their customers. “Through this initiative, we are looking forward to welcoming more tourists to Qatar, to experience our unique culture, warm hospitality and spectacular landscapes.” Customers can find out more about Discover Qatar, its services and offerings by visiting the official website.

Jewellery, luxury brand; Bvlgari Hotel for Shanghai

talian jewellery and luxury goods brand Bvlgari has opened its latest upmarket hotel with a development on the banks of Suzhou Creek in Shanghai. Part of the Suhe Creek riverside urban revitalisation project, it is the sixth in the Bvlgari collection. The company opened is first Chinese property in Beijing last year, joining a growing worldwide portfolio which began with the Bvlgari Hotel Milano in 2004, the Bvlgari Resort Bali in 2006, the Bvlgari Hotel London in 2012 and the Bvlgari Resort Dubai in 2017. The new Shanghai hotel combines a 48-storey tower with the restored Chamber of Commerce building dating from 1916 and is

surrounded by lush gardens. The 82 guestrooms, including 19 suites, offer views of the iconic Bund and Pudong financial district. The extraordinary metropolitan location in the Suhe Creek development, a protected heritage zone, with the hotel’s contemporary glamorous style set new standards of luxury accommodation for Shanghai. Bvlgari CEO Jean-Christophe Babin added: “I like to think of the Bvlgari Hotels collection as a necklace and we have added a sixth gem to it. It is a momentous day to be opening our second property in China in less than a year.”

Wednesday 04 July 2018

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Local and global rail news as it breaks

‘Hasten track laying on Lagos-Ibadan rail project’ … CCECC committed to delivery timeline, says Amaechi

Stories by MIKE OCHONMA

igeria’s minister of transportation, Rotimi Amaechi has expressed dissatisfaction over the slow pace of laying of tracks by the Chinese Civil Engineering Construction Company (CCECC) on the LagosIbadan standard gauge rail project. Speaking at the end of his monthly inspection tour of the project during a stop along the Ibadan project corridor, the minister stated that only three kilometres of tracks has been achieved since his inspection visit last month, during which period the CCECC estimated that, it would lay 11 kilometers of track by this month. ‘According to Rotimi Amaechi, ‘’They have started laying the tracks as you know. But am I impressed with the laying, the answer is no. We agreed at 11 kilometers, they have done only three. They have apologized and said that at the next meeting which would take place on the 25 of July, they would have done more than 10. The minister however pointed out that the reason for the snail speed is the rain that is slowing down the civil works, adding that the contractors are trying to manage the situation until the dry weather comes. Amaechi disclosed that the capacity is that, CCECC can lay that 10 kilometers in one day, but it is the civil works that is the problem and not the laying of the tracks. It is how to manage the civil works under the current situation of weather challenges and they are working towards that. He expressed satisfaction with the management of the Lagos State

Water Corporation, the committee headed by the chairman of Nigeria Railway Corporation (NRC) and all the engineers in the committee mandated to find solutions to the problems and challenges hindering smooth project work along the Lagos-Ibadan rail corridor. On the impact and state of affairs of infrastructures perceived to be hindering the project, the minister said, ‘’If you remember we said we have a challenge of 24 kilometers water pipes in Lagos and the project engineer had consistently argued at the meeting that we can’t say that

France to finance €250m rolling stock renewal

he French government has agreed to finance up to €250m for the renewal and upgrade of the rolling stock on the Paris - Amiens - Boulogne and Paris - St Quentin - Maubeuge/Cambrai lines. An agreement signed by the Agency for Financing Transport Infrastructure in France’s (Afitf ) board of directors on June 26 finalise a protocol signed in March 2017 between the state and the Hauts-de-France region concerning the future of the territorial equilibrium trains (TET). Under the agreement, the region will become the organising authority of the two lines on January 1 2019, giving it responsibility for organising and financing all rail services in its area, while the state would finance up to €250m for the renewal of the rolling stock. “The signing of this agreement

confirms that the state keeps its commitments vis-à-vis the region and its inhabitants. This very important funding from the state will result in a concrete improvement of the quality of daily transport for our fellow citizens, a priority shared by the government and the Hauts-de-France region’’. Says Elisabeth Borne, the minister for transport.

until we go to the site’’. ‘’He went with his team and found out that we only have two kilometers of pipe on our right of way. Those challenges actually exist but not on our right of way. They exist on LAMATA right of way’’. On the importance of the rail infrastructure in the economy, the minister maintained that the whole Nigeria knows that the President is committed to railway and that’s why I will say I’m fortunate because if the aides tell the President the Minister for Transport wants to see you, he assumes it is about railway. So he

Medium-speed rail systems sufficient for Africa, most continents

would just say please let him see me. The President believes that the cost of production and movement of goods including that of agriculture will be resolved to the benefit of th society if we are able to do railway and his focus is everywhere in Nigeria. ‘’So even if I have political problem and I say I want to see the President, I’m allowed to see the President because the assumption is that it is railway and so we must know that it is not a question to say what’s the commitment of the federal government’’. Amaechi stated.

ost continents, Africa included, should be “adequately serviced” by rail systems operating at speeds of between 150 km/h to 250 km/h. Mudholkar is also a Speaking at Africa Rail event held in Johannesburg recently, Vinay Mudholkar, Louis Berger Group rail programmes technical Vice President and former Amtrak director and All Aboard Florida senior VP said he regarded this band of speed as “the sweet spot”, generating a good rate of return. Mudholkar added that he also believed that rail corridors should be shared between passengers and freight, as this generated sufficient revenue. He proposed a system of six E’s for the design, planning and delivery of any rail system. The system must firstly be economical to build, operate and maintain, as it must not place an unnecessary burden on the tax payer. Rail systems must also deliver improvement to the environment, and be expeditious in its delivery. ‘’If people do not see delivery on a railway project in three to five years, they will lose faith in the project, “Every nation is constrained for resources, even in the US now,” noted Mudholkar. Another E is to ensure that the rail system’s energy consumption is sustainable, and that it is able to handle any emergency. The safety of the passenger and goods should be paramount, He said. The last E is to ensure that the construction of a rail system educates the local workforce, with transfer of technology to local employees and businesses. Mudholkar also noted that he believed that rail systems should eliminate all grade crossings, as this holds the “most danger” to rail operations globally adding that systems that operate at these speeds can also be built, operated and maintained efficiently.

‘AC’ concept accommodates freight on passenger trains

new system which enables passenger train interiors to be reconfigured to carry freight is currently providing the needs of commuters in the United Kingdom according to its developer. The Adaptable Carriage (AC) system developed by 42 Technology, Britain, allows seats and tables to be automatically stowed to create space for low-density high-value packages. The system was developed in consultation with Britain’s railway industry as part of a twoyear programme funded by the Rail Safety and Standards Board (RSSB). Adaptable Carriage features a forward-folding seat design, which enables easier cleaning after seats have been stowed. A sliding mechanism is used to configure the seats for passenger use and lock them in position. Seats and mechanisms have been engineered to minimise

weight. All seats, tables and draft screens within each section are linked together and can be moved along the length of the vehicle. The control system secures all seats in both passenger and freight modes. Reconfiguration is fully automated and the process is completed in less than three minutes. This means 20 rows of seats can be compressed to create a space

equivalent to the capacity of an articulated lorry trailer. According to 42 Technology, the system can be installed in both aluminium and steel-bodied vehicles and is suitable for both retrofit and new-build applications. The company says it is working with a number of interested parties on initial trials and to enable further development of the technology.

32 BUSINESS DAY Financial Inclusion

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BusinessDay Radio programme; Financial Inclusion Today Aired yesterday by 11:30am on Rhythm 93.7 FM ENDURANCE OKAFOR Themed: Nigeria banks driving financial inclusion: Diamond Bank With special guest; Uche Ben-Uzoebo, Head, Agency & Merchant service, Financial Inclusion at Diamond Bank. BusinessDay analysts; Patrick Atuanya, Bala Augie, Lolade Akinmurele and Endurance Okafor. Anchored by Lehle Balde peaking on the radio show, Uzoebo explained what Diamond Bank is doing to improve financial inclusion in Nigeria. “For us as a bank, part of our strategy is to include the excluded going by the CBN directive and to bank every single person, whether you stay in your mansion, or in your office, or whether you are a market woman, we should be able to cater for you. The journey for Diamond bank actually started in 2012 when launched our maiden proposition, called the Beta Proposition” “This beta Proposition is actually a savings account specifically for market traders, in doing that we worked in conjunction with Women World Bank and other organisations to ensure that the proposition is properly dimensioned and tested. In doing that we also had a lot of surveys, we did not just sit back at the office to come with a document and put out there. We had a lot of surveys, a lot of customer insight and we listened to them, and we actually built them to what they wanted it to be and we rolled out the Beta Proposition for Market women and men because these are people that are time poor customers, because they do not want to leave the comfort of their shops, because by the time they do that, they lose also a customer who is coming, going to the bank,” the guest said on the show. She decided Diamond Bank decided to bring the bank to those set of people “We now had what we call the Beta Friends, the agents that go to them, open a bank account digitally using a phone and they transact. So everyday, these Beta Friends also go to them, to collect whatever amount they have, and encourage them to save, to start learn-

ing how to save. And we came up with that, and they really liked it. Reason being that at the comfort of their shops, they are still selling, and are also banking, saving and being included. Even when we launched the product, even the name, as you will remember, the name is called Beta, as in e don beta for us. We came up with so many names and we took it to them. So they were the ones that chose the name saying, e don beta for us, as in things are now better, things are now looking up for us, and they liked that and we rolled that out,”Uzoebo said. The Head, Agency and Merchant service said along the line they also noticed that they their customers who on the Beta platform were complaining that they needed to go to the ATM, they want to withdraw money, even when the banks are closed, after banking hours, what happens? Diamond Bank eventually introduce a debit card

to them, so today they have debit cards tied to that account, as compiled from the guest. “We also introduced what we call the target savers for them. So aside their savings account, we introduced a savings plan for them. So that they will now have to save up to a specific goal. Perhaps they want to pay for their rent, they want to save for school fees, save for a particular festivity period. So they started having that as well, moving money to that account. The same thing that the Beta Friends will encourage them to do,” “So as at now we have also rolled out the loan aspect, because at a point they were like Diamond Bank, I need some money to be able to add to my goods and buy one or two things. Maybe the market has good price, maybe it is seasonal and they do not have that extra fund, of course working with bank of Industry and Leshego Microfinance, we recently in the month of

March launched what we called the Beta Quick Loan. So this is the loan that is a maximum of N50,000 at the interest rate of 10 percent and it runs for 30 days,” Uzoebo explained. On the response from the people using the platform, the guest said so far, they have had very good feedback from them. “You know, we’ve tested it and we’re still testing it, we are having the pilot phase still going on, and we have done that within our Lagos area. From there we moved on, and people ask if Diamond Bank is a partner to MTN, and I say yes, we’ve partnered with the largest Telco - MTN to launch what we call the Diamond Yello Account in 2014 and today we are sitting on over 10 million customers. And you don’t need to get to the bank to open an account, all you just need to do is to dial *710# and then you have a bank account. It is a real bank account, it is not a wallet, because most times

people misunderstand it. It is a real bank account, you can transact, you can do fund transfer as well, you can pay your bills and buy airtime,” she said. On the progress of the Beta initiative and the number of people that have been introduced on the platform, Uzoeba said as at today, they have approximately 600,000 customers in their books for the Beta Proposition and of course by the end of this year, they should be gunning for almost a million. It sounds impossible she said, but that is what it is. “Because in doing that, of course we have rolled out a lot of initiatives, we have a lot of programmes that we run for them. We have clinics, financial literacy programmes. We try as much as possible to be in their faces, to make this proposition as interesting as possible, to help their lives, to better their lives. So what we do is that, we go out there, we preach the gospel, because that is what it is, working

with them. With this micro lending that we have done, a lot of them are hearing about it and they want to embrace this as well. So yes, the journey is still far because financial inclusion is not a day thing, it is an ongoing thing, but yes, I can tell you that we will be part of that end story. When asked if there is interest rate on the microloans the guest explained that there is 10 percent interest and the maximum is N50,000. “Yes, they are asking us, ‘can I get more than N50,000?’ The answer to that is that we have to take things gradually, because we do not also want to make mistakes along the line. We do not just also want to throw these monies in the air and we start having bad loans. So we are just monitoring the N50,000. Perhaps after our pilot phase and when we’ve test this, there is room to increase that in the near future. So the loan runs for 30 days and at the end of the 30 days, it gives you a notification, maybe 3 days before you pay back your loan and that’s it, you liquidate, and if you want to take another one after that, you are free to take,” she said. When asked to talk on how impactful the partnership has been with Telcos - Diamond Yello Account (DYA), she replied by saying; “the partnership with MTN has been a great journey as we started in the year 2014, and as at today we have 10 million customers there. Irrespective of where you are, you can open an account, we all talk about financial inclusion and the focus is on the north, and the account is made for anybody, and we have a majority of those that I will call not privilege opening this account and we’ve included them. As a matter of fact, in the year 2017, we rewarded the 2 millionth customer who happened to be a tailor who has a simple sewing machine and he couldn’t even speak english, but he was the 2 millionth customer and we rewarded him with N2 million and it was just because he dialed *710# and opened that simple account. Once you have an MTN sim, you just dial that and you open an account and it is a real Continues on page 33

Wednesday 04 July 2018

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Financial Inclusion

& INNOVATION

BUSINESS DAY

Supported by:

Impact of CBN’s license withdrawal from MMOs on Financial Inclusion OLUWATOSIN DOKUNMU

ith the Central Bank of Nigeria (CBN) keen on revoking the licenses of Mobile Money Operators (MMOs) that fail to achieve the minimum cash balance of N2 billion by the end of the first half of 2018, a possible threat face the 80 percent financial inclusion target by 2020. According to the CBN directive, any MMO that fails to meet the recapitalisation requirement will have to be put out of business with the grace period ending June 2018. On the impact the license revoking by the CBN will have on financial inclusion, considering the apex bank has a target of including 80 percent of NIgerian

inot the financial cycle by the year 2020. “Those MMos that cannot meet with the requirement should merge or be acquired, else you may have MMOs that will default,” Ashiru told BusinessDay in a phone response. “Its effect on financial inclusion is two fold; one,

you have only people with the capacity to deliver in operation and this could force things like partnership just like the bank reforms of 2005, which left us with strong banks with the capacity to do the business,” Yewande Adewusi, a financial inclusion consultant told Business-

Day in a phone response. The opinion of Ashiru, the Lagos-based analyst was not different as he said in a long run, the license revoking by the apex bank will not have negative impact on financial inclusion in Africa’s largest economy. “There was a time we had over 80 banks but to-

day , there are less banks but with much capacity,” Ashiru said. Ashiru concluded by saying that CBN have to make sure MMOs do not have certain threshold regarding capitalisation. Meanwhile, the apex bank seem quite eager on implementing this requirement having grown the initial requirement from N500 million to the current target of N2 billion with a reasonable time for MMOs to comply. “We expect any serious operator to meet the requirement. To the best of my knowledge, there is no plan to shift the deadline” Isaac Okorafor, Director, Corporate Communications, CBN, said after the directive was issued. With two years down the lane for the 20 percent financial exclusion rate among Nigerian adults,

revoking the licenses of MMOs could grave effects on the 80 percent inclusion rate,an analyst who asked not to be quoted said. “We have so many players and a lot of them are not doing anything, so what they are trying to do is to ensure the players in the sector have the capacity to deliver on the b u s i n e s s.”Ad e w u s i e xplained. According to a BusinessDay survey, of the currently licensed 21 MMOs in the country, 15 likely are to face the risk of being put out of business due to the minimum recapitalization requirement. Meanwhile, Mobile money is a platform that leverages the Unstructured Supplementary Service Data (USSD) platform on mobile networks to carry out financial transactions from one person to another.

BusinessDay Radio programme; Financial Inclusion Today Continued from page 32

bank account. As long as your SIM is registered you have all those information captured in that already. So for now it is only an MTN subscriber that can open that account.” On how it will work out for a maid who earns about N40,000 a month and has no proper documentation she explained and said “All she needs do without even leaving her duty taking permission from her boss, in that her room she just dials *710# and she gets an account. Once she opens that account, the boss will be able to transfer her salary to that account and she in the comfort of that her work environment can transfer money to her relations, she can buy airtime as well. So it is as simple as that, because what we are actually doing for Financial Inclusion is for people like her. We are trying to create that enabling environment, we’re trying to also include them.” While on the feedback from people engaged on the platform Uzoebo said they are have been getting a lot of testimonials from the people because they have been very happy. The fact that they they have a bank account, the fact that they can use their mobile phone to transact, to buy airtime, without having to go to the next shop, without having to travel a distance

are the things that makes them happy as compiled from the guest. “Now all those things put together, I will say we have been able to impact in people’s lives. Another aspect of that is offering them the financial literacy.” On what Diamond Bank is doing about passing financial literacy, the guest explained that through their branch networks, as they have a lot of communities, associations and that they usually go to them “some of them also invite us to come and talk or speak to all these associations and we also train them on how to save, have a bank account and what to do with it instead having their monies tied to wrappers or being taken away by the men of the underworld. I remember a session with CBN and in that video it showed people in the village, all of them were just playing, talking having a meeting after a very hard day, they were just in the field and from nowhere, one of them just started screaming fire!, so all of them were wondering what was happening, but this boy was now standing, looking and crying and the others asked him, what is the problem? Do you have anyone inside there? But he said and they said why are you crying? He knew why he was crying because

he hid his money in the hut, all his savings, everything had vanished. But assuming that money was in the bank, even if the building was burning, even if his mobile phone was burning, he would have still had his money. So these are the kind of things when we talk of financial literacy we try to break it down, because you are talking to people who don’t understand the need for bank accounts. So it was a good learning process for us and we use when we go for our programmes,”the financial inclusion guest explained. On the the biggest hindrances between banks and telcos in driving financial inclusion Uzoebo said it was constraints. “well yes, when it comes to identification, because if

you don’t have a valid I.D card you won’t be able to transact even income, cultural and religious differences. We see that a whole lot, it affects all these because without being very particular, we know that there are some aspects of the country where the women are not even allowed to come out and all. So all these cultural and religious beliefs also affects some of these initiatives,” the guest said. On whether or not Nigeria will attain the CBN goal of 20 percent exclusion by 2020 the guest on the radio show said why not? “With the Shared Agency Banking that was launched this March where all banks came together and we’re gunning for 500,000 agents, CBN has mandated every bank to try this and every

bank is committed to it. So yes, because if it is a focus and it is a regulation we just have to work towards that and make it happen. We don’t need to do that by building bank branches and that will need me to the milestone of what we’ve achieved in 2016. What we called our Diamond Closer, we don’t have to be everywhere and build bank branches because that might not be profitable, but with just simple technology, we’ll be able to reach even the last man and reach certain communities and all. We achieved that with a simple technology, with a simple POS machine that can also offer banking services; open an account, withdrawals and deposits, fund transfer, pay bills, pay school fees within their community. What we did is using one of them who has a business in their community, more like giving him the banking license to carry out banking services. So at the end of the day, we’ve been able to include and they are happy and they have the trust because the person who is offering the services is one of them. That’s our agency banking model,” she elaborated. On the challenge of trust and how the bank has been able to breach it Uzoeba explained; “the Diamond Closer we are running, these are peo-

ple that are closer to their community, so what we’ve done, because they are also customers of the bank as they are running their business account with us, so here they are, we’ve given them a banking license as they are now our agents representing the bank and they are known in those communities. As long as he’s collecting the money, and when they come to deposit money, they receive a notification on their phone. So even if today he claims that they robbed him or something, your own money as the customer is safe. So the issue of the trust is nothing to worry about,” On the Global Findex Data and how NIgeria financial inclusion was poor, she said “Initially when we started, as at 2012, most people did have these initiatives. So why did figures drop in 2017, it wasn’t united, but now that CBN has pulled banks together and has mandated all banks to look into this, and we’ve all come together and agreed as one body, so we should see it rising as at the end of 2018. We are going to see a rise in that number, see a lot of changes. CBN is currently monitoring all of us, we are having quarterly reviews, there’s also the outreach programme going on including the vulnerables, a lot is going on.”

BUSINESS DAY

SHIPPING

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LOGISTICS

MARITIME e-COMMERCE

Technically, rice imports now banned as traded goods in Nigerian ports …As Customs confirms no rice vessel has berthed in Apapa port in 18 months Stories by UZOAMAKA ANAGOR-EWUZIE

he Federal Government has finally succeeded in putting an end to the importation of traded rice into the country, BusinessDay has learnt. Consequently, Nigerians now consumes rice produced in-country by local rice millers such as Olam, Stallion and other local rice millers, in line with the objectives of the nation’s rice policy. It also means that any foreign parboiled rice found in Nigerian market today, was smuggled through the land borders. BusinessDay understands that men of the Nigeria Customs Service (NCS), especially Apapa Area command, which has rice import as one of its major revenue earning commodities, has confirmed that no single vessel of traded rice has ever berthed in Apapa port in the last 18 months, January 2017 to June 2018. Recall that the Federal Government had during the last administration put in place a 110 percent import

duty and levy on rice to discourage heavy importation of rice that was taking place at that time. The policy generated several economic difficulties such that government was forced to reduce the tariff regime to 70 percent for importers and 20 percent for rice millers. Also, the Central Bank of Nigeria (CBN) in 2015 listed

rice among the 41 items restricted from accessing foreign exchange from the Nigeria’s official foreign exchange market. By implication, importers desirous of importing rice had to source for foreign exchange from alternative markets. Joseph Attah, Customs national public relations officer had in January 2018,

NAGAFF, Customs move to stop activities of fraudulent importers at ports

orried by the impact of the activities of fraudulent importers on revenue collection from the ports, the Nigeria Customs Service (NCS) has solicited for the support of freight forwarders in order to put an end to such illegalities. Aminu Dahiru, assistant comptroller general (ACG) and Zonal Coordinator in charge of Zone ‘A’, who made the appeal when he visited the National Association of Government Approved Freight Forwarders (NAGAFF) headquarters in Lagos last week, urged the freight forwarders to put the nation’s interest first by desisting from patronising unpatriotic and fraudulent importers, who import prohibited products into the country. Dahiru said that while Customs is making efforts to improve on its operations, freight forwarders should

also learn to see Customs as partners in progress. “If you, forwarders are aware of what you are clearing, nothing is wrong if you say no to such business. So, whatever is not allowed, please do not be a party to it. This association can help by encouraging its members to desist from accepting jobs that are prohibited.” According to him, Customs NICIS 11 has provided accountability and transparency in the Customs documentation process; however, he urged the freight forwarders to update the addresses of their agencies to avoid their licenses being blocked. “We cannot understand why an agency would be operating and when they want to change address, they just move out without informing Customs. This is why agencies are blocked due to unknown addresses,” he said. Increase Uche, President

Wednesday 04 July 2018

of NAGAFF, called for a review of Customs procedures under the NICIS 11 platform, adding that the platform has created more problem than value addition to the clearing process. Uche appealed to the Customs boss to help address the issue of incessant alert on consignments. Boniface Aniebonam, founder of NAGAFF, who condemned seizure of traded goods, urged Customs to provide window for importers of such goods to pay additional duty rather than outright seizures. “Collection of duty is the primary role of Customs while anti-smuggling operation falls under ancillary functions. We are not sure that Customs has enough warehouses to keep seized goods. Why don’t we penalise the importer by ensuring that the appropriate duty is paid instead of allowing imports to waste as seizures?” he asked.

disclosed to newsmen that the government will no longer issue Form ‘M’ to importers for importation of rice. Confirming this, Jubrin Musa, Area Controller Apapa command, told members of the Shipping Correspondents Association of Nigeria, who paid courtesy visit on him at the command in Lagos last week, that the

command has not recorded any revenue on imported rice through the port since 2017. “Form M issuance is not within the purview of Customs. It is a document that is sourced from CBN. If, we see any consignment that has form M, we treat. All goods imported that are for commercial activities must have form M whether valid for foreign exchange or not valid. From last year till date, no importation of rice has passed through Apapa and we have not seen any Form M on rice but the reason, we do not know,” he said. Jubrin said that despite the zero duty recorded on rice, the command has not fared badly in its revenue generation as it has adopted various measures to up its revenue. He added that since the launch of the Nigeria Customs Integrated Information System (NICIS 11), an automated platform, the command’s revenue has been on the increase. According to him, the command collected N28 billion in April; N33 billion in May and N30 billion as at June 28th.

Again, Customs Strike Force intercepts truckload of rice in Oyo

arely one week after the Comptroller General (CG) of the Nigeria Customs Service (NCS) Strike Force, reported the interception of 3,000 bags of rice at Ijebu-Ode, the Force said it has again made another seizure of 420 bags of smuggled rice. Abdullahi Kirawa, national coordinator of the Strike Force, said the rice was concealed in a truck carrying gravel stones and was intercepted in Shaki, Oyo state. According to him, since Salisu Asaba Bullah, zonal commander of the Strike Force, made the Ogun axis un-accessible, smugglers moved towards the Oyo axis. He however promised that the Force will make all routes in the South -West un-accessible for smugglers. “We know the smugglers are desperate and smart but we will always be many steps ahead of them. The interception we made was based on intelligence because we see how desperate the dubious importers are to smuggle contraband into the country,” he said. Kirawa said that the seizure was attributed to the intelligence provided by the Customs Intelligence Unit (CIU), adding that the team has vowed to make the southwest zone ‘a no go area’ for smugglers and ensure they count their loss.

Chinese shipping initiative to grow China-Africa economic tie - Peterside

akuku Peterside, director general of the Nigerian Maritime Administration and Safety Agency (NIMASA), has said that the shipping initiative promoted by China to develop its international shipping connectivity across South East Asia, Africa, Oceania, Indian Ocean, will open up new opportunities for Africa to advance its economic tie with China. Peterside, who was chairman of the 29th annual session of club of ports of the Crans Montana Forum in Brussels, Belgium, said that the new initiative known as ‘Maritime

Silk Road’ comes with a lot of benefits for African continent. The Maritime Silk Road refers to the maritime section of historic Silk Road that connects China to Southeast Asia, Indonesian archipelago, Indian subcontinent, Arabian Peninsula, Somalia, Egypt and Europe, and this route flourished between 2nd-century BCE and 15th-century CE. The trade route includes South China Sea, Strait of Malacca, Indian Ocean, Gulf of Bengal, Arabian Sea, Persian Gulf and the Red Sea. It overlaps with historic Southeast Asian maritime trade, Spice trade, Indian Ocean trade

Dakuku Peterside, director general of NIMASA, speaking at the 29th annual session of Club of Ports of the Crans Montana forum in Brussels, Belgium.

and after eighth century—the Arabian naval trade network. He however charged African countries to be strategic in decision making in order to reap the rewards and avert some perceived risk inherent in the initiative. “Whereas China is pursuing new transportation link throughout the Eurasia region and Africa to boost trade and enhance her economic status; Africa must key in to develop her port infrastructure, maritime assets financing and create jobs for her people,” he said. He listed the potential threats to include the likelihood of ports being taken over by the Chinese to the detriment of Africans, adding that the initiative will create opening for African markets to be flooded with Chinese goods. Peterside also said that Chinese policy may also affect port calls and hub decisions. He warned that the oil tanker and gas markets will be affected by the construction of new pipelines that will connect Africa to China which will engender Chinese political dominance in Africa if not carefully managed.

Wednesday 04 July 2018

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Tax Issues

BUSINESS DAY

FG agrees more work ahead to increase tax-GDP ratio

additional tax collection of 12 percent of GDP”, IMF stated. IMF however faulted the current strategy of relying on strengthened collection efforts and oneoff initiatives such as the Nigerian Voluntary Asset and Income Declaration Scheme (VAIDS) as a first level intervention, saying that it “may not be that effective in delivering higher

revenues sustainably” Nigeria’s tax amnesty programme which started on July 1, 2017 ended on June 30. It offered a twelvemonth window of opportunity for tax payers to regularise their tax liabilities. Revenue authorities were far from meeting their targets because about 20 days to the June 30, 2018 deadline for the Scheme only N30bil-

lion was recovered from individuals and companies under VAIDS, of which the Federal Inland Revenue Service (FIRS) collected 90 percent or N27billion. With the record N30billion revenue, Federal Government had only succeeded in realising only 8.3percent of the target $1billion (N360billion) e x p e c t e d t a x re v e n u e

through the amnesty programme. Given the planned collaboration between the Federal Inland Revenue Ser vice (FIRS) and the E c o n o m i c a n d Fi n a n cial Crimes Commission (EFCC) to enforce compliance post-tax amnesty, it will not be business as usual. Recently, Nigeria introduced new excise duties regime for tobacco, alcoholic beverages which took effect from Monday, June 4, 2018. It has impacted on prices of the affected consumer goods. The new regime applies only to tobacco and its products (such as cigarettes) and alcoholic beverages (beers and stouts, spirits and wines). Manufacturers are persuaded to carry this additional tax burden on their products. What is excise duty? It is a tax levied by the government on goods manufactured inside the country. It is payable by the manufacturers. The addition to a 20 percent tax on tobacco, the government has just added an extra fixed tax per cigarette. A percentage tax on alcoholic beverages has also been replaced by taxes of fixed amounts based on volume.

parable tax revenue data, which is produced in partnership with countries and regional organisations. The database provides reliable and accessible country-specific indicators on tax levels and structures, supports global efforts to raise domestic revenues for sustainable development, contributing directly to the Sustainable Development Goals and the Addis Ababa Action Agenda. It will strengthen the capacity of governments and tax policymakers to develop and implement tax policy reforms that will raise domestic resources

A working paper, drawing on the new database, shows that in the 21st century countries have made strong progress towards mobilising domestic financing for development. Levels of tax revenues are now higher and more even across countries than at the turn of the century; and countries with the lowest revenues have experienced the largest increases in their tax-to-GDP ratios. The Global Revenue Statistics Database integrates information from the four annual Revenue Statistics publications, which provide tailored

with regional partners, with the financial support of the European Union, and in close collaboration with participating countries. Key findings from the working paper (drawing from the new database): Across the 80 countries, tax-to-GDP ratios range from 10.8percent to 45.9percent; half of the countries have a tax-to-GDP ratio ranging between 18.2percent and 33.2percent of GDP; the median tax-to-GDP ratio is 26.2percent. Since 2000, three-quarters of the countries in the database have increased their tax to GDP ratios: half of the countries have increased their tax-toGDP ratios by between 0 and 5percent of GDP; a further quarter has increased their tax-to-GDP ratio by more than 5percent of GDP. Most of these countries are from Africa and LAC. The remaining quarter of countries, where tax-to-GDP ratios fell, are predominantly OECD countries. In Africa (16) and LAC, taxes on goods and services (especially VAT)

and corporate income taxes are particularly important as a share of revenues. Social security contributions and personal income taxes form the highest shares of tax revenue in most OECD countries, with VAT playing a smaller role. Since 2000, VAT has become increasingly significant in more than three-quarters of the countries, in many cases, with corresponding falls in the share of income taxation or taxes on other goods and services. The exceptions are the quarter of countries with the highest increases in their tax to GDP ratios, which recorded strong increases in most or all major tax types. Per capita income and different types of tax structures are linked to the level of taxation. There is a positive correlation between tax-to-GDP levels, per-capita income levels and the share of personal income tax and social security contributions. There is a negative correlation between tax-to-GDP levels and the shares of corporate taxes and taxes on goods and services.

IHEANYI NWACHUKWU

he Federal Government is of firm belief that there are still more work to be done to increase Nigeria’s tax-to-GDP ratio. Nigeria’s tax-to-Gross Domestic Product (GDP) ratio at just 6percent is one of the lowest in the world compared to countries like India (16percent), Ghana (15.9percent), and South Africa (27percent). Most developed nations have tax-to-GDP ratios of between 32percent and 35percent. The International Mo n e t a r y Fu n d ( I M F ) had blamed the nation’s revenue administrators for the low tax collection records of Africa’s largest economy. “The very low tax collection rates in Nigeria are a direct reflection of weaknesses in revenue administration systems and a high level of systemic noncompliance” IMF noted. “With tax-GDP ratio of 6percent, we cannot grow. We have to address this issue of tax and revenue leakages and this administration is very much focused on that. We have done quite a lot, there is a

new database providing detailed and comparable tax revenue information for 80 countries around the world – and which will expand to cover more than 90 countries by the end of 2018 – was unveiled during the 5th plenary meeting of the Inclusive Framework on BEPS, held in Lima, Peru. The Global Revenue Statistics Database provides the largest public source of com-

lot more to be done,” Kemi Adeosun, finance minister said recently following the expiration of Nigeria’s tax amnesty programme. “Estimates of tax potential from the literature suggest that a non-oil tax capacity of 16 to 18 percent would be optimal for a country with Nigeria’s economic structure and per capita income levels. This estimate implies space for

OECD launches largest source of comparable tax revenue data to fund the provision of vital public goods and services. “With information covering 80 countries, the Global Revenue Statistics Database sets the global standard for robust and comparable tax revenue data” said Pascal

Saint-Amans, Director of the OECD Centre for Tax Policy and Administration. “It is a vital foundation for tax policy reform and in supporting efforts to raise domestic resources to fund development”.

insights on tax systems and revenue priorities in African, Asian, Latin American and Caribbean (LAC), and OECD countries. Based on the internationally-recognised OECD standard, the publications are produced in partnership

BUSINESS DAY

Wednesdy 04 July 2018

CityFile

Kwara plans task force against tree felling SIKIRAT SHEHU, Ilorin

wara State is to set up a task force to check illegal tree felling as well as the production, transportation and sale of charcoal in the state. The state governor, Abdulfatah Ahmed made this known on Monday when he signed into law an amendment bill prohibiting the production, transportation, storage or sale of charcoal in the state. According to him, the amendment was necessitated by the need to strengthen existing laws against charcoal production and transportation in a bid to protect the environment and preserve natural resources, especially valuable cash crops that can boost the state’s economy. The amendment bill, which was recently passed by the House of Assembly, seeks to protect the state’s eco-system and save it from desertification occasioned by indiscriminate felling of trees in different parts of the state. Under the new law, any person who contravenes its provision shall be guilty of an offence and liable on conviction to a fine not exceeding N100,000 or imprisonment for a term not exceeding two years or both.

Cholera claims 5 in Katsina

o fewer than five persons have lost their lives and 50 others hospitalised over suspected outbreak of cholera in Funtua local government area of Katsina State. Ahmed Abubakar, representing Funtua local government constituency in state House of Assembly, disclosed at the plenary on Monday. “The victims were alleged to have been drinking contaminated water due to the commencement of rainy season,’’ he said. Abubakar called on his colleagues to give the matter accelerated deliberation to prevent further loss of lives. “We have put some temporary measures since the outbreak of the disease last week Friday and some of the victims of cholera have started responding to treatment. “The matter has been temporarily brought under control as the local government health department deployed its personnel to the affected areas in the local government. “The areas affected by the cholera outbreak included some parts of the Funtua town, Dikke, Goya and Maska villages,” the lawmaker said.

Tukur Buratai, chief of army staff, (with shovel) demonstrates to officers and men how to keep their environment clean by packing dirt into a wheelbarrow at the inauguration of a sanitation exercise to mark the 2018 Nigerian Army Day celebration at Gudumbali in Guzamala Local Government Area of Borno. NAN

FRSC limits speed on Lagos-Ibadan road to 50km p/h RAZAQ AYINLA, Abeokuta

...as contractor mobilises back to road

p e r a t i v e s o f t h e Fe d eral Roads Safety Corps (FRSC) have urged motorists that ply Lagos-Ibadan Expressway to cautious and look out for traffic barriers, construction equipment and materials deployed to the expressway by Julius Berger Plc following the resumption of construction works on the road. The corps also advised motorists to prepare for extra travel time on the road, pointing out the possibility of narrowing down the carriageways and occasional diversion of traffic for which it warned the motorists not to go above 50km per hour, within the construction zone. It would be recalled that the Federal Executive Council (FEC) in April ap-

proved N64.108 billion for additional works on the express road, to cover rehabilitation, construction and erection of pedestrian bridges and toll plazas. Clement Oladele, Ogun State sector command of FRSC, in a statement made available to BusinessDay, said the maximum speed limit allowed by law around the construction areas is 50km per hour. He said this was applicable to Lagos-Ibadan expressway as well as all other roads under construction, stressing that motorists that flout the traffic rule would be prosecuted. “It is important to alert the public that the resumption of works by Julius Berger has led to the mobilisation of construction materials and erection of traffic barriers, which could narrow

the carriageways and even cause occasional diversion of traffic from the long bridge to Warewa, Ibafo, NASFAT, Mowe and RCCG towards Sagamu Interchange. “Accordingly, motorists are advised to note this and re-plan their trips with allowance for extra travel time around these construction areas. Motorists are also reminded that maximum speed limit allowed by law at construction zone is 50km/hour. “Violators are liable to prosecution. We, therefore advise motorists traveling along the expressway to drive cautiously and obey traffic rules at construction sites. They should also obey the FRSC and sister traffic and emergency agencies directing traffic around the construction areas.”

Ekiti partners EU to boost water supply Anambra moves to regulate

…awards N1bn contract to rehabilitate dam, water schemes AKINREMI FEYISIPO, Ibadan

kiti State has awarded a contract of over N1billion for the rehabilitation of Egbe Dam also known as Little Osse. The project being funded by the State Government in partnership with the European Union (EU) under the water supply and sanitation sector reform programme phase III, is expected to guarantee stable water supply to five local government areas. The local councils include Gbonyin, Ado, Ise/Orun, Emure and Ekiti East. Tunde Ogunleye, the commissioner for public utilities, who disclosed this during a familiarsation meeting with the contractors handling the projects and other stakeholders in Ado Ekiti, said that the development would also see to the rehabilitation of other water schemes in Aramoko, Ido-Ile, Erijiyan,

Ikogosi, Ipole-Iloro, Erio and Okemesi. Represented by Olumide Ajayi, his permanent secretary, the commissioner explained that the contractors had been given 18 months to complete the projects, adding that government would not only expect timely delivery of the tasks, but quality. Ogunleye urged the contractors to be professional and ethical at all levels of service delivery in order to achieve the desired objective. Charging the benefiting communities to cooperate with the contractors, Ogunleye stressed the need for them to take ownership of the projects and the need to continually support efforts at developing the state and improving the lot of the people. He assured that government would continue to collaborate with interested development partners to develop the state and make life more meaningful for the people.

borehole drilling EMMANUEL NDUKUBA, Awka

nambra House of Assembly is finalising a law to regulate the drilling of boreholes with the aim to raise the quality of potable water in the state. Peter Idibia, vice chairman House Committe e on Environment state d this at the swearing-in of members of Borehole Drillers’ Association of Nigeria (BODAN), Anambra chapter, on Monday. “We want to further energise them with the angle of law by making a bill for the regulation of borehole drilling in the state. This has to be done to make the operation better, functional and further sanitise the drilling of borehole in the state,’’ he said.

Idibia described the siting of water boreholes close to pit toilets and burial grounds as hazardous to health. “This is unacceptable. It is hazardous. These are part of the issues that will be embedded in the bill that will be passed into law to educate the drillers and help the consumers in particular. “If all the regulations are there and all the angles of the law are there, the consumers will drink clean water. There will be no diseases such as typhoid from unclean water,” he said. Wilfred Akpu, chairman of BODAN in Anambra, assured that borehole drilling activities in the state would meet acceptable standard. “We will make meaningful and positive contributions to the state government in the areas of interests,” he said.

Wednesday 04 July 2018

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37 NEWS

BUSINESS DAY

Nigeria gets $475m grants... Continued from page 1

Governor of Osun State, Rauf Aregbesola (r) and the project developer, Gboyega Adeeyo, laying the foundation of Osun Shopping Mall on Monday in Osogbo.

Nigeria’s cocoa processors squeezed as debts... Continued from page 1

by processors include high operating cost coupled, higher import duty in European markets and high cost of cocoa beans which makes it unattractive for Nigeria’s remaining five cocoa processing factories to tap export demand for butter, cake and powder. BusinessDay’s onsite investigation at Ile Oluji Nigeria Limited, Nigeria’s oldest cocoa processing firm, found that the company has only processed 2,000 metric tons of Cocoa since the beginning of the year, which is by far below its 30,000 metric tons installed capacity. A visit also to FTN Cocoa Processors PLC, a company listed on the Nigerian Stock Exchange with a 20,000MT processing capacity showed that it has only being able to process 600MT between January and June. This is because of insufficient working capital in the industry to increase production due to the absence of long term financing resulting in the accumulation of debts. “Our capacity utilisation in the industry is less than 20 per cent because most of the cocoa processors are really under the heavy weight of debt. The total debt in the industry today is not less than N50 billion,” Akin Olusuyi, managing director, Ile Oluji Nigeria Limited told BusinessDay. “Despite special funds provided by the government for us, the least we pay as interest is 12 per cent at 360 days while the least for commercial banks is 26 per cent at 360 days. We are 30 percent less competitive than our counter parts in Ghana and Ivory Coast. Processors in Ivory Coast and Ghana attract less financial

risks because they have access to long term financing at single digit interest rate,” Olusuyi said. Olusuyi who is also the chairman of the Cocoa Processors Association of Nigeria (COPAN), said that only five cocoa processing factories are functional in the country today. Multi-Trex Integrated Foods PLC, Nigeria’s largest cocoa processing factory with a production capacity of 65,000MT per annum, has since been shut down and thereafter taken over by the Asset Management Corporation Organisation of Nigeria (AMCON) over a N5 billion non-performing loan the processor acquired from Sky Bank. Apart from the huge debt burden in the industry, Nigeria’s cocoa cake, powder and butter attracts 6.1 per cent and 4.2 per cent import duty in Europe when the products of manufacturers in other leading cocoa producing countries attracts zero per cent. This makes it difficult for Nigeria’s processed cocoa to compete favourably. BusinessDay’s found that the higher tariffs on Nigeria’s cocoa beans, cake and butter in the European markets is due to the failure of the Federal Government to sign the continent’s Economic Partnership Agreements (EPA). The EPA is a scheme to create free trade between the European Union and the African, Caribbean and Pacific Group of States. Furthermore, despite the potential of Nigeria’s cocoa industry to diversify into agriculture and make exponential gains by way of earnings, employment and other spin-offs, the country is yet to fully capitalise on its production. Cocoa remains one of the fastest selling and most desirable

Dangote Cement issues N50bn in commercial... Continued from page 1

used for capital expenditure, working capital and general corporate purposes. The tenor for the initial issuance is 180 to 270 days, with a discount rate of 12.4 percent that will yield 13.21 percent for the 180 days, while that of the 270 days has a discount rate of 12.65 percent and with a yield of 13.96 percent. “This landmark transaction is the largest ever commercial Paper issuance by a corporate issuer in Nigeria as it allows us to broaden our sources of funding and combine established bank lines of credit with access to

capital market funding, which will lower our overall cost of borrowing,” Joe Makoju, Group Chief Executive Officer of Dangote Cement said. Notes of this issuance will be listed on the Nigeria’s FMDQ OTC Securities Exchange on July 19, with a minimum investment of N5 million and multiples of N1000 thereafter. “The success of this programme reflects the high quality of our business and its strong cash generation which was made possible by our market leading positions in Nigeria and across Sub Saharan Africa, where demand for cement is growing rapidly,” Majoku said.

agricultural commodities in the international market due to the rapid growth and expansion of chocolate confectioneries and other products, however it is still neglected by the government. Over the years, the government keeps saying its priority is to develop cocoa farming and processing, the only sizeable and largest foreign exchange earner in the continent’s biggest economy since the discovery of oil. But various government policies have not yet made it beyond the talking stage. The Buhari led government promised to revive cocoa production and make payments of backlogs of the Export Expansion Grant (EEG), instead the country lost its position from fourth to seventh in the comity of cocoa producing nations. Similarly, exporters of processed agricultural products are yet to get any payment under the EEG initiative even after three years of the APC led government in office. “We are yet to access the EEG that was designed to cushion structural misalignment in our economy since 2013. Since last year we have been given approval by NEXIM and our banks but we are yet to get it,” Akin Laoye, executive director, FTN Cocoa Processors PLC said. Furthermore, BusinessDay’s investigations in Ondo, Ogun, Cross River and Edo states shows that processors are being priced out by exporters of raw cocoa beans in the country. “The Nigerian cocoa beans market is un-regulated and so farmers sell their cocoa beans at almost the price of the international market. This makes it difficult for processors to buy at that price and still be competitive,” Pascal Okoko, a licensed cocoa buying agent at Ikom, Cross River state said. Continues on wwwbusinessday online.com

Dangote Cement was advised on the issue by Stanbic IBTC Capital Limited as Sole Arranger and Dealer; Stanbic IBTC Bank PLC is the Issuing Calculation and Paying Agent while Banwo and Ighodalo is Legal Counsel and Deloitte is Auditors to the Issuer. Carl Franklin, head of investors’ relations at Dangote Cement Plc told BusinessDay that the commercial paper is a short-term funding programme that will be used for general corporate purposes however it won’t have any impact on the firm sales volumes as they expect to announce their Q2 results probably in three weeks’ time. Continues on wwwbusinessday online.com

N14.5b in Nigeria. The grants were given to fund projects in Lagos, Kano and Ogun states to develop various projects. The projects which are being financed through a French development agency, the Agence Francaise de Development will support various projects including water improvements efforts in Kano state. The AFD is an inclusive public financial institution and the main actor in France’s development policy, which makes commitments to projects that genuinely improve the everyday lives of people in developing and emerging countries and in the French overseas territories. The concessional loan granted to the Kano stare by the AFD, is to allow Kano state develop effective and sustainable water supply. The key objectives of the water project include improving access to drinking water and quality of water service in greater Kano; improving financial viability of Kano State Water Board by increasing its revenues and the enhancement of the governance framework of the water sector. The project mainly comprises rehabilitation and densification of the network, as well as the main water production facilities. The project will support consumer awareness campaigns in particular sanitisation promo

and hygiene sensitization, provide assistance to Kano State Water Board and to the State Ministry in charge of Water Resources. The Ogun agreement is a letter of intent to participate in the implementation of Nigeria blue print and land degradation project in Ogun state. Uche Orji, Managing Director of the Nigerian Sovereign Investment Authority NSIA signed for Nigeria while Rachel Kolbe signed for the French government .The French President Emmanuel Macron and President Muhammadu Buhari, while speaking at a joint press briefing, applauded the longstanding relationships between both countries. The French President called for the development of inclusive economic policies and human capital development as a panacea for addressing insecurity. “Now, what we have to better understand is, why many people are convinced to join these jihadists and these terrorists. That is what we discussed and this is the second part of your question, because of some times economic and ethnic crisis. That is why it is very important to build not just the security approach but the stabilization approach at the same time, to prove new opportunities to these people and convey two messages,” Macron said. Continues on wwwbusinessday online.com

Aregbesola lays cornerstone of N2.7bn... Continued from page 1

Limited.

Aregbesola said that the Mall, when completed, will provide ultramodern state-of-the-art retail, entertainment, relaxation and dining facilities with 2,000 square metres of shopping space, including retail shops, food court and three cinemas with automated parking space for not less than 500 vehicles, among others. He added that the Osun mall will complement Nelson Mandela Freedom Park, which is nearby, to provide recreation for the people of Osun. In his speech “Our Road to Modernity”, the governors said that the project was embarked upon with a view to creating a sustainable environment conducive for human habitation and improved economic growth. Speaking on the infrastructural intervention of his administration in the state, particularly in Osogbo, the state capital, Aregbesola said no government can compete with his administration’s achievements. His administration, he said, has given the state, particularly Osogbo, a befitting facelift of socioeconomic development which can never be matched by any government since the creation of the state. “There will be all round power system for the complex. When completed, it will complement Nelson Mandela Freedom Park, which is just nearby, to provide recreation for the people of Osun.” “Our people will not need to

travel to Ibadan or Lagos to enjoy such facilities anymore” “So, this Osun Shopping Mall will be the father of all the projects we have completed in Osogbo and I am immensely grateful to God for the cornerstone laying ceremony we are all gathered here to perform today.” “It is our fervent hope that this complex will be ready in November. It will be one of our iconic legacies, even as our administration winds down gloriously in the state,” he added. In his remarks, the project developer, Gboyega Adeeyo, disclosed that the project will be completed before the expiration of the present administration. He said the project when completed will enhance socioeconomic activities and attract investors to the State. He assured that the company will ensure full participation of Osun citizens throughout the construction of the project as being mandated by the Governor. “The construction of this project is in no doubt in continuation of the massive infrastructural developments the Aregbesola’s government has brought to the state and her people.” Meanwhile, the governor on Monday entered into an agreement with BrightstarAapoInisa Solar Investment Limited (BAISOLAR) to produce 30 Megawatts of electricity from Solar energy. The project will be cited in Inisa, Odo Otin Local Government Area of Osun. Continues on wwwbusinessday online.com

BUSINESS DAY

Wednesday 04 July 2018

Live @ The Stock Exchange Stock investors book additional N124bn loss Stories by IHEANYI NWACHUKWU

t certainly looks like there will be no good deal for stock investors this week as the market continues its value loss with resultant impact on returns. Stock investors who set out on Tuesday July 3, 2018 to Custom Street Lagos with hope of accumulating values only ended up booking additional loss of about N124billion. While only 13 stocks gained as against 30 losers, the equities market year-to-date (ytd) returns furthered into the red zone and closed at minus 1.67percent. Investors that were greatly impacted by the record negative are those that hold the shares of Nestle Nigeria Plc which

lost N65 or 4.13percent from N1, 575 to N1, 510. Also, those that invested in Mobil Oil Nigeria Plc booked reasonable loss after its share price declined from N199.9 to N190, down by N9.9 or 4.95percent. Also, Lafarge Africa Plc share price declined from N40.95 to N39.45, down by N1.5 or 3.66percent; Dangote Cement Plc declined from N224.1 to N222.8, down by N1.3 or 0.58percent; while Cadbury Nigeria Plc lost 70kobo or 5.38percent, from N13 to N12.3. The Nigerian Stock Exchange (NSE) All Share Index (ASI) decreased by 0.90percent on Tuesday and closed at 37,605.12 points against the preceding day close of 37,946.92 points. The value of listed equities â&#x20AC;&#x201C;the Market Capitalisation closed at N13.622 trillion as against preceding trading day close of N13.746 trillion.

On the gainers table, Beta Glass Nigeria Plc recorded highest rally from N86.3 to N90.45, up by N4.15 or 4.81percent. Unilever Nigeria Plc followed, from N52.5 to N55, up by N2.5 or 4.76percent; while Nigerian Breweries Plc stock price rose from N113.1 to N113.9, up by 80kobo or 0.71percent. The volume of stocks traded increased by 0.45percent, from 256.2 million to 257.3 million, while the total value of stocks traded increased by 42.3percent, from N1.860 billion to N2.648 billion in 3,932 deals. At the close of trading on the Nigerian bourse, the Financial Services sector led the activity chart with 109.8million shares exchanged for N1.39billion; followed by Natural Resources sector with 100.001 million shares traded for N20million.

Flour Mills reports group revenue of N542.7bn

lour Mills of Nigeria Plc, the market leader in food and agro-allied products in Nigeria has announced its audited financial results for the year ended March 31 2018 with Group revenue increasing to an all-time high of N542.7billion. Key highlights of the results show group revenue

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I, formerly known and addressed as Achonye Nkemdilim but now am adding Maximus. And i now wish to be known and addressed as Achonye Maximus Nkem. All banks and genral public please take note.

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of N542 billion, compared to N524billion in 2017 (3.5percent year-on-year growth); group operating profit stood at N48billion, compared to N41billion in 2017 (16.9percent year-onyear growth); group Profit Before Tax of N16.4 billion, compared to N10.4 billion in 2017 (58percent yearon-year growth; and group Profit After Tax of N13.6

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billion, compared to N8.8 billion in 2017 (54.1percent year-on-year growth. The Company (Flour Mills) recorded revenue of N389billion, compared to N375billion in 2017 (4percent year on Year growth). â&#x20AC;&#x153;Our Food business has performed in line with our objectives on both top and bottom lines. The results of our agro-allied businesses reflect a combination of both profitable and growing businesses (feed, fertilizer), while our latest entry into this category are yet to fully deliver according to our expectations including sugar, with our local backward integration program in Sunti, as well as our edible oil business.

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Wednesday 04 July 2018

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

BUSINESS DAY

research@businessdayonline.com

08106395676

A survey of HR executives on the future of work in Nigeria OMOSOMI OMOMIA

n 2018, BusinessDay Research & Intelligence Unit (BRIU) partnered with the Nigeria Employers Consultative Association (NECA) to conduct a survey of NECA’s membership comprising over 500 HR experts, leaders and c-suite executives of major companies, SMEs and multinationals in Nigeria. Members surveyed cut across the various levels of their businesses and comprised senior management executives (40%), middle-management personnel (10%) and junior management (2.5%). The balance of 47.5 percent of those surveyed simply identified themselves as operating in the HR function or expertise. NECA’s membership cuts across various sectors of the Nigerian economy. Subsequently, of the total survey respondents, heads of human resources (HR) from the manufacturing sector constituted 19.51% and the professional services sector 14.63% led with the highest number of respondents. This was followed by the financial services (9.76%), I C T / Te l e c o m m u n i c a t i o n s (7.32%), oil & gas sectors (7.32%) and healthcare & pharmaceuticals (4.88%). Participants from other sectors included, education, trade, consumer business, insurance, construction, agriculture & agribusiness, among others. In terms of organizational size, small businesses employing between 1 to 1,000 employees accounted for 64.1 percent of the total respondents surveyed, while medium-scale businesses with about 1,000 to 10,000 employees accounted for 33.33 percent of participants. Large companies employing over 10,000 staff brought up the rear with 2.56 percent of those surveyed. Survey participants were asked to rate the level of ease or difficulty in recruiting people with the following skills or characteristics: problem-solving, adaptability, collaboration, leadership, creativity and innovation, risk management, digital skills and STEM skills. According to some of the HR leaders and experts, risk management skills (43.75%) was the most difficult for them to recruit followed by leadership

skills (17.65%) and STEM skills (13.33%). Other skills that were identified by some participants as also difficult to recruit for, included problem-solving (11.76%), creativity and innovation (11.76%) and adaptability (5.88%). According to the World Economic Forum (WEF), the 10 top skills that will land prospective and existing employees the highpaying jobs by 2020 include creativity, complex problem-s0lving, people management, cognitive flexibility (which involves creativity, logical reasoning and problem sensitivity). Other skills include emotional intelligence, critical thinking, coordinating with others, judgement and decisionmaking, service orientation and negotiation. When it comes to millennial and generation Z, the HR experts and leaders surveyed believe that flexible working (62.5%), learning and development opportunities

career (32.5%). Millennials are identified as those born between 1981 to1996 (22 to 37 years old) while Generation Z are identified as those born between 1995 to 2009 or 1995 to 2014. According to Goldman Sachs Global Investment Research, millennials are one of the largest generations in history and have come of age during a time of technological change, globalisation and economic disruption. This has given them a different set of behaviours and experiences than their parents.They’re also the first generation of digital natives, and their affinity for technology helps shape how they shop. They are used to instant access to price comparisons, product information and peer reviews. In terms of the flexible working phenomenon, 60 percent of the organisations from which respondents were drawn have not adopted this activity for workers in

(62.5%) and benefits package (55%) are the three foremost tools required to encourage loyalty among the abovementioned demography. Other tools they believe can be used to attract and retain these group of individuals comprise access to the latest technology (45%), interesting projects (40%), meaningful work with a higher purpose (40%) and a fast-track

their firms. 17.5 percent of companies in the survey, on the other hand, offer about 5 to 10 percent of their staff the opportunity to work flexibly in the course of the month. A further 10 percent of those surveyed allow 50 percent of their employees to work flexibly each month. Ten percent of respondents were split equally between providing flexible working for about 11 to 20 percent and 21 to 30 percent of their members of staff respectively. With the balance of 2.5 percent of respondents providing this to 31 to 40 percent of employees in their firms. Flexible working is a way of working that is tailored to suit the employee’s needs and is an alternative to traditional set working hours. It could include working from home or flexible start and finish times. According to the Financial Times lexicon, flexible working gives employees flexibility on how long, where and when they work. Employees access flexible

working through human resources policies, which usually require supervisory approval. Flexible working is comprised of three main arrangements: fulltime, part-time and career flexibility. Full-time flexible options include: Flexible hours (flextime) - the ability to choose the start and finish time of the working day within core hours;Telework (flexplace) - the chance to work from home or another place one or several days a week;Time banks - the ability to take time off in compensation for overtime;Compressed work weeks - such as working for longer days and taking the fifth day of the week off, or working a nine-day fortnight. When surveyed on the frequen-

next decade; HR investment and spending plans over the next 12 to 18 months; what areas HR plan to invest in in the same period; plans with regards to headcount in the same time; what technologies will be the most disruptive to industry/ business models. All the above questions and much more are answered in depth and scope in BRIU’s Future of Work Report out in September. The report also contains four other surveys involving human capital plans and perspectives from CEOs, Millennials, Employees, University Undergraduates and Graduates. The surveys in the report were developed by BusinessDay Research & Intelligence Unit (BRIU)

cy of flexible working time provided to employees for companies that have adopted this form, 30.77 percent said everyday while 19.23 percent revealed the permitted flexible working time was once a week with 11.54 percent providing for once a month for employees. Overall, the survey comprised 35 questions such as the adoption and impact of Artificial Intelligence (AI) powered solution on various businesses and across different sectors. Other questions include the most important challenges for Nigerian business over the

and powered by GetJama, a data aggregator company, which unlocks data, in realtime and with verification that leverages on the power of human intelligence connected across over 70 million mobile phones to provide realtime and insightful results. The report also contains interviews with CEOs and leading HR executives from various sectors of the Nigerian economy on the trends, issues, challenges, experiences and perspectives of the future of jobs, skills and the workplace in Nigeria.

Wednesday 04 July 2018

BUSINESS DAY

A2 BUSINESS DAY

C002D5556

Wednesday 04 July 2018

NEWS

CBN boosts SMEs, wholesale forex market with $210m HOPE MOSES-ASHIKE

C L-R: Tope Shonubi, executive director, Sahara Group; Roland Omoregbe, managing director, West Africa Gas Limited (WAGL); Moroti Adedoyin-Adeyinka, chief executive officer, Asharami Synergy plc (a Sahara Group Downstream Company); Umar Isa Ajiya, managing director, Petroleum Products Marketing Company, and Theophilus Aholu, manager, Projects Engineering, LNG Investment Management Services of NNPC, at the ceremony to mark the delivery of 7,000 metric tons of LPG following the maiden voyage of MT Sahara Gas, a newly acquired LPG Vessel owned by WAGL (an NNPC/Sahara Group JV) to Nigeria in Lagos.

Local demand for gas to rise within five years - NNPC OLUSOLA BELLO, FRANK UZUEGBUNAM & HARRISON EDEH, Abuja

he Nigerian National Petroleum Corporation (NNPC) has revealed that from its findings, Nigeria’s demand for gas is expected to rise exponentially from 4,000mmscfd to 7,500mmscfd within the next five years. Maikanti Baru, group managing director, NNPC, made the disclosure on Tuesday in Abuja at the ongoing Nigerian Content Seminar, with the theme: “Driving Nigeria’s Oil and Gas Industry Towards Sustained Economic Development and Growth.” “In terms of gas production, the domestic demand for gas in Nigeria is unprecedented, with a current daily realistic gas demand of 4,000mmscfd, which is expected to grow exponentially to about 7,500mmscfd in the next five years,” Baru said. Speaking further on the corporation’s effort to increase gas’ availability, he

said, “The Corporation is committed to increasing natural gas availability from the current 1.5bscf/d to about 5 billion standard cubic feet per day in 2020. Consequently, the government will supply enough gas to generate up to 15GW of electricity to the power sector by 2020, and stimulate gas-based industrialisation.” He further assured that the corporation would continue to progress with our Seven Critical Gas Development Projects (7CGDP), which he said had also been established to deliver about 3.5bscfd of gas to the domestic market by 2020, and was expected to support power aspirations and boost the economy. On the current efforts of the corporation to improve on gas infrastructure, he said, “Recently, we sanctioned the $2.8 billion, 614Km AjaokutaKaduna-Kano (AKK) pipeline

project as a demonstration of our commitment, which anchors on developing structured gas architecture across the length and breadth of Nigeria. This trajectory will continue to be our priority in the medium to long term.” Aside infrastructure, he explained that the corporation had continued implementation of the gas master plan, which remained a core focus of the NNPC. Gas pricing has been adjusted to export parity, legacy debt owed by the various sectors to gas suppliers are being paid through an intervention fund arranged by the Central Bank of Nigeria (CBN). “Gas supply agreements will continue to be made effective with terms that assure bankability to provide the relevant comfort to the producers. The World Bank Partial Risk Guarantee (PRG) will be sustained to provide securitisation of gas revenues. These interventions are boosting confidence in the gas sector,”

Senate commences move to establish state police OWEDE AGBAJILEKE, Abuja

enate has commenced move to finally create state police. To this end, it has directed its Committee on Review of the 1999 Constitution to submit a constitution amendment bill for the creation of state and community police within the next two weeks. The deputy Senate president, Ike Ekweremadu, chairs the committee. It was gathered that the Senate leadership promised to pass the bill before lawmakers embark on annual recess by the end of July. The resolution was sequel to a motion moved on Tuesday by Jonah Jang (PDP, Plateau State) on the recent killings in Plateau State. Prayers for creation of state police was moved by Solomon Adeola (APC, Lagos State) and seconded by Olusola Adeyeye (APC, Osun State). During the debate, lawmakers described the current centralization of policing in Nigeria as a colossal failure and stressed the need urgent need to amend the constitution to allow for state and community

police. The Senate also resolved to fast track in two weeks pending bills on police reforms and that of National Truth and Reconciliation Commission to ensure a peaceful dialogue among communities, ethnicities and religious groups in the country. While calling for the overhaul of security architecture in the country, the upper legislative chamber also resolved that security officers such as military commanders, police officers and community leaders stationed in any locality attacked across Nigeria should henceforth be held responsible when attacks happen within their areas of jurisdiction. Moving the motion, Jang disclosed that over 155 persons were killed in attack by herdsmen out of which 98 were from Mangu Local Government. The former Plateau State Governor said the way the attackers executed the killings unhindered, indicated the need for decentralisation of the nation’s security. Seconding the motion, Ekweremadu said as long as the country refused to establish state police, the wanton killings in the land will continue.

“I have been saying it here anytime issues of senseless killings in the land come up that creation of state police is the way out since the centralised police have proved to be incapable of addressing the problem. “By tomorrow (today) or next, a bill for constitutional provision for state and community policing, shall be sponsored by me in this chamber,” he said. Other Senators like Olamilekan Adeola (APC, Lagos), Godswill Akpabio, (PDP, Akwa Ibom), Barnabas Gemade (APC, Benue), threw their weight behind the call for state police. In his remarks, Senate President, Bukola Saraki who presided over the session said: “The killings are totally unacceptable and we must condemn it in totality. These are acts of criminality and we should not encourage any other colouration to it. Be it religious, this is criminality and as such we have a role to ensure that we must address this criminality. “We believe there is need for urgent review of the security architecture.

Court says Fayemi is constitutionally eligible to contest

he FCT High Court sitting in Bwari has quashed the Report of the Commission of Enquiry set up by Governor of Ekiti State, Ayodele Fayose. The court also quashed the White Paper issued by Government of Ekiti accepting the Report. In a judgment delivered on Tuesday, in the case filed by ACTION PEOPLES PARTY challenging the eligibility of DR KAYODE FAYEMI to contest for the office of Governor of Ekiti State on the grounds that he had been indicted by the Commission of Inquiry set up by Ekiti State Government, which also barred him from holding public office for 10 years, Justice O.A. Musa in his judgment, dismissed the suit by the APP on the ground that it was without merit. The plaintiff had argued among others, that Fayemi’s indictment by the commission of inquiry set up by the state government to probe his administration, and the white paper issued by the state based on the indictment, had disqualified Fayemi from holding public office by virtue of Section 182(1) (i) of the Constitution. Justice Musa quashed Fayemi’s purported indictment on the grounds that the process leading to the report and white paper was tainted with bias, as Fayemi was not accorded fair hearing. The judge noted that Section 182(1)(i) of the Constitution, on which the suit was based, was no longer in existence having been deleted by the National Assembly through the first alteration of the Constitution in 2011. Justice Musa, who answered the two questions posed by the plaintiff in the negative, refused all its prayers and declared that Fayemi was eligible to contest the next governorship election and that the APC was at liberty, under the law to field him as its candidate. Fayemi’s counsel, Rafiu Balogun, in an interview journalists after the ruling, described the judgment as a very sound, saying it was a judgment that met the justice of the case.

entral Bank of Nigeria (CBN) on Tuesday injected a total of $210 million into the inter-bank Foreign Exchange Market to meet the needs of customers in the wholesale and Small and Medium Enterprises (SMEs) segments. This follows its desire to ensure liquidity in the foreign exchange market in order to meet customers’ requests in various segments of the market. Figures obtained from the bank on Tuesday, indicate that the CBN offered $100 million to authorised dealers in the wholesale segment of the market, while the SMEs segment received $55 million. Customers requiring foreign exchange for invisibles

such as tuition fees, medical payments and Basic Travel Allowance (BTA), among others, were also allocated $55 million. The bank’s acting director, corporate communications department, Isaac Okorafor, confirmed the figures and reassured the public that the bank would continue to intervene in the interbank foreign exchange market in line with its quest to sustain liquidity in the market and maintain stability. It would be recalled that last Friday, June 29, the CBN had intervened to the tune of $318.73 million to cater for requests in the retail segment of the forex market. Meanwhile, the naira continued its stability in the forex market, exchanging at an average of N360/$1 in the BDC segment of the market on Tuesday, July 03, 2018.

NDIC assists Uganda Deposit Protection Fund on implementation of DIS HOPE MOSES-ASHIKE

igeria Deposit Insurance Corporation (NDIC) is assisting the Uganda Deposit Protection Fund (DPFU) to develop capacity to implement the Deposit Insurance System (DIS) in the East African country. The Corporation recently hosted a five-member delegation from DPFU who arrived the country to understudy the activities of the Corporation. The NDIC has been the destination of choice for several sister agencies and central banks from across the African continent eager to understudy the activities of the Corporation and learn from its rich experience in Deposit Insurance – a subject on which it is recognized as a leader in Africa. A statement signed by Mohammed Kudu Ibrahim head, communications and public affairs said the Ugandan team was only the latest delegation from several Africa countries to

visit the Corporation for capacity building. The NDIC previously hosted delegations from the Reserve Bank of Malawi, Reserve Bank of Lesotho, Deposit Protection Fund Board of Kenya, Deposit Insurance Board of Tanzania, Commission Bancaire del’Afrique Centrale (COBAC) of Cameroun, Delegates from Banque Centrale Des Etats De L’ Afrique De L’ Ouest (BCEAO) in Senegal all of whom the NDIC assisted build the capacity for the implementation of the Deposit Insurance System (DIS) in their various jurisdictions. Others include teams from the Central Bank of The Gambia, Bank of Tanzania, the Deposit Protection Corporation of Zimbabwe, and the Ghana Deposit Protection Corporation (GDPC). In September 2018, the NDIC will also host the African Regional Conference of the International Association of Deposit Insurers (IADI).

Makarfi decries use of security agents to influence election results ANIEFIOK UDONQUAK, Uyo

ne of the presidential aspirants on the platform of the Peoples Democratic Party, Ahmed Makarfi has decried the use of security agents in the country to manipulate election results saying people should be allowed to freely choose their leaders. Makarfi, former acting national chairman of the party and former governor of Kaduna state is one of the many presidential aspirants seeking to be the flag bearer of PDP in next year’s general election. Other aspirants include former vice president Atiku Abubakar; former governors of Jigawa State, Sule Lamido and Rabiu Kwankwaso of Kano state as well as Ibrahim Saminu Turaki Speaking in Uyo, the Akwa Ibom State capital when he

visited Governor Udom Emmanuel in his office, he said the people should be allowed to choose who they want without the institutions of government being used to suppress the aspirations and wishes of others. “Why can’t people be allowed the latitude to freely choose what they want without using institutions of government to suppress the aspirations and wishes of others? This must have to come to a stop,” he stated. The presidential aspirant, who said he was also interested in employment generation, provision of enabling environment for private sector investments to thrive, education loan scheme for indigent student said he would also work to ensure ‘institutional restructuring,’ and causing the states to work in partnership with the central government.

Wednesday 04 July 2018

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BUSINESS DAY

FINANCIAL TIMES Supreme Court online tax ruling boosts accountants

Turkish lira drops 1% after inflation hits 14-year high Page A5

Page A4

World Business Newspaper

Credit investment firm HPS sells minority stake

Dyal Capital adds to its portfolio of hedge fund and private equity stakes LINDSAY FORTADO

PS Investment Partners, a $45bn credit firm that was formerly part of JPMorgan Asset Management, is selling a minority stake in its business to Dyal Capital Partners, a unit of Neuberger Berman, to free up cash to do more deals. The stake was a passive, nonvoting minority equity stake, so Dyal would not have any impact on HPS’s day-to-day operations, the firms said. Financial details of the deal were not disclosed HPS’s assets are spread across public and private credit, including direct lending and leveraged loans. About $30bn was in private credit, said Scott Kapnick, the fund’s chief executive. The firm’s clients, which include pension funds and sovereign wealth funds, are increasingly seeking to co-invest alongside HPS in debt financing opportunities, so the fund is looking to have more cash on hand for such situations. “As the firm continues to grow and we get later in the credit cycle, we wanted to fortify our balance sheet in order to take advantage of long-term market opportunities as they arise,” Mr Kapnick told the Financial Times. Dyal, which owns minority stakes in hedge funds and private equity, has been on a buying spree of late. The firm bought stakes in Clearlake Capital in May, Vector Capital in April, and Cerberus Business Finance, Ata-

laya Capital, TSSP and Sounds Point Capital last year. It also has minority investments in Jana Partners, Silver Lake, Starwood, Vista Equity and Graham Capital. HPS “has distinguished itself through its exceptional management and investment team, and we believe they remain strategically positioned to further capitalise on a broad array of unique investment opportunities across the credit spectrum”, said Michael Rees, the head of Dyal Capital Partners. HPS, formerly known as Highbridge Principle Strategies, was spun out of JPMorgan in early 2016 when the founders and management bought the business. Mr Kapnick had founded HPS in 2007 after leaving Goldman Sachs. The firm raised one of the largest mezzanine debt funds in 2016, with $6.6bn, and another $4.5bn for a direct lending fund late last year. Credit funds such as HPS are lending to companies at a record rate as they dominate a business once run by big banks. The New York-based fund is beefing up its operations in Europe, expanding its private credit business, including mezzanine debt, direct lending and leasing platforms, and in Asia credit. The firm’s direct lending business is one of the largest in the world, and has invested $21bn in 230 companies. The firm hired Evercore earlier this year to run the stake sale process for them.

Scott Kapnick, HPS Investment Partners, chief executive: ‘We wanted to fortify our balance sheet in order to take advantage of long-term market opportunities’ © Getty

China central bank seeks to reassure after renminbi tumble Traders cite central bank support for currency as state media criticise ‘irrational overreaction’

GABRIEL WILDAU

hina’s renminbi suffered one of its worst intraday falls on record on Tuesday before the central bank appeared to intervene to stabilise the market. The onshore renminbi fell 0.8 per cent against the US dollar in early trading — its fourth-biggest intraday drop — but by late afternoon had pared losses to 0.3 per cent, a move that traders attributed to state banks aggressively buying the currency. The Chinese currency’s 3.3 per cent tumble in June was its worst month ever. Analysts said that, unlike its declines earlier this year, the renminbi in recent weeks had fallen not only against the US dollar but also against the broader currency basket that the central bank said was its key

Shares fall 12% after miner told to produce documents on Nigeria, Congo and Venezuela NEIL HUME, DAVID SHEPPARD & HENRY SANDERSON

lencore has been ordered to hand over documents and records to US regulators related to its operations in Nigeria, the Democratic Republic of Congo and Venezuela dating as far back as 2007, sending its shares tumbling 12 per cent. The Swiss-based mining and trading group led by billionaire Ivan Glasenberg said on Tuesday that it had received a subpoena from the US Department of Justice to produce documents with respect to compliance with the Foreign Corrupt Practices Act and US money laundering statutes. The records related to the company’s activities in Nigeria, Venezuela and the DRC, a source of near constant

headaches for Glencore. “Glencore is reviewing the subpoena and will provide further information in due course as appropriate,” the company said. In early trading on Tuesday, Glencore shares were down 12 per cent to 303p, wiping more than £5bn off its market capitalisation, which now stands at £45bn. “There is not enough detail in the release to understand exactly what the investigation holds, however with the subpoena covering multiple countries, this would indicate that there is a relatively thorough investigation at hand,” said Tyler Broda, analyst at RBC Capital Markets. “The Foreign Corrupt Practices Act appears at first investigation to provide subject to sanctions, fines and penalties up to $25m or twice the gain or loss caused Continues on page A4

fallen as much as 2.6 per cent but closed the day flat. It has fallen 15 per cent this year. Market participants said expectations of a falling trade surplus were helping drive the renminbi and the stock market lower. “Maybe they go ahead with tariffs, or maybe there’s an agreement, but no matter how this gets resolved, China’s trade surplus is going to come down,” said a senior foreign exchange trader at a Chinese bank in Shanghai. “Onshore clients are buying dollars in bulk, and banks’ prop desks in the offshore market are all shorting the renminbi.” In a statement posted to the People’s Bank of China’s website on Tuesday afternoon, governor Yi Gang sought to calm markets, attributing renminbi weakness to the strong dollar and “some pro-cyclical behaviour”.

Trump may use New Deal-era agency to aid farmers

Roosevelt’s Commodity Credit Corp could help soyabean growers cope with Chinese tariffs

GREGORY MEYER

Glencore subpoenaed by US justice department

benchmark. “Renminbi weakening on the back of a strong US dollar is less of a valid argument in the past two weeks, since the trade-weighted basket has also weakened sharply,” said Tai Hui, chief Asia-Pacific market strategist at JPMorgan Asset Management in Hong Kong. “It does reflect the narrowing spreads between US dollar and renminbi interest rates,” he said, also noting that recent monetary easing in China has added to downward pressure on the currency. Worries over the impact of a trade war with the US was adding to downward pressure the currency was facing from a slowing domestic economy. Meanwhile, Chinese equities erased their earlier losses. The CSI 300 index, which tracks large stocks traded in Shanghai and Shenzhen, had

he Trump administration is exploring the use of a New Deal-era agency to salve financial wounds US farmers have suffered from its trade battle with China. Beijing is on July 6 set to raise duties by 25 percentage points on $34bn of US goods in retaliation for tariffs imposed by the White House. Among the biggest targets are soyabeans, the largest agricultural export to China. The threat has pushed the US soyabean market below $9 a bushel, an unprofitable price for many farms. Last week, futures slid a further 4 per cent. Sonny Perdue, US agriculture secretary, last week told reporters that the federal Commodity Credit Corporation was among the tools under consideration to offset farmers’ losses. “If China does not soon mend its ways, we will quickly begin fulfilling our promise to support producers, who have become casualties of these disputes,” Mr Perdue wrote in a newspaper column. Established in 1933 by President

Franklin Roosevelt, the CCC is a littleknown arm of the US Department of Agriculture. It has $30bn in borrowing authority from the Treasury department and latitude in how the funds are spent. The corporation has the purpose of “stabilising, supporting, and protecting farm income and prices”. Its powers include making loans and payments to farmers and buying their crops, according to its charter. “It was always the emergency break-the-glass programme that we could tap into if really extreme situations popped up,” said Robert Holifield, a former staff director for the US Senate agriculture committee. Congress in March broadened the CCC’s remit by lifting curbs on its authority to prop up crop prices and remove commodities surpluses, giving the administration more firepower to confront Chinese tariffs. Farm states such as Iowa, Indiana and Ohio propelled Donald Trump to victory in his 2016 presidential campaign, even as his rhetoric on trade gave farmers pause. The government estimates the US will have a $21bn trade

surplus in agriculture this fiscal year. China’s countermeasures come as low prices for corn, wheat and soyabeans weigh on grower incomes, with the USDA forecasting the lowest inflationadjusted net farm profit since 2002. Farm groups have sought to head off Mr Trump’s aggressive trade tactics against China, Mexico, Canada and the EU, without success. They remain committed to keeping trade lanes open. “We always prefer market forces over government programmes wherever possible,” said a spokesman for the American Farm Bureau Federation. “That’s not always practical, but in this case the quantity of money involved, and the sheer value of goods that are going to be affected, make it very difficult for any government to make us whole.” Joseph Glauber, a former USDA chief economist, said that many farmers already had safeguards against low crop prices in the form of government-backed price and income supports and revenue insurance. Such programmes were preserved in the farm bill recently passed by the Senate and House.

BUSINESS DAY

C002D5556

NATIONAL NEWS

Supreme Court online tax ruling boosts accountants Compliance costs for smaller ecommerce companies to rise significantly after decision SHANNON BOND

cottage industry of accountants, tax consultants and software companies is rising up to reap the benefits of a US Supreme Court ruling that opens the door for states to levy taxes on internet sales by companies located

in other places. The June 21 ruling threatens to squeeze the often-thin profit margins of online retailers that have enjoyed the competitive advantage of tax-free pricing since the early days of the internet, but it represents a boon for accounting services providers.

An ecommerce business with annual revenue of $300,000 to $500,000 could face an upfront cost of $20,000 and annual expenses of $5,000 to $10,000 to collect sales tax from customers in various states, said David Pope, an accountant in Wyoming who works with internet retailers. So steep are the expenses that

Seattle start-up LumaTax, which sells automated tax reporting services to small businesses, is considering lowering its fees — now $20 per month per state — to keep its clients afloat, said founder Robert Schulte. “If you are forced to comply in 45 states and you have $1m in

revenue, now I’m almost unaffordable,” he said. “I’m going to have to rethink the way I price . . . There’s a fine line where I can deliver the service affordably yet make money.” Shares in Avalara, a maker of sales tax software, rose as much as 33 per cent on the day of the high court ruling. The company’s stock price has doubled since it raised $180m in an initial public offering a week before the Supreme Court ruling.

SEC opens investigation into Facebook data breach

Glencore subpoenaed by US justice... Continued from page A1 by the violation and imprisonment for up to 5 years per occurrence,” added Mr Broda. Glencore is the world’s biggest commodities trader, shifting millions of tonnes of metals, minerals and oil across the globe. It is also a leading mining house with operations spanning the globe from Australia to Colombia. The company prides itself on operating in jurisdictions where many of its rivals fear to tread such as the DRC, Africa’s biggest copper producer and home to significant deposits of cobalt. “The news today regarding a subpoena from the US increases the geopolitical overhang on Glencore shares, even if there are no charges against the company in the end,” said Christopher LaFemina, analyst at Jefferies. Traders noted that the DoJ subpoena comes just weeks after Glencore settled a dispute with Dan Gertler, its former business partner in the DRC. Glencore said it would pay Mr Gertler in euros so as to not fall foul of US sanctions, which were placed on the Israeli billionaire last year for his “opaque and corrupt mining deals” in the DRC. At the time Glencore said it did not believe it was necessary to apply for a licence from the US government to pay Mr Gertler because no US person or the US financial system would be involved in the transactions. It also claimed it has discussed the royalty payments, which it stopped paying in December, with the appropriate authorities in US and Switzerland, where the company has its headquarters. However, the move unnerved investors and analysts who said the deal would test Washington’s resolve over sanctioned individuals. On the same day Glencore announced its deal with Mr Gertler, the US Treasury department placed sanctions on 14 companies with ties to the Israeli businessman, including the vehicle that will receive the royalty payments from Glencore. The DoJ subpoena is the latest in a string of problems to hit Glencore this year. In addition to its legal fight with Mr Gertler, it also agreed to write off $5.6bn of debt in a joint venture with Gecamines, the DRC’s state mining, to end another legal dispute. The company could also face a bribery probe by the UK’s Serious Fraud Office over its ties to Mr Gertler. Glencore and oil trading rivals Lukoil, Vitol and Trafigura are also being sued by Venezuela’s state oil company PDVSA over an alleged multibillion corruption scheme to buy petroleum products at below market value. Global Witness, a campaign group, said: “Holding Glencore accountable is a huge step in global accountability more generally. It would set a precedent for companies all over the world who, in many cases, are able to act with impunity in regards to the world’s mineral wealth.”

Wednesday 04 July 2018

Regulator joins FBI, Justice Department and Federal Trade Commission in probing group TIM BRADSHAW

T Mark Zuckerberg, chief executive and founder of Facebook, speaks during a House Energy and Commerce Committee hearing in Washington in April © Bloomberg

German migrant deal prompts Austrian border threat Agreement between Merkel’s coalition partners could weaken EU’s Schengen GUY CHAZAN & RALPH ATKINS

ustria has threatened measures to protect its southern borders if an agreement between the warring parties in Germany’s coalition government takes effect, in a sign that the deal could weaken the EU’s Schengen passport-free travel zone. Angela Merkel’s CDU and its Bavarian sister party the CSU reached an agreement late on Monday to resolve a dispute over migration policy that at one point risked destroying their near-70-year alliance and unravelling the coalition government, less than four months after it took office. The agreement called for the creation of transit centres on the German-Austrian border for asylum seekers who have already been registered in other EU countries. They could then be sent directly from there to the countries that are responsible for them. But the Austrian reaction on Tuesday shows that the idea could prove hard for some of Germany’s EU partners to accept. It also underlines how contentious the whole migration issue has become for EU member states. The Austrian government said Germany appeared to be taking “national measures” to fight the migrant influx. “If this agreement becomes the position of the German government, we will be prompted to take action to prevent disadvantages

for Austria and its population,” said the joint statement by Austrian chancellor Sebastian Kurz and two far-right members of his cabinet. That raised the prospect of Vienna restricting access to migrants entering the country via the Brenner Pass on the Austria-Italy border. Austria has repeatedly warned that it would match any unilateral German measures on its own borders, such as those it shares with Slovenia and Italy. The statement said Vienna was seeking a “rapid clarification of the German position” from Berlin. The row between the CDU and CSU blew up last month when Mr Seehofer proposed that German border police be given powers to turn away refugees who are already registered in other EU countries. Ms Merkel rejected the proposal, saying such unilateral moves would lead to a domino effect, with other EU countries closing the borders in response. Austria’s reaction to the deal shows she had a point. During a stormy meeting of the CSU party executive that stretched deep into Sunday night, Mr Seehofer threatened to resign over the issue. But he said on Monday that the deal would allow him to remain in the government. The accord said that Germany would strike deals with countries allowing for refugees who were originally registered there to be sent back. But it also said that in cases where countries

refused to conclude such agreements, German police would turn back such previously registered refugees anyway, “on the basis of an agreement with Austria”. Germany’s left-of-centre Social Democrats, who are also part of Ms Merkel’s coalition government, said they needed to scrutinise the asylum compromise before they agreed to it. But some SPD figures were scathing about the deal. “After weeks of fighting, with ultimatums, threats, swearing, resignations, withdrawal of resignations, the conservatives have at last laid an egg,” tweeted Ralf Stegner, SPD deputy leader. “What will hatch from it? What is to be made of it? We will look at it closely.” Yet it is unlikely that the SPD, which is lagging behind in the polls, will reject the deal. Such a move would trigger a fresh crisis and would likely to lead to a new election, which the party wants to avoid at all costs. The row between Ms Merkel and Mr Seehofer has its roots in the chancellor’s decision to keep Germany’s borders open at the height of the refugee crisis in 2015, a move Mr Seehofer argued against at the time, and has continued to insist was a grave mistake. The issue has taken on renewed urgency in the run-up to state elections in Bavaria in October, in which the rightwing Alternative for Germany could deny the CSU its absolute majority.

he US financial regulator is probing Facebook’s public disclosures about its massive data leak to Cambridge Analytica, opening yet another front in the social network’s global regulatory battles. The Securities and Exchange Commission is scrutinising Facebook chief executive Mark Zuckerberg’s testimony to US lawmakers as part of its investigation. The SEC joins the Federal Bureau of Investigation, the Justice Department and the Federal Trade Commission, which are already examining Facebook over the Cambridge Analytica scandal. Facebook confirmed that it was responding to questions from all four US agencies. “We are co-operating with officials in the US, UK and beyond,” Facebook said. “We’ve provided public testimony, answered questions and pledged to continue our assistance as their work continues.” Facebook has already faced questioning from officials in the UK and the EU about the circumstances surrounding the leak of personal information from some 87m of its users to Cambridge Analytica. Previously, the focus of regulators’ attention was on Cambridge Analytica itself. The political data-mining outfit worked on Donald Trump’s US presidential campaign and has subsequently shut down in the wake of the scandal. Its executives denied wrongdoing and said they deleted the data. Investigators are now probing Facebook itself more closely, including when and how it told its investors and users about the 2015 leak, news of which first emerged in March. Mr Zuckerberg, Facebook’s founder, provided 10 hours of testimony to the US Congress in April and faced another grilling by the European parliament in May. However, some US politicians criticised Mr Zuckerberg for failing to disclose data-sharing relationships with Chinese technology companies, including Huawei. Mr Zuckerberg waited for five days to publicly respond to initial reports in March that data from tens of millions of its users had leaked. The FTC has been examining whether the privacy breach violated the terms of Facebook’s 20-year data protection agreement with the regulator, signed in 2011. Fines for breaching the settlement could run into billions of dollars.

Wednesday 04 July 2018

C002D5556

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Turkish lira drops 1% after inflation hits 14-year high Consumer price index sees spikes in costs of transportation and household equipment LAURA PITEL & ADAM SAMSON

urkey’s inflation soared to a 14-year high in June, increasing pressure on President Recep Tayyip Erdogan to intervene to halt steadily rising prices. According to official figures released on Tuesday, the country’s consumer price index climbed 15.4 per cent in June from the same month in 2017, up from 12.2 per cent in May, driven by sharp spikes in the costs of transportation, furnishings and household equipment in line with the devaluation of the lira, which has lost almost 19 per cent of its value against the dollar since the start of the year. Food prices rose almost 19 per cent. The figures were the worst since the start of 2004, when a new method of measuring inflation came into force. Jason Tuvey, an emerging markets economist at the consultancy Capital Economics, described the data as “pretty terrible.” He added: “People are now really concerned that inflation is starting to get out of control.” Turkey’s official inflation target is 5 per cent. The lira fell 1.3 per cent against the dollar to TL4.6742 after the release of the data before recovering slightly to about TL4.66. The figures underline the dilemma for the recently re-elected Mr Erdogan and his new economic team, which he has yet to put in place. Indicators suggest the Turkish economy faces a slowdown in the second half of 2018 after stimulusfuelled growth of 7.4 per cent last year. But the high inflation figures will increase the likelihood of calls for a new interest rise at the

next central bank meeting on July 24 — a move that would further damp growth. The central bank has already announced three interest rate rises worth a total of 500 basis points so far this year, including an emergency rise after the lira flirted with TL5 to the dollar in late May. But the moves have had only limited effect. The markets are anxious about the policies of Mr Erdogan, a vociferous opponent of high interest rates, who vowed before the election that he would use a powerful new presidential system to have a greater say in his country’s economic management. Piotr Matys, an emerging markets currency analyst at Rabobank, said that investors needed reassurance that the central bank would be allowed to step in to curb inflation and protect the lira. “Another rate hike on July 24 would be yet another important step in the process of rebuilding central bank’s credibility,” he said. Turkish ministers and officials argue that the economic slowdown will naturally rebalance both inflation and a current account deficit that stands at more than 6 per cent of gross domestic product on an annualised basis. But Murat Ucer, an adviser on Turkey at the consultancy GlobalSource Partners, said that such an approach would not be sufficient. “The government cannot keep hoping that the economic slowdown will take care of the problems,” he said. “The government needs to take a very hard look at where things are. They have to give up growth for a much longer period than they were planning and accept shortterm pain for long-term gain.”

Swedish krona bounces on upbeat inflation forecast

Currency climbs against the euro as investors judge latest outlook to be hawkish

ROGER BLITZ

weden’s krona bounced on Tuesday after the country’s central bank delivered an upbeat outlook on inflation, raising the chances that it will join the growing number of monetary authorities starting to tighten policy in the second half of the year. The Riksbank left its repo rate at minus 0.5 per cent and maintained its forecast that rates will begin to rise by the end of the year. But its policymakers lifted their inflation prediction for this year and next, while two officials pushed for rates to rise sooner than planned. Investors reacted by driving the krona 1.1 per cent higher against both the euro and dollar, reversing the trend of the past two weeks during which the krona weakened 3 per cent against the euro and 4

per cent versus the dollar. The Riksbank was among a number of central banks which at the start of the year seemed on track to join the US Federal Reserve in raising rates. While some central banks have sought to dampen those expectations, the Bank of England and Norway’s Norges Bank have raised the possibility of rate hikes this year. The latest commentary from the Riksbank “has firmly positioned themselves as one of the G10 hawks”, said Jane Foley, forex strategist at Rabobank. The Riksbank said the krona had weakened more than expected, a factor that contributed to the upgrade in its inflation forecast. It was important, the Riksbank added, that the krona developed “in a manner compatible with inflation remaining close to target”.

Indicators suggest the Turkish economy faces a slowdown in the second half of 2018 after stimulus-fuelled growth of 7.4% last year © EPA

Major automakers post upbeat US June sales Potential headwinds loom even as big automakers cap first half on strong note PATTI WALDMEIR

he US auto industry is closing out the first half of the year with major automakers reporting stronger than expected June US sales despite higher petrol prices and interest rates and fears of a global trade war targeting autos. Ford reported June sales of 230,635 vehicles, up 1.2 per cent from the same month last year. Fiat Chrysler reported June sales up 8 per cent on the year earlier period at 202,264. Toyota, which had been expected to see sales drop in June, announced June sales up 3.6 per cent year on year at 209,602. General Motors reported first half sales up 4.2 per cent at 1.47m. GM no longer reports monthly sales figures. GM predicted a strong second half year too. GM chief economist Elaine Buckberg said in a statement: “Tax reform raised take-home pay, consumer confidence is high and household balance sheets are healthy. All of this plus a strong job market makes consumers more willing to commit to major purchases like vehicles,” she said. “Customers are buying with

confidence because the economy is strong and they expect it to remain strong,” said Kurt McNeil, GM’s US vice-president for sales. Ford said in a conference call that the threat of tariffs on imported vehicles had not affected sales so far, with Mark LaNeve, Ford head of US sales, noting that “our most profitable vehicles are all built in the US”, which offers “some protection” against threatened tariffs. Ford reported sales of its profitable F-150 pick-up trucks up nearly 5 per cent for the first half year, at 451,138, with US sales of moneymaking sport utility vehicles and trucks combined up 2 per cent in the first half at nearly 1m vehicles. Car sales were down 13.9 per cent at 312,348 for the first half, continuing a trend of shifting consumer preference toward SUVs and trucks which led Ford to announce recently that it would abandon all but two car models in the US market. Total Ford US first half vehicle sales were down by a less than expected 1.8 per cent, at 1.3m. “The US auto industry report card for [the first half of 2018] has been better than most anticipated, with relative strength along a number of metrics,” Barclays auto analyst Brian

Johnson wrote in a note published ahead of June sales data. Most auto industry analysts expect June sales to rise by 2 to 3 per cent year on year, closing out an unexpectedly strong first half, belying earlier forecasts that the US auto sales could fall off significantly in 2018. “Buying conditions for higherincome Americans, who are the new-vehicle market’s core constituents, have been very favourable as tax reform has improved income and wealth for these potential buyers. Consumer confidence has also held at near-record levels, buoyed by wage growth and historically low unemployment” Cox Automotive said in a statement, revising the group’s full year sales forecast upwards to 16.8m from 16.7m for 2018, compared with 17.2m last year. But most analysts are predicting a tougher second half year, especially if President Donald Trump’s trade war leads to higher import tariffs that raise prices for US car buyers. Global automakers operating in the US warned last week that President Donald Trump’s plans to impose tariffs on auto imports could raise prices of imported vehicles by as much as $6,000 per car and raise prices of locally made cars as well.

London hedge fund files claim against Novo Banco Winterbrook Capital pursues Portuguese lender over ‘defaulted’ bonds ROBERT SMITH

interbrook Capital has filed a claim in the English high court against Novo Banco, escalating the London hedge fund’s tussle with the Portuguese lender over bonds it says are in default. Winterbrook Capital sent letters to the board of Novo Banco last month outlining several events of default that the fund believes have been triggered on the bank’s senior bonds. The London-based firm publicly announced its claim last week, as the Portuguese bank was in the middle of raising €400m of risky subordinated bonds. Court filings show that Winterbrook filed a claim against the issuer of Novo Banco’s senior bonds in the English high court on June 27. The London hedge fund is represented by US law firm Boies Schiller Flexner. “Upon learning of the offer of the new notes, Winterbrook issued a claim in the English courts alleging

the occurrence of events of default under the notes it claims to hold,” a spokesperson for the bank told the FT. “Novo Banco believes that the claims asserted are without merit and intends to defend them vigorously.” Winterbrook could not be immediately reached for comment. Despite the fresh challenge, the lender raised the €400m of Tier 2 bonds at a yield of 8.5 per cent on Friday. Novo Banco was created out of the failure of Portugal’s Banco Espírito Santo (BES) in 2014 and is already the subject of long-running litigation from international investors including BlackRock and Pimco, which lost money due to a controversial debt transfer at the end of 2015. Winterbrook is arguing that the bonds are in default due to unintended consequences of the Bank of Portugal’s rescue of BES, which saw the central bank carve up its assets into a surviving good bank and a

run-off bad bank in 2014 and 2015. Hedge funds have increasingly looked to profit from complicated quirks in the law relating to European bank bonds, with Caius Capital this week stepping up pressure on UniCredit to convert €3bn of complex instruments into common equity. Winterbrook’s argument centres on a $835m loan to BES from a Luxembourg special purpose vehicle set up by Goldman Sachs called Oak Finance, according to a person familiar with the matter. The loan — made little over a month before the central bank rescued BES in August 2014 — is already the subject of litigation from Goldman, the New Zealand Superannuation Fund and other investors that lost money. Winterbrook argues that the central bank’s decision that this loan should remain at the bad bank impacts the guarantee of Novo Banco’s senior bonds, meaning that an event of default has been triggered.

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Nigeria dealmaking hits N232 billion in H1 2018 LOLADE AKINMURELE

n a record-breaki ng f i r s t ha l f o f 2018, Nigeria recorded some N232 billion ($758 million) worth of deals, a staggering 162 percent more than the N88.4 billion ($289 million) deals recorded in the whole of 2017, according to data tracked by BusinessDay. It also represents a 97 percent increase over the $384 million worth of

deals in 2016. The largest deal was Standard Bank of South Africa’s acquisition of an 11.35 percent stake in tier-one lender- Stanbic IBTC holdings in June worth N52 billion. There’s been a significant increase in deal flow in Nigeria, as investors get over the foreign exchange illiquidity that dogged deal flows in the last two years. Liquidity has improved on the back of

AIIM acquires 50% stake in SEGAP MICHEAL ANI

frican Infrastructure Investment Managers (AIIM), through African Infrastructure Investment Fund 3 (AIIF3) has invested an undisclosed amount to acquire a 50 percent stake in Société d’Exploitation et de Gestion Aéroportuaires (SEGAP), a holding company with an established portfolio of airport investments across West and Central Africa. The infrastructure-focused private equity fund manager said the investment will further diversify AIIF3’s portfolio with a view to expanding the firm’s market horizon both geographically and on a sector basis. AIIM, a member of Old Mutual Alternative Investments, has been investing in the African infrastructure sector since 2000 with a track record extending across seven African infrastructure funds. AIIM currently man-

PRIVATE EQUITY WORD FOR THE WEEK Inside round A round of financing in which the investors are the same investors as theprevious round; an inside round raises liability issues since the valuation of the company has no third party verification in the form of an outside investor.

higher oil prices and foreign portfolio investment inflows into Africa’s largest economy which exited its first recession in a quarter of a century last year. The exchange rate stability has also boosted investor confidence, with the naira/dollar exchange rate largely hover ing around N360 per dollar at the Investors and Exporters window since inception in April 2017. Nigeria M&A is keep-

ing up the pace w ith global activity, with deals soaring as high as $2 trillion year to date on the back of US tax reforms. Interesting global deals announced in the past month include Fifth Third Bancorp buying MB Financial for $4.7 billion, Blackstone buying LaSalle Hotel Properties for $3.7 billion, and General Electric merging its transportation business with Wabtec in an agreement worth $11.1 billion.

ages $US2.1bn in assets across the power, telecommunications and transport sectors with operations in 15 countries across East, West and Southern Africa. AIIM said it will complement Egis’ operational and technical expertise by contributing additional strategic support to the business and providing access to capital for further expansion. SEGAP holds interests in 3 concession companies operating five airports in Cote D’Ivoire, Gabon and the Republic of the Congo that is currently handling more than 4 million passengers per annum. The company remains 50 percent owned by the Egis Group, an experienced airport operator with a long track record in Francophone Africa This will allow SEGAP to capitalize on growth opportunities as the African aviation sector matures and opens up for private sector investment in airport infrastructure. “We provide operational performance to airports based on our expertise and deep rooted experience in airport management, completed by best practice sharing and workplace culture of our portfolio of airports, and we are pleased that this has been recognized on an international stage by a strong investor such as AIIM,” Francis Brangier, CEO of SEGAP said while commenting on the announcement. “Furthermore, we are delighted to welcome AIIM as a partner today. With its proven track record, industry experience and regional insights, AIIM is the right investor to support SEGAP’s growth plans,” the CEO added. On his part, Romain Py, Head of Transactions at AIIM said “In recent years, the firm has seen strong economic growth across the region and a rising middle class with a growing appetite to fly, creating an attractive

Wednesday 04 July 2018

COMPANIES & MARKETS

Green Africa Airways gets funding from Kuramo Capital ENDURANCE OKAFOR

reen Africa Airways, a Nigerian airline founded by Babawande Afolabi, a former investment banker for Morgan Stanley, has finalized its Series A stage of funding from Kuramo Capital on June 27th, 2018, as compiled from Centre for Aviation’s (CAPA) website. Meanwhile, Kuramo Capital is an independent investment management firm that provides targeted global investment management services to institutional investors, with branch offices in both Lagos and Nairobi. The worth of the investment by Kuramo Capital was however not disclosed. Afolabi, founder & CEO of Green Africa Airways said, the company was incredibly fortunate and honored to have reputable leaders back Green Africa Airways. “The consortium brings seasoned experience, extensive global networks and value-based leadership to Green Africa Airways. This pivotal Series A round of financing and outstanding advisory board will strengthen our journey to build Green Africa Airways into a top-notch carrier that will help create a better future for several millions of customers in Nigeria and Africa at large,” Afolabi disclosed. As part of the new investment, Green Africa Airways has formed an advisory board of senior industry leaders led by Tom Horton, former CEO & Chairman of American Airlines and former Chairman of oneworld Alliance, William Shaw, Founder & former CEO of VivaColombia, and Virasb Vahidi, former CCO of American Airlines. Prior to the invested by the New York-based investment firm, Green Africa Airways announced it had secured its Air Services Licence (ASL) and is now pursuing its Air Operator’s Certificate (AOC) from the Nigerian Civil Aviation Authority (NCAA). The airline also disclosed before the announcement of the deal with Kuramo Capital that it would, in its initial stages, operate flights within Nigeria using leased mid-sized jets. As such, it was in the process of raising USD100 million in initial funding, in what is a hint to how much Kuramo Capital might have invested in the airline’s Series A round of finance. Walé Adeosun, Founder & CEO of Kuramo Capital said the aviation sector is a critical industry that can create meaningful value for shareholders while also contributing significantly to the economic development of a nation. “Green Africa Airways presents a legacy opportunity for Kuramo Capital to generate attractive risk-adjusted return for our investors and build a world-class business that will serve as catalyst for economic growth on the African continent,” Adeosun said in a statement. Horton, leader of the advisory board set up by the airline said Nigeria is uniquely positioned to be the home of the next major value airline in the industry that will bring air travel to a much broader group of people. “Alongside William, Virasb and Babawande, I am very happy to join hands with Kuramo Capital to launch and shape Green Africa Airways into a preeminent customer-focused brand,” Horton explained in a statement. sector with much promise. “Liberalisation of the air transport market in Africa will provide further opportunities for growth, and we look forward to working alongside the Egis Airport Operations management team as it continues to build on SEGAP’s successes and improve connectivity in Africa.” AIIF3 is AIIM’s third pan-African fund, focused primarily on power, transportation and energy infrastructure across sub-Saharan Africa. Including SEGAP, AIIM has made six investments on behalf of the AIIF3 fund. Other investments are Starsight Power Utility Ltd, a leading energy services company in Nigeria; AIIM Hydroneo, a pan-African hydro power development platform; DSM Corridor Group, a specialist dry bulk terminal operator in Tanzania; Albatros Energy Mali, a 90 megawatt (MW) thermal power station and Amandi Energy Limited, a 200MW thermal power station in Ghana. Egis Group is a French engineering group offering a broad range of services in the field of urban development, from buildings to transport infrastructure; hospitals, tertiary buildings, stadiums, museums, stations, airports, tramways; and major transport and civil engineering projects; high-speed railway lines, motorways, port terminals, civil nuclear engineering, as well as sectors such as water, the environment and landscaping. Egis is a 75 percent-owned subsidiary of Caisse des Dépôts, with the remaining 25 percent held by partner executives and employees. The Group generates more than one billion euros of managed revenue.

BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, DIPO OLADEHINDE, ENDURANCE OKAFOR, DAVID IBEMERE ... Graphics: DAVID OGAR ) Businessday’s Private Equity and Fundraising section is a weekly publication that provides in-depth analysis on private equity trends and tracks deal activity in Nigeria.

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

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PRIVATEEQUITY & FUNDRAISING

BUSINESS DAY

People & Perspectives

TPG’s investment in Cellulant took 2 years to close – Akinboro Cellulant, a digital payments solutions company operating in 11 African countries recently raised $47.5 million in its Series C round—one of the largest for a solely Africa-focused venture-funded company. The round was led by The Rise Fund, an impact investment fund run by TPG Growth, a US-based private equity group. Bolaji Akinboro; co-founder and CEO of Cellulant Nigeria, in this interview with BusinessDay’s LOLADE AKINMURELE, talks through the process o f raising the cash and the fast-evolving digital financial services space in Africa.

ow straightforward/difficult was it to raise the TPG Growth fund and what factors put you in good stead to attract the investment? It was a long journey that took us two years, 400 presentations and back-to-back meetings with at least 60 potential investors. From the onset of our fundraising journey, an encouraging number of investors were optimistic and ready to commit capital. However, we took our time as we were looking for investors who understood our model and shared our vision for payments on the continent. TPG was a natural partner, as it has an extensive track record investing in high growth tech companies and Cellulants’ positioning in Africa with Agrikore held a certain appeal to them. Agrikore is one of our products that have advanced digital financial empowerment, especially in Nigeria. TPG was keen on investing in businesses that will not only give a return but also drive impact. Which financial institutions and mobile money operators in Nigeria are you collaborating with and what are the most exciting projects – past and in the pipeline - that you are working on with them? With our network of Agents, we are looking to partner up with some financial institutions to address and power the Government’s payment system vision 2020 financial inclusion agenda. Already we are part of the companies driving the Shared Agency Network Expansion Facilities (SANEF) loan from CBN. We are also working with commercial banks and microfinance institutions to provide financial services to the out of reach people using our network of agents. How would you evaluate the agent banking model in Nigeria and what – do you think the country needs to put in place to improve financial inclusion? Nigeria has come a long way in Mobile payments, but there is still the need to cover the last mile. Mobile operators need to expand and cover more regions which will enable companies like ours to be able to penetrate and deploy payment solutions and drive financial inclusion. The CBN is also on the forefront of driving financial inclusion with the Shared Agency Network Expansion

Akinboro

Facility (SANEF) where we in Cellulant are targeting 10,000 agents across 10 states. These agents are set to offer basic financial services, such as Cash-in, Cash-out, funds transfer, bill payments, airtime purchase, government disbursements as well as remote enrolment on BMS Infrastructure (BVN) for people especially the underbanked in the rural. Agent banking has delivered gains in Kenya, India and Bangladesh to name a few, but is struggling to take-off fully in Nigeria. What – in your opinion – are the factors that prevent this, given the clear demand? Isn’t it profitable for investors? Agency banking has a lot of potential in Nigeria because, as you mentioned, there is a clear demand. However, the low uptake is because there is still a mismatch between the products and the market. Banks need to understand the unique needs of the lower segments of the

market, which is the market segment generally served by agents. Mobile money is also delivering robust gains, where do you stand in the debate about whether the telcos or the banks should drive the mobile money market in Nigeria? Nigeria does not use or imitate the playbook of other countries. And while that is admirable, it has led to the concentric effort to develop a new playbook for Agency Banking that will work in Nigeria. The Banks, the MNOs, the MMOs, all need to work together to drive the uptake of Mobile money in Nigeria. The MNO understand user mobile consumer behaviour, the banks understand the financial or access to finance behaviour. Independent MNO companies like ours are the ones that can penetrate the upper and lower echelon of the Nigerian society successfully we sit in the middle with connections to the banks as well as

the MNOs, our products are also nimble and can cover more areas than the banks can especially in the rural, it will also enable anyone to access mobile money easily as the telcos are bound to restrict the service to only their subscribers. You serve 40 million people across Africa. Which African countries are you in? How many people per country do you serve and how many are from Nigeria? Cellulant debuted operations in Kenya and Nigeria in 2004 and has grown to operate across 11 African markets, including Zambia, Ghana, Zimbabwe, Tanzania, Uganda, Botswana, Mozambique, Malawi, and Liberia. Overall, we serve customers in the banking sector, mobile money operators, merchants, retailers and everyday consumers who use Cellulant’s payment platform to run their businesses and personal finances. With regard to banks, we have partnerships

We strive to be the company that connects Africa through payment and use our products to solve everyday payment problems on the continent

with 95 different banks on the continent and plan to expand this going forward. In Nigeria alone, we serve over 15 million people. Our promise to our clients still remains the same, we will keep growing our payment network and improving our products. We strive to be the company that connects Africa through payment and use our products to solve everyday payment problems on the continent. 94 Per Cent of your clients were unbanked before signing up to your platform, that speaks volumes of the good work you are doing, at what point would you say you have achieved enough? The impact our work has had on digital financial empowerment on the continent is certainly one of the things we are proud of. However, we cannot rest on our laurels. Two-thirds of the population across the continent is still locked out of the financial system, despite the widespread mobile revolution that has put mobile phones in the hands of at least 700 million Africans. We see this mobile penetration as a huge opportunity to bring financial services closer to millions of people through mobile-based solutions, but also realize that more partnerships will be needed; more

meetings; more presentations; more investments—in other words more work. We will say the work is enough when we have addressed this huge unmet demand for financial services. Please provide a status update on Tingg and Agrikore. What impact have they had since inception and what feedback are you getting from the users? How much has been transacted between farmers and their clients on Agrikore and how does that compare over time? What percentage of the activity on the platform is driven by Nigeria? Agrikore is a blockchain based smart-contracting, payments and marketplace system that ensures that everyone in the agriculture value chain (Farmers, FMCGs, Agriculture inputs providers, produce aggregators, insurance companies, financial institutions, governments and development partners) can do business with each other in a trusted environment. I believe that this solution can help solve food crises and hunger not just in Nigeria but Africa. Africa has the landmass and sun to grow as much quantity of food that can feed the world. But first we will need to feed ourselves as a continent, and the bedrock of Africa agriculture is the smallholder farmer. Agrikore addresses the issues plaguing the smallholder farmer as well as problems in the whole value chain. Tingg, on the other hand, is a one-stop shop for payment. In 2017 we launched the Tingg neighbourhood banking service points, today we are building out the network to 6000 sites which will trigger the creation of 200,000 agent points. These points are set to become the defacto payment points for people in the rural as they provide banked customers with access to previously limited banking services while the unbanked are enrolled into the financial space. What are your plans for both platforms in the short term? For the Short term, we will be enrolling more beneficiaries into our Agrikore blockchain platform, on the longterm we intend to take it to more countries across Africa. We are also looking at building out our Tingg neighbourhood bank to a nucleus of 6000 banking points across the country.

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NEWS YOU CAN TRUST I WEDNESDAY 05 JULY 2018

Opinion

Who do you trust in Nigeria and the world? CHIDO NWAKANMA Nwakanma Â is Â a Â Visiting Â Member Â of Â the Â BusinessDay Â Editorial Â Board Â and Â serves Â on Â the Â Adjunct Â Faculty Â at Â the Â School Â of Â Media Â and Â Communication, Â Pan Â Atlantic Â University, Â Lagos. Â Email Â chidon-Â wakanma@gmail.com. Â

on-Government Organisations a re t h e m o s t trusted institutions in all of Africa. The trust level for NGOs is a high 87% in Tanzania, 83% in Ghana and 81% in Nigeria. People want to be able to trust other people, institutions and governments. â&#x20AC;&#x153;A good reputation may get me to try a product; but unless I come to trust the company behind the product, I will soon stop buying it regardless of its reputation.â&#x20AC;?Trust mat-

ters to Nigerians so much that a top 72 percent agrees with the statement above. Research shows that Nigerians trust each other more than they believe governments, institutions or celebrities. â&#x20AC;&#x153;A person like yourselfâ&#x20AC;? is the one Nigerians trust the most at 69%. Next are Board of Directors, 63%; Religious Leaders, 62; NGO Representative, 61 and Journalist, 61. Others in descending order are CEO; Academic; Successful entrepreneur; and technical expert. Scoring below 50% is the following: industry analyst; an online personality; blogger; government official and a celebrity. The score for celebrities, bloggers and online personalities would ruffle assumptions in the marketing communications industry where endorsements became a significant arsenal in the marketing toolbox recently based on assumptions. The data says celebrities and such-like do not sway Nigerians. Trust or the growing distrust in government and institutions is the concern of

the day across the world. The trust deficit is a significant challenge for the Federal Government in the wake of its continuing failure to keep promises. The trust challenge gets worse with each massacre in the embattled North East of Nigeria or with each new scheme to appropriate lands and water resources across the country under varying guises each time. Trust is the focus of the major yearly research into attitudes, beliefs and behaviours across the world. It added Nigeria into the countries of the survey in 2017. The Edelman Trust Barometer has interviewed people online in 28 countries in the last ten years. It reports that â&#x20AC;&#x153;The Battle for Truthâ&#x20AC;? is the critical trust issue in the world in 2018. It carried out its research between October 28 and November 20, 2017. It interviewed 1,150 respondents in each country representing the general public and 200 persons serving the informed public. Persons in the â&#x20AC;&#x153;informed publicâ&#x20AC;? fit the profile of ages 25-64; uni-

versity-educated; in top 25% of household income per age and report significant media consumption and engagement in business news. I examine the findings of this survey here as a basis for further discussions on issues around trust, credibility and relationships in our land. As with the rest of Africa, NGOs and media rank highest in trust in Nigeria, followed by business. Trust for NGOs is at 81%, while it is at 78% for media. Government is the least trusted, but still comes in at 60% trust level. The trust in media and other institutions is higher in Nigeria and Africa than the rest of the world. The issue of the moment globally is the challenge of fake news. The media faces a paradox. While there is declining trust in the media, trust in journalists is growing. The public does not differentiate between content and platforms. People define media as both the content and the platforms conveying that content. Across the world, 50% of the survey population still en-

gages with the news. Of these, 25% report active engagement in what the media do. Trust is critical for the four institutions of society, to wit, government, business, media and NGOs. Trust is the license to operate. For companies globally, trust is a significant barometer. Eighty-eightpercent of people chose to buy products and services of trusted companies; 80% would recommend them to friends and colleagues; 58% shared positive opinions on trusted firms. Most significantly, 55% would pay more for goods and services of trusted firms,and the same percentage would defend such companies. Nigerians invest much expectation in business. â&#x20AC;&#x153;Driving the economic prosperity of our country is one of the most important things businesses should doâ&#x20AC;?, the report cites 57% of respondents saying. They also believe businesses must be socially responsible. Up to 87% of respondents assert that â&#x20AC;&#x153;Companies that only think about themselves and their profits are bound to fail.â&#x20AC;?

Nigerians have distinct messages and tasks for CEOs. They believe that CEOs must build trust ; communicate regularly with clients and customers; ensure their products and services are of high quality and communicate regularly with employees. Most trusted sectors globally are technology, healthcare, energy, food and beverage and telecommunications. For Nigerians, the top five industries in the trust ranking are food and beverage, fashion, manufacturing, automotive and retail. Respondents outline these â&#x20AC;&#x153;trust-building mandatesâ&#x20AC;? for each institution. The government must â&#x20AC;&#x153;drive economic prosperity, investigate corruption and support the poorâ&#x20AC;?. For business, the tasks are to safeguard privacy, drive economic prosperity and provide jobs and training. NGOs must support the poor call out abuses of power and create a sense of community. Finally, the media must guard information quality, educate, inform and entertain and safeguard privacy.

The New Partnership for African Development (NEPAD) as a catalyst for economic integration in Africa

ADE ADEFEKO Adefeko Â is Â Vice Â President Â Corpo-Â rate Â and Â Government Â Relations, Olam Â Nigeria

he New Partnership for African Development otherwise known as NEPAD agency was established as an outcome of the integration of NEPAD into AU structures and processes. The NEPAD Agency is the technical body and implementing agency of the African Union, tasked with the facilitation and coordination of the development of NEPAD programmes on the continent. As part of the strategic framework for pan-AfÂŹrican socioeconomic development, the agency mobilises resources and engages the global community, regional economic communities and member states in the implementation of these programmes and projects. As an aside it is pertinent to mention that the CEO,

Ibrahim Assane Mayaki a Nigerien who has been at the helm since 2009 is an academic, former politician and Prime Minister of Niger but now works as a technocrat wearing a private sector type hat. After the adoption of the Agenda 2063 Framework document by the summit in January 2015 as the basis for Africaâ&#x20AC;&#x2122;s long term socio â&#x20AC;&#x201C;economic and integrative transformation, NEPAD has over the years rolled out the continental frameworks developed by the African Union Commission (AUC), including the Comprehensive African Agricultural Development programme (CAADP), Programme for Infrastructural Development in Africa (PIDA), Accelerated Industrial Development for Africa (AIDA), amongst others to support member states of the African Union in their development efforts.These frameworks are being implemented by some member states and have been captured as priority areas of the first tenyear implementation plan carved out of the Agenda 2063 50year strategic document. A creative and positive fallout of this was the creation of the Grow Africa Partnership of which there is a nexus with NEPAD and

WEF. Grow Africa Partnership Grow Africaâ&#x20AC;&#x2122;s partnership was jointly founded in 2011 by the African Union (AU), the New Partnership for Africaâ&#x20AC;&#x2122;s Development (NEPAD) and the World Economic Forum (WEF). Since then, Grow Africaâ&#x20AC;&#x2122;s mission has been to mobilize private sector investment in African agriculture and accelerate execution in support of national and continental priorities. Grow Africaâ&#x20AC;&#x2122;s role has been to catalyse the potential for private sector investment to generate economic growth and job creation, particularly among smallholder farmers, women and youth. This has been achieved through playing a convening role between key stakeholders in African agriculture, particularly governments, international and domestic agriculture companies and smallholder farmers, with the goal of working together to lower the risk and cost of investing in African agriculture. In the past 4 years, Grow Africa has developed a strong reputation for mobilising private sector investments that improve smallholder incomes and create new jobs. Cumula-

tive investment commitments grew from $3 billion in 2012 to approximately $10 billion in 2015. At the last annual stocktaking of these commitments based on my research, US$2.3 out of US$10 billion original investment commitments had been converted into actual investments, reaching over 10 million smallholder farmers and creating 88,000 new jobs created in agriculture. G r o w A f r i c aâ&#x20AC;&#x2122;s c o r e strength is its capacity to convene effective multistakeholder partnerships that have a dire ct and positive impact on investments in agri-business. Through effective structuring of partnerships and platforms, Grow Africa contributes to building trust and confidence between public and private stakeholders, connecting partners and linking new private investment opportunities to policy reform. In the absence of strong policy alignment and coordinating structures within the sector to support value chains, private sector investment intentions do not always translate into commercial va l u e c ha i n a c t i v i t i e s. Such linkages are important in generating shared value and ensuring long-

term collaboration among sector players. Grow Africa is currently working towards addressing this issues using a framework tool called, the Country Agribusiness partnership framework (CAP-F). CAP-F is mechanism for establishing effective public private engage ment to create agribusiness par tnerships in a country. It facilitates the alignment of private sector investments commitments with public sector policy/infrastructure obligations and provides a mechanism for all parties to hold each other accountable for their obligations. Agribusiness partnerships are unique in that they often involve numerous parties in both the downstream and upstream phases of the investment. An effective mechanism for mutual accountability is critical, CAP-F provides steps to address this issues. Grow Africa anticipates that in time, CAP-F (or similar frameworks) will be established in all African countries making it much easier to establish agribusiness partnerships As the continental leaders convene in Nouakchott, Mauritania for the 31st Ordinary Ses-

sion of the African Union Summit, it is only incumbent on the Heads of State and government to support these agencies they have set up for affecting economic change and socio economic development for their citizens and to make them work for the people and help attain sustainable growth. Beyond the political optics of grandstanding and declarations viz the C o m p re h e n s i v e A f r i c a Agriculture Development Programme (CAADP) MAPUTO of 2003 and Malabo of 2014 declarations as a case in point, this simply urges member nations to commit 10% of their yearly budgets to agriculture and work on having member countries reach a higher path of economic growth through agric leddevelopment leading to reduction in hunger and achieving food security amongst others. Afr ican leaders and heads of government should strive to with their financial and political muscle fund and enable our institutions and agencies achieve the noble objectives of the founding fathers of the African Union which, to put it simply, is political and economic integration.

Published Â by Â BusinessDAY Â Media Â Ltd., Â The Â Brook, Â 6 Â Point Â Road, Â GRA, Â Apapa, Â Lagos. Â Â Ghana OIĂ&#x20AC;FH Business Â Day Â Ghana Â Ltd;Íž Â ABC Â Junction, Â near Â Guinness Â Ghana Â Limited, Â Achimota Â â&#x20AC;&#x201C; Â Accra, Â Ghana. Â Tel: Â +233243226596: Â email: Â PDLO#EXVLQHVVGD\RQOLQH FRP Â Â Advert Â Hotline: Â 08116759801, Â 08082496194. Â Subscriptions Â Â 01-Â2950687, Â 07045792677. Â Newsroom: Â 08169609331 (GLWRU $QWKRQ\ 2VDH %URZQ. Â Â All Â correspondence Â to Â BusinessDAY Â Media Â Ltd., Â Box Â 1002, Â Festac Â Lagos. Â ,661

WEST AFRICA

ENERGY intelligence oil

gas

power

Wednesday 04 July 2018

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POLICY

Could re-election of Turkey’s president brighten Nigeria’s gas outlook

Page 5

finance people appointments

L-R: Sadeeq Mai-Bornu, DMD, NLNG; Saidu Mohammed, COO, Gas & Power, NNPC; Maikanti Baru, GMD, NNPC and Tony Attah, MD/CEO NLNG, at the World Gas Conference which held in Washington D.C recently

Debrief

Four major takeaways from 2018 World Gas Conference FRANK UZUEGBUNAM (Washington D.C)

Tullow ups 2018 output forecast, provisions for Seadrill claim Page 6 OPEC weekly basket price DAY

PRICE

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72.4

22/6/18

71.83

15/6/18

73.85

8/6/18

73.45

1/6/18

74.02 Source: OPEC

he World Gas Conference is the most important global gas industry gathering of influential leaders, policy-makers, buyers, sellers and experts on gas. Here are four major takeaways from the 2018 triennial edition; There is a huge role for gas in power generation There is no doubt that there is a huge role for natural gas to play in power generation in the coming years and decades. IHS Market is projecting global power consumption to double from today’s level by 2050. “This presents a great opportunity for gas,” Shankari Srinivasan, vice president and managing director of global gas and EMEA power for IHS Markit, said. “For Nigeria, gas is clearly the direction. We must all do our bit to attract foreign direct investment around our 192tcf proven gas reserves which we hope shall be translated into energy security, power

generation and above all value addition for our teeming populace,” Dada Thomas, President of the Nigerian Gas Association (NGA) said on the sidelines on the conference. “We are focused on jumpstarting and sustaining gas supply to support a rapid growth in power generation,” Maikanti Baru, NNPC GMD, told delegates during the session on “The Role of Gas in Power Generation”. “We are keen on using some of the new projects like the 614km Ajaokuta-Kaduna-Kano Gas Pipeline Project to open up not only the gas corridor but also ensure that power plants that are built can inject stability into the national grid,” Baru added. Free trade benefits gas market Chief executives of global super majors spoke out strongly in support of free trade in global gas business. US President, Donald Trump earlier this year decided to impose 25 percent on imported steel and 10 percent on aluminum but this could impact negatively on various “steel-sensitive” projects in the US especially liquefied natural gas export terminals.

Michael Wirth, Chevron chief executive, emphasized that free trade is a key principle as the global gas industry moves forward. “The risk of trade wars starts to weigh on people’s perceptions of economic growth in the future”, Writh said at the opening plenary session. “We compete globally. Free trade underpins the strength of those businesses and our competitiveness as a US company”, Darren Woods, ExxonMobil chief executive said. Emerging markets key demand source for gas De La Rey Venter, Shell’s executive vice president of integrated gas ventures, said developing countries “face a triple challenge of having to deliver a doubling or perhaps quadrupling of power supply,” develop a system that is resilient and “does not suffer from frequent blackouts,” and take steps to be green in order to avoid “upfront the troubles that China and India have to address in their cities today.” He suggested the “optimal power system” to meet those three needs

“will have lots of renewable energy distributed all over the grid, and it will have just the right amount of gas-fired power close to the main centers of demand, balancing the grid and providing grid resilience.” He noted low capital needs and scalability as “the beauty of gas-fired power.” Gas deals consummated LNG offtake deals took center stage at the World Gas Conference in Washington. Freeport LNG reached a binding sales and purchase agreement with global energy trader Trafigura for 500,000 tons/yr to be supplied from the export facility it is building in Texas. The arrangement, which begins in 2020, is small and a relatively short-term deal - three years. Venture Global LNG signed an agreement during the conference with PolishOil & Gas related to offtake from the two Louisiana export facilities that Venture Global is developing. The agreement defines basic terms and conditions of a 20-year contract for the sales and purchase of 2 million tons/yr of LNG.

02 BUSINESS DAY WEST AFRICA Outlook Libya: UN concerned about control of Libyan oil assets

ontrol over oil production in Libya and the revenues it generates need to be in the appropriate hands, António Guterres, UN secretary-general said. Libya’s National Oil Corp. rejected a move by the Libyan National Army to move on exports from the Gulf of Sirte. The move followed militant raids on oil storage depots in the east of the country that sidelined production from the member of the Organization of Petroleum Exporting Countries (OPEC). Stephane Dujarric, a spokesman for UN Secretary General António Guterres, said the world body stands ready to support Libya’s legitimate institutions. “The secretary-general is concerned about the

latest developments in Libya’s Oil Crescent region, he said in a statement.” He calls for de-escalation and for the return of all natural resources, their production and their revenues to the control of the recognized Libyan au-

thorities.” Storage tanks at the Ras Lanuf oil port suffered catastrophic damage after militants stormed the facility earlier this month. Reconstruction efforts could take several years, especially considering the

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Brief South Africa: South Africa halts oil exploration permits to revamp licensing tense security situation in the country. Secondary sources reporting to OPEC said Libya produced an average of 955,000 barrels per day. Conflict sidelined about a quarter of that output so far. A joint statement from the British, French, Italian and US governments relayed deep concern about the security situation at Libyan oil fields and called for authority to remain in the hands of Libya’s National Oil Corp., in accordance with UN Security Council resolutions. “Any attempts to circumvent the UN Security Council’s Libya sanctions regime will cause deep harm to Libya’s economy, exacerbate its humanitarian crisis, and undermine its broader stability,” the statement read.

Ethiopia: Ethiopia to begin extracting crude oil in Ogaden region

thiopia will begin extracting crude oil on a test basis from reserves in the country’s southeast, state-affiliated media and the prime minister’s office said. Fitsum Arega, chief of staff in Prime Minister Abiy Ahmed’s office, said on Twitter that Abiy had met with officials from Poly-GCL Petroleum Investment Limited to “officially kick-start crude oil production test in Ogaden Region”. “The company has discovered that there is a prospect of commercial quantities of crude oil in the region,” Fitsum wrote. The firm is a joint ven-

ture of state-owned China POLY Group Corporation and Hong Kong-based Golden Concord Group.

Wednesday 27 June 2018

outh Africa’s Department of Mineral Resources has issued a moratorium on new applications for petroleum exploration and development in order to change its licensing process. The restriction will not affect applications received before the date of publication of the notice, which appeared in the online version of the Government Gazette on June 28 and was signed by Minister Gwede Mantashe. The restriction “is primarily aimed at using licensing as a tool to achieve the transformation ideal” and fast-track exploration, Petroleum Agency South Africa, the country’s oil and gas regulator, said in a statement cited by the department. The ruling African National Congress has

implemented legislation aimed at redistributing the country’s mineral wealth more equally among South Africans to make up for racial discrimination during apartheid. Royal Dutch Shell Plc last year relinquished a license to search for oil off South Africa due to legislative uncertainty. Other companies with permits in the country’s mostly unexplored offshore have diluted work programs as they wait for greater clarity.

Congo: Congo says it will open two national parks up to oil drilling The state-affiliated Fana media quoted Abiy as saying 450 barrels would be produced on a

trial basis. The prime minister added that full scale production of crude oil in the future, would help the state alleviate unemployment and the prevailing foreign currency shortage. Ethiopia also projects to earn up to $8 billion annually once it begins exporting natural gas with its full capacity, he said. A pipeline to export gas to Djibouti, will be launched in September and will take two years to complete. The firm is a joint venture of state-owned China POLY Group Corporation and Hong Kong-based Golden Concord Group.

emocratic Republic of Congo’s government said that it has decided to open up parts of Virunga and Salonga National Parks, home to mountain gorillas, bonobos and other rare species, to oil drilling. Earlier proposals to allow oil exploration in the parks met fierce resistance from environmental activists, who say drilling would place wildlife at risk and release huge amounts of carbon dioxide into the atmosphere, causing global warming. The government has defended its right to authorise drilling anywhere in the country and said it

is mindful of protecting animals and plants in the two UNESCO World Heritage Sites. The cabinet said in a statement that it had approved the establishment of inter-ministerial commissions charged with preparing plans to declassify sections of the parks, including 1,720 sq km, or 21.5 percent, of eastern Congo’s Virunga.

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gas

ENERGY intelligence

Mozambique: Marketing efforts underway for Mozambique’s Rovuma LNG project

4 is the quality of the co-venture partnership,” said Massimo Mantovani, Eni chief gas and LNG marketing and power officer. “Following the FID on Coral South FLNG in 2017 we are working together to develop the remaining gas fields which will feed the Rovuma LNG trains taking full advantage of the expertise of all our coventure parties.” “We have made significant progress on marketing and are now in active negotiations on binding sales and purchase agreements for Rovuma LNG with some affiliated buyer entities of the Area 4 co-venturers,” Peter Clarke, president of ExxonMobil Gas and Power Marketing Company, said at the World Gas Conference. “These commitments will help us progress toward a final investment decision, which we expect to reach in 2019.”

Natural Gas Market: Global natural gas prices rise for first time in two years

lobal natural gas prices are increasing for the first time in two years with demand for the fuel advancing across the world. Consumption of the cleanest fossil fuel is projected to grow under virtually all major scenarios, “including the most aggressive low-carbon transition scenarios,” according to a report published by Italian grid operator Snam SpA, the International Gas Union trade lobby and The Boston Consulting Group. Higher prices were driven by mainly by the rising cost of crude due to its influence on oil-linked supply contracts, as well as stronger-than-expected demand for liquefied natural gas. Across the major global gas hubs, the US remained the cheapest, with prices 62

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Brief

ni and ExxonMobil said that marketing efforts are underway for the Rovuma LNG project, which will produce, liquefy and sell natural gas from the gas fields of the Area 4 block offshore Mozambique. Senior management representatives of the co-venture parties (ExxonMobil, Eni, CNODC, ENH, Kogas and Galp) met today during World Gas Conference in Washington, D.C. to affirm marketing progress. “The key strength of Area

BUSINESS DAY

percent less than those in Asia and half the levels in the European Union. “The flexibility of gas and the ease with which it can be transported and stored make it an ideal partner for the growth of renewables,” Marco Alvera, the CEO of Snam, said in an emailed statement. “And gas is well on the way to becoming a renewable-energy source itself, thanks to the development of greengas technologies.”

LNG: Nigeria needs to pay attention as new entrants penetrate market STEPHEN ONYEKWELU

atural gas exploration and developments are gathering momentum in various African sub-regions but Nigeria, holder of Africa’s largest proven gas reserve trails behind peers in terms of activity. In West Africa, Mauritania and Senegal have disposed of both political and infrastructural resources to develop their new discoveries of gas reserves as Nigeria struggles with a burden of infrastructure inefficiencies. In Southern Africa, Mozambique has moved closer to becoming a player on the fast-growing global market for liquefied natural gas, eight years after the first major deep-water discovery there. The development of hydrocarbon resources is crucial for the southern African country, which has struggled in 2018 to service its debt. While the LNG projects will require tens of billions of dollars in funding and take years to develop, they offer a way to stimulate growth in one of the world’s poorest countries. Egypt aims to increase production at its huge Zohr offshore gas field in the Mediterranean to 1.75 billion cubic feet per day in August; Tarek El Molla Egypt’s petroleum minister said on June 14. For Nigeria, infrastructure challenges have slowed down the development of its 192 trillion cubic feet (TCF) of gas reserve. The plans to build the Nigerian Liquefied Natural Gas (NLNG) Train 7 have

remained on the drawing board for over eight years. Though partners in the NLNG said they hope to take a final investment decision (FID) on building the much awaited 7th train by the fourth quarter of this year, the entrance of Mauritania, Senegal and Cameroon into the LNG space should be a wakeup call. In 2016, when Tony Attah, the managing director of Nigeria’s Liquefied Natural Gas (NLNG), took over from Babs Omotowa, immediate past managing director of the company, he appeared to be under no illusion, regarding the task ahead of him. “We are right in the middle of the turbulence. Gas supply is down, assets are about 18 to 20 years old if you add the construction phase meaning the asset is aging. So we are also beginning the second half almost the same way we started the first half” Attah said, when he collected the

‘NLNG’ key. “With the Americans who used to import now exporting, Australia capturing the Indonesian market where we used to cream off, it is no longer a kid’s play to lead a company like this. We have a lot to do but we have no choice, we have to win and to win, you have to win this second half,” Attah explained. Good news for global natural gas exporters is that India’s largest utility is hunting for new supplies to import. The bad news is that it is seeking shorter deals than have been traditional in the past. India now consumes almost 22 million metric tons a year of liquefied natural gas, but that demand could double within just four to five years, according to B.C. Tripathi, the chairman of Gail India Ltd. As a result, his company wants to import more LNG, especially around 2023 and 2024. But he wants deals to last

for just 10 years, rather than the more traditional 20. “It is becoming difficult for one to think long term,” Tripathi said in an interview June 29, at the World Gas Conference in Washington. “The amount of uncertainties has increased.” While shorter deals allow buyers more flexibility, US developers have talked about the need for longer-term contracts to justify spending millions of dollars on new export terminals in the US Cheniere Energy Inc., for instance, recently announced an agreement to negotiate a 25-year deal with a Taiwan utility. Those concerns may push India to look elsewhere for its deals. “We would like to remain engaged with our old suppliers,” Tripathi said. “But we are also looking at new opportunities,” from Qatar’s expansion project to potential new supplies from Southern Africa, namely Mozambique.

04 BUSINESS DAY WEST AFRICA ENERGY intelligence

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power

Sub-Sahara Africa: Power Africa Gas Roadmap outlines 16,000MW of gas-fired power

GE debuts world’s first upgrade with additive manufactured components to GT13E gas turbines FRANK UZUEGBUNAM

E Power has announced the new MXL2 with Additive Manufactured Performance (AMP), the world’s first upgrade solution for GE’s GT13E2 gas turbines that uses key components manufactured using additive technology. The addition of additive manufactured parts into the MXL2 solution represents a turning point in the global power generation industry and confirms GE’s commitment to keep its mature fleets competitive in today’s very dynamic marketplace. The new technology can help gas plant power producers save up to $2 million in fuel annually, while opening up the potential for additional revenue of up to $3 million annually in new power capacity. Today’s

news also marks the third investment announcement GE Power is making in six weeks in its Power Services business. “We’re continuing to invest in new technologies to keep our installed base competitive: the new MXL2 with AMP upgrade could not be manufactured with conventional methods and marks the first-of-its kind solution with the injection of components manufactured by additive technologies,” said Scott Strazik, president and CEO of GE’s Power Services business. “Because these components are made with a lightweight configuration and can be engineered to include advanced cooling channels, they help the gas turbine run more efficiently, representing a new frontier in turbine engineering and production. These savings translate directly into increased performance and provide

turbine operators with greater fuel efficiency and more capacity. We’re excited to bring this technology to our GT13E2 fleet, which we acquired from Alstom in 2015.” The new MXL2 with AMP include two components produced by GE’s Additive Manufacturing Works (AMW) teams in Birr, Switzerland, and Greenville, South Carolina, United States: the first-stage turbine vanes and heat shields. These parts are among the turbine’s hottest-running components, and the significant amount of cooling air they traditionally require impacts the engine’s performance. Additive printing allows GE to use advanced cooling designs that considerably reduce the amount of cooling air the parts need, improving the turbine’s performance and offering operators po-

tentially millions of dollars in benefits per year. The breakthrough technology can significantly elevate the output and efficiency of existing GT13E2 gas turbines. It’s capable of: reducing component cooling requirements by up to 25 percent, increasing output up to 21 megawatts (MW) in combined-cycle configuration, achieving efficiency improvement of up to 1.6 percent in combinedcycle configuration and delivering maintenance intervals of up to 48,000 hours. The MXL2 with AMP upgrade is a direct result of GE’s long-term commitment to additive manufacturing technology. Vattenfall began supporting this technology in 2015 with the installation of four different 3D printed components at its Heizkraftwerk BerlinMitte Power Plant near Germany’s capital city of Berlin.

he US Agency for International Development’s (USAID) Power Africa Coordinator has launched the Gas Roadmap for sub-Saharan Africa (SSA), outlining an additional 16,000MW of gas-fired power by 2030. These figures are based on those projects that could most likely achieve financial close by the said date. USAID notes that “Power Africa’s Gas Roadmap estimates US companies could invest in, or compete for, $175 billion worth of gas power projects in SSA, with the potential for at least $5 billion of US exports of liquefied natural gas by 2030.” This report focuses on nine countries, which have been strategically selected; Côte d’Ivoire, Senegal, South Africa, Ghana, Angola, Kenya, Nigeria, Mo-

zambique and Tanzania. According to USAID, these countries were selected due to their relatively large populations, high gross domestic product (GDP), and either because they have local gas resources (in operation or under development) or are planning liquified natural gas (LNG) import projects. “We estimate that these countries hold the potential for around 16,000 MW (86 percent) of new gasfired power generation projects through 2030.”

United Kingdom: Oil major BP buys UK’s largest EV charging company Chargemaster

il major BP said that it has agreed to buy Chargemaster, the UK’s largest electric vehicle charging company. However, no price was put on the deal. This is the oil major’s fifth foray into the electric vehicle market this year, with BP estimating that

there will be 12 million EVs on UK roads by 2040, up from around 135,000 in 2017. Founded in 2008, Chargemaster runs POLAR, the largest public charging network in the UK with 6,500 charge points. The network has over 40,000customers, some paying a monthly subscription fee, the remainder re-charging on a pay-as-you-go basis. Chargemaster also supplies home charging points across the UK, and is the charging partner for a number of car manufacturers. “Fast and convenient charging is critical to support the successful adoption of electric vehicles,” Tufan Erginbilgic, BP Downstream’s chief executive said.

Wednesday 04 July 2018

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POLICY

BUSINESS DAY

Could re-election of Turkey’s president brighten Nigeria’s gas outlook ISAAC ANYAOGU

he re-election of Turkish president Recep Tayyip Erdogan means that more cargoes of Liquefied Natural Gas (LNG) from Nigeria could yet find its way to Turkey, as Nigeria LNG struggles to find new buyers for its gas contracts. While Turkey sources only 3 percent of its natural gas from Nigeria, Africa’s biggest gas reserves holder accounts for more than 20 percent of Turkeys LNG imports. Through a contract between NLNG and Turkey’s state-owned BOTAS Petroleum Pipeline Corporation, Nigeria has delivered over 4,000 LNG cargoes to the company’s Mamara LNG Terminal since 1999. LNG differs from natural gas in that it is created by cooling natural gas to form a clear, colourless and non-toxic liquid, 600 times smaller than natural gas. This is to enable the gas to be transported from where it is produced to where it is going to be consumed The re-election of Erdogan, analysts say could mean that the Sales Purchase Agreement (SPA) between NLNG and BOTAS set to end in October 2021, may see more positive talks towards extension as Turkey seeks alternative gas markets now that trade relations with Russia sputters. With only 25 percent of Turkey’s energy demand met by domestic energy sources, the country is heavily dependent on external sources. Ninety-eight percent of the country’s natural gas comes from external sources, imported through pipelines from Russia (60 percent), Iran (20 percent) and Azerbaijan (10 percent), and increasingly from LNG sources in Nigeria and Algeria.

“This dependence on foreign imports has become a point of concern for the government in Ankara, particularly following deterioration in relations with Russia, Turkey’s biggest natural gas importer. Ensuring its current and future energy security is a top priority,” say analysts at West Sands Advisory Limited, a UK-based business intelligence firm. The country aims to reduce its dependency on pipeline gas through FSRUs Floating Stor-

age Regasification Unit (FRSU) a vessel equipped with facilities to reheat liquid gas and convert into its original state before it can be pumped into its storage systems. Turkey launched its first FSRU, in 2016 with a capacity of 20million cubic meters. The second with the same capacity was launched in February this year. Strong economic growth in the past ten years has seen energy demand grow by 4 percent between 2005 and

2015 according to a Financial Times study. It is projected to rise further helping to make the global LNG market forecasted to increase by about 50 percent between 2015 and 2020 according to a Wood Mackenzie study. Both the Nigerian and Turkish presidents seem to maintain a congenial relationship, exchanging visits in 2016 and 2017. During the D8 meeting (developing nations) in Ankara last year, Buhari paid a visit to

Erdogan where both leaders signed an MoU on trade, economic and industrial cooperation. Trade relations between Nigeria and Turkey was at $779 million in the first eight months in 2017 largely consisting clothing, food (biscuits and pasta), engine and automobile parts, and pharmaceuticals from Turkey and sesame seeds, raw and semiprocessed leather, and rubber from Nigeria.

06 BUSINESS DAY

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ENERGY intelligence Brief $800m VRA debt poses dire consequences for Ghana Gas

he Chief Executive of Ghana National Gas Company (GNGC) says the firm needs a clean balance sheet in order to effectively attain their core objectives. According to K.B Asante, the challenges confronting the firm are largely due to the fact that those who lift gas from them do not pay regularly. The comments come on the back of reports that the Volta River Authority owes Ghana Gas in excess of $800 million. The Public Interest and Accountability Committee (PIAC) has claimed the rising indebtedness of Volta River Authority (VRA) to GNGC poses dire consequences for the nation. PIAC’s assessment revealed that VRA’s debt to Ghana Gas stood at $750 million as of the end of 2017. In its Annual Report on the Management of Petroleum Revenues for

2017, PIAC disclosed that from inception of gas production to the end of December 2017, the Ghana National Petroleum Corporation (GNPC) has supplied 78.1 billion Standard Cubic of Gas (78,130.07 million) (MMScf) of raw gas to GNGC. Commenting on the development, the Ghana Gas boss said the company could do much better if the debt owed them are paid. “The collection of money should be right on and I think that is what the Ministry is trying to do. Ghana Gas is on its feet but it could be firmer if all debt is paid. Those who take gas from us do not pay regularly. We are asking for a clean balance sheet. That is what we are asking for. VRA has given us a paltry amount of what we are owed. We have been told that we will be given the second chunk of the money. Government has promised us that,” he said.

Wednesday 04 July 2018

finance people appointments

Tullow ups 2018 output forecast, provisions for Seadrill claim

ullow Oil has raised its 2018 production outlook to 86,00092,000 barrels of oil per day from 82,00090,000 bopd, boosted by its offshore fields in Ghana. The Africa-focused firm said it has contracted a second rig for its Ghana

fields to start work in October on three wells, without increasing its capital expenditure programme. Tullow said it is preparing for the London Commercial Court to decide on a $277 million claim brought by Seadrill over the termination of the West Leo rig contract for

force majeure in Ghana. Tullow has set aside $128 million in case it loses. Tullow is also working towards growing output in West Africa in Ivory Coast, where it has farmed out its licenses to Cairn Energy retaining 60 percent, but with Cairn set to pay for most of the pre-drilling ex-

ploration costs. Looking to further output growth, Tullow is due to start exploration drilling in Namibia in September. For East Africa, Tullow reiterated it planned final decisions in Uganda towards the end of 2018 and in 2019 for Kenya, where it hopes to export up to 2,000 bpd in trucks - before a pipeline is built to the coast. At an average realised oil price of $67 a barrel, Tullow expects to free cash flow of $300 million for the first half year and might cut its net debt to around $3 billion by year-end from around $3.2 at end-June, finance chief Les Wood said. It has hedged 45,000 barrels in the second half at a floor price of $52.23 a barrel and around 8,000 barrels in 2020 at a floor of $55.13.

Petrobras could raise $28 bln selling stake in key offshore area

razil’s state-controlled oil company Petroleo Brasileiro SA, also known as Petrobras, could raise around $28 billion by selling a big stake in a key offshore oil area if Congress passes a bill allowing such a move, Wellington Moreira Franco, Brazil’s Mining and Energy Minister said. The reserves, located in the offshore Santos basin, are part of the “transfer-ofrights” area that the government passed to Petrobras at a price that is still in dispute. Since 2014, negotiations to resolve the dispute have been contentious, with both parties claiming to be owed billions of dollars. A basic text of a bill that would allow Petrobras to sell up to a 70 percent stake in the area was passed by the Lower House but requires further approvals there before it heads to the Senate.

“Once approved, the change should let Petrobras make around $28 billion,” Franco said. The transfer-of-rights area was granted to Petrobras in 2010 to extract 5 billion barrels of oil and gas for a price based on oil prices then. However, the con-

tract stipulated that costs, among other things, would be reviewed after the area was declared commercially viable in 2014. That has led to years of sparring, as oil prices have fluctuated. The bill winding its way through Congress would

also allow the government to auction off oil and gas reserves in the area beyond the 5 billion barrels promised to Petrobras. The government has already said it wants to host the auction on November 29. However, Joao Vicente de Carvalho Vieira, Brazil’s oil and natural gas minister, said the chance of Petrobras and the government reaching a deal this year over the value of the disputed area are slim. Such a deal would be a key precursor for an auction of the remaining areas. Brazil, now Latin America’s largest producer, has attracted top dollar from the world’s largest oil companies in recent auctions, as they seek to lock in access to Brazil’s pre-salt offshore oil play. There, billions of barrels of oil are trapped under a thick layer of salt beneath the ocean floor.

07 WEST AFRICA ENERGY intelligence

Wednesday 04 July 2018

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marketinsight Oil rises as market anticipates US sanctions on Iran

il prices climbed as US sanctions against Iran t h re at e n e d to remove a substantial volume of crude oil from world markets at a time of rising global demand. Benchmark Brent crude jumped $1.49 to a

high of $79.34 a barrel before easing back to around $78.75. The US oil futures contract hit its highest since November 2014 at $74.03 per barrel. Iran is the fifth-largest oil producer in the world, pumping about 4.7 million barrels per day (bpd), or almost 5 percent of to-

tal output, much of it to China and other energyhungry nations such as India. The US government wants to stop Tehran exporting oil to cut off a vital supply of finance, and hopes other big oil producers in the Organization of the Petroleum Exporting Countries and Russia will make up for the deficit. But the world oil market is already tight with unplanned disruptions in Canada, Libya and Venezuela removing supply. Many analysts and investors think strict enforcement of US sanctions against Iran will push up prices sharply. “It is becoming increasingly clear that Saudi Arabia and Russia will struggle to compensate for potential losses in oil production from the likes of Venezuela, Iran and

Libya,” said Abhishek Kumar, analyst at Interfax Energy in London. A Reuters survey of 35 economists and analysts forecast Brent would average $72.58 a barrel in 2018, 90 cents higher than the $71.68 forecast in last month’s poll and compared with the $71.15 average so far this year. Outside North America, record demand and voluntary supply cuts led by OPEC have pushed up prices. Major buyers of Iranian oil, including Japan, India and South Korea, have indicated they may stop importing Iranian crude if US sanctions are imposed. Until then, however, they are buying as much Iranian oil as possible. Imports of Iranian crude oil by major buyers in Asia rose in May to the highest in eight months.

Asia steps up efforts to diversify from Iranian oil

sian oil importers are stepping up efforts to diversify crude sources and Iranian oil payment mechanisms after the US

announced it is pressing buyers to completely eliminate Iran imports by November 4. The US State Department confirmed it is taking a hard line on sanc-

tions enforcement and is working with Middle East allies to prevent an oil supply shock. Around 60 – 65 percent of Iranian oil shipments head to Asia. A few Japanese shipping companies have decided in principle not to accept Iranian oil from loadings in August to clear their transactions before US sanctions are re-instated, a source said. In India, Asia’s secondlargest importer after China, state-run refiners will have to give up the euro payment mechanism for Iranian crude imports from November when US sanctions against Iran come into force but still could continue imports if Iran accepts an alternative

BUSINESS DAY

OPEC Flakes OPEC run by unanimous decision, not Saudi Arabia, says Kazempour

ran’s OPEC governor has warned Saudi Arabia to stick to the terms of its deal rubber-stamped on June 23 and refrain from exceeding its allocated output quota. “If Saudi pumps above its allocated quota it is in breach of the contract with OPEC,” Hossein Kazempour Ardebili told S&P Global Platts. His comments come just days after Iran agreed to a deal with its OPEC partners and allies outside the group led by Russia to reduce over compliance to cuts, effectively releasing more crude to the market. “OPEC is run by unanimous decision not one country,” he added. OPEC’s meetings recently were complicated by a deep political rift between Tehran and the kingdom, which

has come under pressure from US President Donald Trump to pump more oil following the reimposition of sanctions on Iran. Kazempour said OPEC’s Secretary General, Mohammed Barkindo, could face the choice of calling an extraordinary meeting of the group if the agreement was found to have been breached when its monitoring committee next meets September 22-23 in Algiers to review progress.

Russia can raise output above 200,000 b/d if needed to meet OPEC new target

payment or offers a longer credit period, oil ministry officials said. South Korea is still verifying the report with the US State Department. “The government is continuing diplomatic efforts to win exemption from the US sanctions,” a ministry official said, noting local refiners have sharply reduced Iranian crude imports to get a sanction waiver as they did in 2010. “We are ready to further reduce crude and condensate shipments from Iran in line with the government policy as we have increased light sweet crude imports from alternative sources, such as Russia and Kazakhstan,” top South Korean refiner SK Innovation said.

ussia is ready to increase oil production above 200,000 b/d if other countries of the OPEC-led coalition are not be able to meet the group’s new goal to raise the combined output by 1 million b/d, Alexander Novak, Russia’s energy minister said. “If everybody agrees that we cannot receive the 1 million b/d increase, of course we will be participating in ensuring the increase with higher parameters than 200,000 b/d if needed,” Novak said. At the Vienna meeting, OPEC and its allies, led by Russia, agreed to adjust individual oil output ceilings in line with each country’s spare capacity to increase combined production by up

to 1 million b/d to avoid potential shortages in supply amid high risks of further falls in crude production in Venezuela, Iran and Libya. Russia’s quota was put at 200,000b/d. The increase would translate into a Russian production cut of 100,000 b/d from October 2016’s level, the baseline for OPEC and its allies’ production cut deal effective from January 2017, Novak said.

08 BUSINESS DAY WEST AFRICA ENERGY intelligence

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Wednesday 04 July 2018

talking points

In association with

Trends in LNG global market indicate shift to short term contract ISAAC ANYAOGU

he current glut in the LNG market and projected demand growth by both Royal Dutch Shell and the International Energy Association (IEA) indicate that the global LNG market could be shifting to shorter-term contracts. According to the Gas market report released by the International Energy Association (IEA), LNG industry will become the largest contributor to the increase in global gas demand to 2023, taking the lead from power generation, which had historically held this role, thus raising the need for flexible shorter-term contracts. The IEA says that overall, industry accounts for over 40 percent of growth in global gas demand to 2023, followed by 26 percent for power generation. The change is espe-

cially marked in Asia and other emerging markets due to higher gas use in industrial processes and as feedstock for chemicals and fertilizers. Major changes are expected also from the supply side, with the United States leading gas production growth worldwide to 2023, largely due to the on-going US shale revolution. “Most new US supplies will be geared to export markets as LNG or through pipelines. The development of destination-free and gas-indexed US LNG exports will provide additional flexibility to the expanding global water-borne traded market. However, NLNG supplies are indexed to oil and contain destination clauses which does not allow for flexibility. It is currently trying to re-market expiring contracts. The fortunes of the NLNG have grave implications for Nigeria. Through the NLNG Nigeria has received $15billion in dividends. For the past 6 years, NLNG has paid over $5billion in taxes and employed

2,000 Nigerians directly and another 18,000 through vendors and contractors. At 4 percent, the company is a major contributor to Nigeria’s GDP. Analysts say the company may need a new strategy to engage the market. “The changing LNG market is creating a need for a new strategy,” Olufola Wusu, an energy lawyer and co-founder of Megathos Law Practice told BusinessDay earlier about the matter. The IEA say LNG is progressively taking a larger share in global gas trade, especially in Asia. LNG trade as a share of total gas trade is forecast to rise from a third in 2017 to almost 40 percent in 2023. “Emerging Asian markets will account for about half of global LNG imports by 2023. This continued rise in the LNG market will have significant impacts on trade flows, pricing structures and global gas security,” says the IEA. The Paris-based think tank further says the current wave of LNG export projects will

increase liquefaction capacity by 30 percent by 2023. Nigeria has not been able to add new capacity since the NLNG Trains 1 - 6 were completed. Leading industry players also agree that the market is shifting to shorter-term contracts. Charif Souki, chairman at US LNG developer Tellurian Inc., at the Flame conference in Amsterdam said long-term contracts in the LNG sector would soon be a thing of the past. Total’s head of gas, Laurent Vivier, meanwhile, said the long-term contract could still have a role to play, but said that size was the crucial factor. “LNG is a commodity ‘in the making’,” he said. “There could still be a need for longterm contracts to help finance new LNG projects.” But, he said, a company needed to be global and have a big portfolio, and that final investment decisions for new projects depended on that visibility.