Businessday 04 jun 2018 by BusinessDay

FMDQ unveils critical Clearing Infrastructure

n a significant milestone for the nation’s financial markets, the Securities and Exchange Commission, Nigeria (“SEC” or the “Commission”) registered FMDQ Clear Limited (“FMDQ Clear”), the first central clearing house in Nigeria,

... positions to bolster liquidity and financial system stability in Nigeria through establishment of first-class central clearing and settlement structure a wholly-owned clearing and settlement subsidiary of Nigeria’s foremost debt capital, currencies and derivatives OTC Exchange, FMDQ OTC Securities Exchange

news you can trust I * * MonDAY 04 JUNE 2018 I vol. 15, no 67 I N300

(“FMDQ”). The Nigerian fixed income and derivatives markets have hitherto experienced slow growth due to sustained counterparty, credit

and settlement risks. Being Africa’s largest economy, analysts say the development of the Nigerian financial markets is crucial, with improved market architecture, in-

creased risk management structures, growing need for bespoke hedging products, derivatives and

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Emeka Offor’s EEDC slams ‘stop work’ injunction on Ariaria’s stable power experiment in Aba Ignatius Chukwu

he plan by the federal government through the Rural Electrification Agency (REA) to test-run an uninterrupted off-grid power supply system with Ariaria Market in Aba,

Continues on page 46 L-R: Afolabi Oladele, director, portfolio management department, Debt Management Office (DMO); Mark Eddo, communicator & founder, Mark Eddo Media; Oscar Onyema, CEO, Nigerian Stock Exchange (NSE); Babatunde Fashola, minister, power, works and housing; Eme Essie Lore, country manager, International Financial Corporation (IFC); Gokul Mani, head primary markets, London Stock Exchange (LSE) and Elias Kagumya, director, risk management, The African Export-Import Bank during NSE – LSE Dual Listing Conference with the theme, ‘Attracting Global Capital to Drive Nigeria’s Economic Reforms and Sustainable Growth’ in Lagos, at the weekend.

Police invites Saraki, Lexus SUV used in Offa robbery was taken to Government House

Nigerian banks lead African I peers on ROE, lag in valuations

…as DSS allegedly recalls security

n a surprise move, which many see as high level political gamesmanship, the Nigeria Police yesterday, June 3, invited Senate President Bukola Saraki for questioning in connection with the violent Offa Bank robbery during which 33

trade at P/B ratio of 1.378x, SA 2.64x, Kenya 1.607x

ENDURANCE OKAFOR, DIPO OLADEHINDE & UJU IKEDIONU

espite having lower valuations compared to its peers in South Africa and Ke nya, Nig er ia n banks performed better in terms

of profitability and efficiency in making use of their operating funds in 2017. Research by BusinessDay on the best five performing banks in Nigeria, South Africa and Kenya showed Nigerians banks such as

Guaranty Trust bank and Stanbic bank led African peers in terms of Return on Equity (ROE) which measures bank’s profitability by revealing how much profit a bank generates with the money shareholders have invested.

RMB engages stakeholders on sustainable growth

P. A7

In full year 2017, Guaranty Trust bank with a market cap of N1.1 trillion ($3 billion) had the highest ROE of 30.17 percent compared to 28.8 percent recorded in 2016. “GT Bank has had great suc-

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Inside AMCON act allows CBN increase to Bank levy – Kuru

P. 46

BUSINESS DAY

Monday 04 June 2018

BUSINESS DAY

businessday market monitor Commodities

NSE

Brent Oil

Biggest Gainer

$76.96

CCNN N27.95

Cocoa

US $2,458.00

Biggest Loser

4.88pc

Everdon Bureau De Change

Bitcoin NESTLE N1430

36,816.29

₦2,727,015.06

-2.89pc

-0.03 pc

Buy

Sell

$-N 361.50 364.50 £-N 483.00 493.00 €-N 416.00 426.00

BUSINESS DAY

FMDQ Close Foreign Exchange Market

I&E FX Window 360.85 CBN Official Rate 306.00

fgn bonds

Treasury Bills

Spot $/N

5 Years

10 Years

20 Years

0.21 12.14

0.27 12.39

-0.06% 13.19%

0.00% 13.31%

-0.01% 13.42%

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Nigerian banks lead African peers on ROE, .... Continued from page 1

cess in Nigeria’s affluent segment, based on high service levels. It has been rated best in class in terms of CSAT, a measure of client experience,” Mckinsey Global consulting firm said in its 2018 report. Mckinsey said African customers have a strong need for affordable financial solutions, which points directly to the second winning practice in African retail banking: targeting the right segments with compelling offers of which Nigeria GT Bank is a good example. Nigeria’s Stanbic bank (market cap of N463.2 billion or $1.28 billion) was second, reporting a strong ROE of 29.6 percent in 2017 while South Africa’s leading Capitec Bank, with a market cap of $8 Billion had the third best ROE of 27 percent in 2017. Also, Nigeria’s Zenith Bank (market cap of N800.6 billion or $2.2 billion) had the fourth best ROE of 23.3 percent in 2017 followed closely by First Rand of South Africa (market cap of $27 billion), with ROE of 22.5 percent. Kenya’s Equity Group Holdings (market cap of $1.78billion), came in next with ROE at 21.6 percent in 2017. “The main driver for the Nigerian banks last year was the yields and government securities which were up 18 to 20 percent,” Tajudeen Ibrahim, Head of Research at Chapel Hill Denham Securities said. Another foremost bank in south Africa, Barclays Bank of Africa (market cap $11 billion) had ROE of 20.1 percent in full year of 2017, while Kenya Commercial Bank (market cap $1.38billion) had ROE of 19.5 percent in 2017. South Africa’s NED bank (market cap $10.82 billion) and Standard Bank Group (market cap $26.5 billion) had ROEs of 18.1 percent and 17 percent in 2017 respectively. Co-operative Bank of Kenya with a market capitalisation of $976.4million reported ROE of 17 percent in 2017 while Nigeria’s UBA with a market cap of N369.3 billion or $1 billion had an ROE of 16.78 percent in 2017. Barclays Bank of Kenya Limited (market cap of $639.2million) had ROE of 16.02 percent in 2017; Kenya’s Diamond Trust Bank with a market cap of $523.09million recorded an ROE of 14.2 percent in 2017. Nigeria’s Access bank (market cap of N300 .8 billion or $830 million) had ROE of 12.7 percent in 2017 while South Africa’s Absa bank with a market cap of $27 billion had an ROE of 11.8 percent in full year of 2017.

While the Nigerian Banks led on returns they still largely lacked their African peers in terms of valuations of their stock by investors. The five Nigerian Banks researched had an average Price to Book ratio of 1.378x, compared to the 5 South African lenders which had an average P/B ratio of 2.64x, and Kenyan lenders with P/B ratio of 1.607x. The price-to-book ratio (P/B Ratio) is a ratio used to compare a stock’s market value to its book value. A lower P/B ratio indicates that the stock is undervalued. Wale Okunriboye, Head, Investment Research at Sigma Pensions said though some Nigerian banks might report a higher ROE than South African and other peers, one needs to normalize this number for the environment using cost of equity which tends to be driven largely by the risk free rate. “From this perspective, investors would seek to reward banks with high excess return, that is the spread of return on equity over cost of equity in their markets with a richer price to book valuation,” Okunriboye said. GT Bank, the bank with the highest ROE in 2017 had a 1 year return of 22.8 percent and trades at 2 times price to book ratio, while the second highest in terms of ROE, Stanbic Bank, had a 1 year return of 78 percent and trades at a 2.5 times price to book ratio. Also, Zenith bank had a 1 year return of 43.9 percent while its price to book ratio was 1 times, however UBA had a 51 percent 1 year return and a trades at 0.7 times book value, while Access Bank trades at a Price to Book ratio of 0.69x. In South Africa, Captec bank had a 1 year return of 18 percent while price to book ratio was 5.5 times; Barclays Africa Group had a 1 year return of 24.6 percent while its price to book ratio of was 1.2 times. NED Bank had a 1 year return of 35.3 percent and price to book ratio of 1.5 times, First Rand Bank trades at a price to book ratio of 3x, and is up 32 percent in the past year, while Standard Bank Group had a 1 year return of 54 percent and price to book ratio of 2 times. Kenya Commercial bank with a one year stock return of 14.29 percent had a price to book ratio of 1.37 times. Meanwhile Barclays Bank of Kenya and Equity Group Holding Bank recorded one year returns

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L-R: Oghenevwoke Ighure, executive director, digital services, BusinessDay Media Limited; Frank Aigbogun, publisher/CEO, and Babatunde Fowler, executive chairman, Federal Inland Revenue Service (FIRS), during BusinessDay team courtesy visit to FIRS office in Lagos, at the weekend. Pic by Olawale Amoo

UK investors admit Nigeria capital market offers huge opportunities ...1 in 5 FTSE 100 listed firm has operations in Nigeria Iheanyi Nwachukwu

igeria as the largest economy in Africa has the potential for a larger capital market that offers better returns for any prospective investor now and in future, according to government and private sector representatives at the 5th edition of the Nigerian Stock Exchange (NSE) and London Stock Exchange (LSE) Dual Listing Conference held Friday in Lagos. “Nigeria still offers huge opportunities for investors. Africa and indeed Nigeria are very high focus regions for London Stock Exchange Group (LSEG),” Gokul Mani, head of primary markets, Middle East, Africa and India at LSEG said at the conference. The high profile event held Friday June 1, 2018 aimed at increasing business relationship between Nigeria and United Kingdom (UK), brought together companies keen to explore a London/Lagos dual listing, corporate finance experts, lawyers, capital market operators, regulators, government officials, and thought leaders who discussed investment opportunities in Nigeria. Capital markets are critical to sustainability of growth and development in an economy, and one of

the things that Nigeria needs to sustain its growth, is a solid and vibrant capital market ecosystem that will attract investment and unlock the potential that exists in the economy. The Nigerian Stock Exchange continues to increase its product offerings to the investing public with the listing of securities such as the $300m Diaspora Bonds and $3bn Eurobonds in 2017, the N100billion Federal Government Ijarah Sukuk and the Sovereign Green Bond. These add to the nation’s funding options to catalyse the rebound of Nigerian economy and offer investment alternatives to the vast majority of Nigerians. Nigeria’s inaugural issue in the Green Finance market earned a credential as the first ever Sovereign issuance in Africa. The Nigerian Stock Exchange and London Stock Exchange Group signed a capital markets agreement in 2014 and renewed it in 2017, to support African companies seeking dual listings in London and Lagos. The agreement followed the implementation earlier in 2014 of a unique new cross-border settlement process between the UK and Nigeria. In 2014, Seplat Petroleum Development Company Plc became first Nigerian company to simultaneously dual list equity shares in London and Nigeria Stock Exchanges. The company’s Initial Public Offering

(IPO) raised $500 million. The recent dual listing of the first-ever FGN Sovereign FX denominated $1 billion Eurobond on The Nigerian Stock Exchange and London Stock Exchange gives credence to the successful partnership between the two exchanges. There are other corporate Eurobonds in pipeline. Also speaking at the conference themed “Attracting Global Capital to Drive Nigeria’s Economic Reforms and Sustainable Growth Development,” Laure Beaufils, British Deputy High Commissioner, British High Commission, Lagos said the UK government through the London Stock Exchange (LSE) Group has been working to attract UK investors to Nigeria. “The UK is fully committed to further support investment, finance, and inclusive growth in Nigeria. One out of every five companies listed on FTSE 100 Index has business presence in Nigeria,” she said. The UK Government currently supports Nigerian economic development agenda through international aid provided by DFID and other foreign policy instruments through the Foreign and Commonwealth Office, UKTI and other such agencies.

Continues on wwwbusinessday online

Monday 04 June 2018

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Monday 04 June 2018

Tuesday 05 June 2018

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NEWS

2019 Presidency: Why I want to unseat Buhari – female aspirant INNOCENT ODOH, Abuja

resident Muhammadu Buhari will contend with another challenger to his ambition to retain his seat in the 2019 general elections as a female aspirant has declared intention to unseat him and his ruling All Progressives Congress (APC) even as she promised to restructure Nigeria to achieve true federalism. Elishama Ideh, made her intention known during a world press conference in Abuja on Thursday, stressing that under the Partnership For a New Nigeria (PFANN), her campaign train has started the movement to “birthing a new Nigeria”,which she said is on the right agenda to extricate the nation from prolonged backwardness caused by past and present leadership. Ideh, who is seeking the presidency under the platform of the Alliance for a New Nigeria (ANN) said the party encapsulates great values, vision and mission. She pointed out that she is committed to the actualization of the party’s ideology and its innovative roadmap for the regeneration of Nigeria and the creation of the material and social wealth that will secure the present and future of Nigerians living today and generations yet unborn. She lamented that almost 60 years as an independent country,

Nigeria, despite its rich human and material potentials, has suffered crisis of leadership and dysfunction in governance leading to collapse of its infrastructure, which has caused immense setback in economic development coupled with severe moral and value breakdown. “Nigeria’s terrible reversal of fortune in just over half-century of our existence as a nation did not just come upon us like a thief in the night. Our situation today is a culmination of a prolonged crisis of leadership and dysfunction in governance- a crisis and dysfunction arising from weak or non-existent institutions, and a flawed constitutional framework that allows the powerful to get away with serious breaches of the law and the demand of basic decency, while punishing the weak and victimizing the innocent,” she said. The public intellectual, who is a member of the Nigeria Intervention Movement (NIM), explained that as President she will focus on the youth, women and people living with disability and initiate policies that will better their lives. She also promised to reform Nigeria’s revenue generation and allocation structure and liaise with the international community to secure good business environment that will create jobs for the millions of jobless Nigerians.

“As President, I will reform the country’s revenue generation and allocation structure, including our federal tax regimes. We will strive to strike a balance between making sure that nobody evades their financial obligations for the amenities that government provides, and ensuring that our tax regime allows business to take root, expand and create jobs,” she said. Ideh, declared that if she becomes president, she will deploy the Economic and Financial Crimes Commission (EFCC) to fight the monster of corruption in all its tangible and intangible manifestations devoid of the seeming selective pattern of past and present leadership. Ideh said further that she will combine integrity with intelligence and a no nonsense strength of character to do things the right way adding that she is motivated by the quest to serve the country and deliver its people from the sufferings of today. “Let it be known that in seeking the highest office in the land, I am not motivated by my personal ambition or any desire on my part for personal aggrandizement or promotion. I am only answering the clarion call of destiny, a historic summons to save my beloved nation from the path of perdition upon which it is currently, almost inexorably, embarked,” she said.

FG projects positive economic outlook in 2018 CYNTHIA EGBOBOH, Abuja

he federal government has projected a positive economic outlook for 2018 and according to Udoma Udo Udoma, Minister of Budget and National Planning, the government is committed to initiatives such as the economic recovery growth programme (ERGP) focus labs aimed at attracting sufficient private sector investments. The minister, who spoke on ‘Delivering Economic Resilience and Growth’ at the Financial Times Nigeria Summit in Lagos, explained that the initiatives were meant to ensure that Nigeria achieved the growth target of 7percent by 2020 despite the challenging economy which the administration inherited and has succeeded in returning to growth again. He explained further that the collapse of oil prices in the global market from $111.8 in June 2014 to as low as $30.7 in January 2016, and with no fiscal buffers has set the country’s economy on a downward spiral, culminating in a recession by the second quarter of 2016. He explained that the government responded with an expansionary 2016 Budget, supported by a Strategic Implementation Plan (SIP), consisting of a series of short term interventions aimed at reflating the economy. “This was followed by the development of the Economic Recovery and Growth Plan (ERGP) in 2017, a medium term plan

whose implementation has taken the country out of recession and will place the economy on the path of sustained, diversified and inclusive growth”, he said. He indicated that, “as part of the implementation of the ERGP, there have been substantial increases in capital allocations to priority sectors such as infrastructure and agriculture, with capital releases of over N1.2 trillion under the 2016 Budget, and almost N1.5 trillion under the 2017 Budget”. He further explained that as part of Government’s effort to build up a better economy, a number of reform measures, such as the Presidential Enabling

Business Council (PEBEC), have resulted in the country becoming recognised by the World Bank as one of the top ten reforming countries in the world adding that the country has moved up 24 places in one year in the World Bank’s ease of doing business rankings. The Minister was happy to report that confidence in the country is clearly coming back as evidenced by the substantial increase in capital inflows. He pointed to the over US$6 billion of capital inflows in the first quarter of 2018 compared to less than US$1 billion in the first quarter of 2017 – an increase of more than 600%.

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9 NEWS

BUSINESS DAY

Uncertainties over FG’s strategy in setting up national carrier

…Experts suggest workable models to adopt IFEOMA OKEKE

ndustryexpertsandoperators have said that despite government’s drive in establishing a national carrier in December 2018, they are still oblivious of government’s directions and plans on how to run the proposed project. They say that, though Hadi Sirika,MinisterofStateonAviation, has promised that it will be private sector-led and private sector driven, it is only expected that, by this time, there should have been a clear direction on how governmentintendstoruntheprojectand airlines it intends to partner with. A national carrier is a trans-

Oil palm plantation, processing plant valued N6bn set in Delta MERCY ENOCH, Asaba

il palm industry in the country received a boost recently as a farm comprising 3, 000 hectares of Oil Palm Plantation, a 10-ton per hour palm oil mill, a palm oil refinery and a palm kernel crushing plant valued N6 billion is set to be established in Delta State. Delta State Governor, Ifeanyi Okowa, has already performed the ground-breaking of the 3,000 hectare Oil Palm Plantation and Processing Plant at AkwukwuIgbo, Oshimili North Local Governnment Area of the state. Speaking at the ground breaking event, Thursday, the governor expressed satisfaction that his administration’s drive for investors to come to the state was yielding results. He commended and congratulated Norsworthy Farms and Allied Industries Limited for establishing the farm in the state. The governor who did not hide his satisfaction at the event, said, “I see this exercise as a good example of private sector participation in the economy. It is really ennobling when private sector organisations partner with government in the pursuit of sustainable development.” “There are many avenues through which the private sector and non-governmental organisations can partner to bring sustainable development to the doorsteps of the people. I am convinced this is a major step forward in the development of viable business in the agricultural sector, which is a part of the key element of private sector participation in the development of our dear state”, Okowa added. “This farm which comprises 3, 000 hectare Oil Palm Plantation, a 10-ton per hour palm oil mill, a palm oil refinery and a palm kernel crushing plant, will no doubt, change the face of Oil palm industry not only in the state but, the country,” he exclaimed. He assured the people of Akwukwu-Igbo that the road from the community to Ugbolu would be captured in the 2019 budget and urged traditional rulers across the state to make land available to investors. Managing Director of Norsworthy Farms and Allied Industries Limited, Engr. Gabriel Ugbechie said over N6 billion has been budgeted for the project.

portation company, such as an airline that, being locally registered in a given state, enjoys preferential rights or privileges accorded by the government for international operations. Nogie Meggison, Chairman of Airline Operators of Nigeria (AON),saidairlineoperatorsareat a loss as to the relevance and need ofaNationalCarrieratthispointin time in the history of the nation. Meggison said, “Whilst we are not averse to the government providing a conducive operating business environment and a level playing field for the establishment of a private sector driven flag carrier, the idea of using tax

payers money to float a “National Carrier” in 2018 is not only counterproductive, but inimical to the overall interests of the present corps of private entrepreneurs. “Intheoverallschemeofthings, ‘NationalCarrier’canonlyresultin a huge distortion to the current market and will be a huge drainpipe to government’s treasury.” The AON chairman therefore urged the Federal Government to provide clarity on the agenda whether it’s for job creation or for profitaswellasstepsbeingtakenin the establishment of this “National Carrier”, especially when viewed against the background that the Sirika has indicated that this airline

will commence operations on December 24, 2018. He explained that the model where 80 percent of the airlines in Europe were government owned airlines, is no longer practicable worldwide, adding that today, 98 percent of the airlines have been privatised. “I have no clue on who the government is partnering with and how they want to do it. All I know is that the government says the carrier will be private sector driven and government will have very minimal participation, about 3percent,”Ikechi Uko, aviation expert and Nigerian travel business consultant.

Uko said there is a need for a national carrier but it should be in partnership with some of the local carriers that already exist so that they can learn from their experiences, adding that the process should transparent. “I think we should take into consideration the already existing domestic airlines. The national carrier will help pull the resources of the domestic airlines, especially now that they are struggling with depleting number of fleet. “Individually, they are weak but collectively, they can do well as a national carrier. Ethiopian airline is a national carrier, when you compete globally. They bring

out something that will serve the interest of the country,” he added. A UK-based Airline Management Group, an airline group with keen strengths in start-up carriers as well as Aviation International and Tianerro FZE was appointed by the federal government as transaction advisers for the national carrier. According to Sirika, the transaction advisers will be liaising with the project delivery team to ensure it all comes to fruition in record time. He further stated that all the transaction advisers except for the National Carrier were engaged in May 2017 and have a 9 month contract.

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Monday 04 June 2018

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The Dr. J.K. Randle colloquium BASHORUN J.K RANDLE Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants • Continued from last week

s for veteran banker Alex Otti, he unleashed a barrage of statistics (in total disregard of the warning by British Prime Minister Benjamin Disraeli:”There are three kinds of lies: lies, damned lies, and statistics.”): “Recently, the world transparency watchdog, Transparency International came out with its current rating on the Corruption Perception Index [CPI] which ranked Nigeria as No. 148 out of the 180 countries ranked with a score of 28%. This is against our ranking of 136 out of 180 countries in 2016 with a score of 27%. This means we dropped twelve places below our ranking a year earlier. Regarding Human Development Index [HDI], it measures health, education, income, livelihood and security in a country relative to others. It is contained in a UNDP report which is published annually. In the mostrecent report which was released last year, Nigeria ranked 152 out of 188 countries. This was a drop from its 120th position the previous year.

Bill Gates was absolutely correct when he reminded us that in upper middle income countries, the average life expectancy is 75 years. In lower middle income countries it is 68. In low income countries, it is 62. In Nigeria, it is lower still; just 53 years. 30 per cent of our children are hungry. I stand four square with him that we have to create opportunities for human development in agriculture and small/medium scale enterprises. Agriculture which contributes over 40 per cent to Gross Domestic Product [GDP] is denied access to finance as only 4% of Nigerian farmers have access to loans to expand their business.” Edward Dickson the Managing Director/Editor-in-Chief of “The Tribune” demonstrated uncommon commitment by personally delivering the front page editorial of his newspaper which was published on March 5, 2018. Headline: “Nigeria’s worsening corruption” “Transparency International’s (TI) latest report shows that corruption is worsening in Nigeria. According to TI’s Corruption Perception Index (CPI), Nigeria ranked 148th out of the 180 countries surveyed in 2017 with a score of 28/100, whereas it ranked 136th in 2016 with a score of 27/100 out of the 168 countries surveyed. This means that Nigeria has not made significant progress in the fight against corruption. This is surprising given the fact that the government of President Muham-

The TI report provides some insight into the relationship between openness and corruption. In countries where openness and media independence are absent, corruption thrives

madu Buhari has anti-corruption as a priority objective of governance. Indeed, Nigeria occupies the 32nd position out of the 52 assessed countries in Africa in the 2017 ranking. In West Africa, Nigeria is the second worst country out of 17 countries, leaving only Guinea Bissau behind. Nigeria’s score of 27/100 is far below the African average of 32/100. The report buttresses the claim by critics of the government that the anti-corruption war has been weak and targeted at critics of the government or opposition figures, and that grand corruption has been condoned within governmental circles, hence the persistence of nepotism, cronyism, favouritism and bribery at all levels in the country. In fact, the Sultan of Sokoto, Alhaji Sa’ad Abubakar, stated at a book launch in honour of the Registrar of the Joint Admissions and Matriculation Board (JAMB), Professor Ishaq Oloyede, in February that corruption had not reduced in

the country. The Sultan decried the absence of statesmen in the country, adding that, these days, Nigeria only had “men of state.” It should also be noted that in his press release earlier in January, former President Olusegun Obasanjo complained that the president’s inability to enforce discipline among those who were close to him had led to an increase in corruption, nepotism and clannishness, with adverse consequences for governance and service delivery. The TI report provides some insight into the relationship between openness and corruption. In countries where openness and media independence are absent, corruption thrives. The report called on the government and private sector organisations to support free speech and media independence. Importantly, too, government must allow the opposition and civil society to engage it. The government must give life to the Freedom of Information Act which has not been allowed to operate because of hostility by public office-holders to request for information on the basis of that law. President Buhari assumed the reins of leadership on the back of a campaign promise to crack down on endemic corruption. His slogan was that “if Nigeria does not kill corruption, corruption will kill Nigeria.” Now, he must ensure that corruption does not kill Nigeria by ensuring that graft is effectively sanctioned. Since 2015 when the current government took the reins of power, very few high-profile corruption cases have been concluded. Convictions

have been very scarce. The claim by the government that the judiciary has been largely compromised, thereby undermining the anti-graft war, cannot be a valid excuse. The government has to re-engineer public institutions to address corruption. The government must lead in transparency by proactive disclosure of important data such as budgets, company ownership, public procurement and political party financing through open data formats. Although the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices and other related Offences Commission (ICPC) claim to have recovered huge sums of money, the size, location, owners and basis of the recovered funds have not been provided for public scrutiny. Governor Ayo Fayose of Ekiti State has challenged the government to make public the identities of those who have refunded stolen public money. We support the idea. Indeed, some Nigerians fear that such funds would likely be re-stolen by government officials who are shielded by the government. It seems that both the EFCC and the ICPC have become agencies for the recovery of stolen public money without detailed public accountability for such recovered funds. The fight against corruption must go beyond such claims. It must be done with openness. Above all, those found guilty of stealing pubic fund must be sanctioned.”

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Delivering on the promise of social change beyond the rhetoric

ADE ADEFEKO Adefeko is Vice President Corporate and Government Relations, Olam Nigeria

igeria is faced with several challenges towards achieving meaningful economic growth and development. The population, estimated at 184 million, is growing at a 2.6% percent rate per annum. The number of citizens living below the poverty line of $2 per day is conservatively estimated at 82 million citizens (42.4% of total population). Following the economic recession of 2016, the nation started experiencing a fast paced increase in its unemployment rate. This rate rose to 18.8% in 2017; representing a surge from 6.4% in 2016. Under-employment was also estimated at 21.2% in 2017. This was more pronounced amongst the youth as Nigeria’s age distribution is significantly skewed to the younger generation or those often referred to as the millennials. In response, theBuhari/Osin-

bajo led government attempted a robust approach towards attaining macro-economic stability, economic recovery and growth. This approach has been entrenched in social policies focusing on sectors that drive inclusive growth, such as education, agriculture and Small and Medium Enterprises (SMEs) in order to invigorate the economy and enhance human capital. Historically, there have been over 26 attempts at social protection and investment programs by successive Nigerian governments to close the poverty gap in the nation. This has largely been driven by the high poverty rate, low social mobility and poor financial inclusion among the lower income classes. In 2015, The FG set up a portfolio of four (4) social investment programs to deliver socio-economic support to the disadvantaged Nigerians across the Nation. Following its launch in 2016, the program aimed to transform citizens from poverty to self-sustenance through capacity building, investment and direct support. This initiative is strategically hosted within office of the Vice President. There has been some marked progress in the journey so far; Job creation and youth empowerment (N-Power) This program addresses the skill gaps of non-graduates and graduates alike. It aims to provide skill acquisition opportunities through

employment into the education, agriculture, health and construction sectors of the economy. Interested persons are selected on an online platform, so long as they are between the ages of 18 and 35, have the requisite qualifications and have bank accounts through which they are paid N30,000 each month So far, there are 200,000 graduates in the program, and a further 300,000 verified graduates awaiting deployment. There are also 10,000 nongraduates in the N-Build category being trained in 23 States. There are a further 10,000 non-graduates awaiting to come on board pending the audit of skill centers in 15 states and explorations in terms of fit. The nongraduate category are paid N10,000 per month, through the period of 3 months of training and 9 months of apprenticeship. They are also provided with tool boxes and training, to enable them continue with their chosen vocations, as they exit from the training. Eight technology hubs are also in the pipeline, with the Humanitarian Hub in Adamawa State having taken off, in partnership with ICRC and the Adamawa State Government. 1,500 applicants submitted innovative ideas out of which 250 of the best were selected to make a pitch in Abuja and Yola. After those two events, 25 of them were selected to participate in a boot camp, commencing 28th of May in Yola, Adamawa State. At the camp, they would be mentored, coached and taken into the field to

test and fine tune their ideas, after which 6 of the best would emerge winners by the 4th of June, with financial support and FGN backing to actualize their dreams. The private sector - and indeed the public - is encouraged to support the social entrepreneurs at their efforts to resolve our many challenges. The Lagos Climate Change hub is due to commence in June, in collaboration with the World Bank and the Lagos Business School, aimed at engaging interested applicants on solutions around clean energy. The 6 regional hubs would essentially follow the same pattern as the Humanitarian Hub. The Technology Hubs are designed to encourage creative and innovative minds engage with addressing our many concerns, providing the opportunity for the private sector as well as Governments to engage and harvest the ideas, at scale. National Home Grown School Feeding Program (NHGSFP) The school feeding program, which targets vulnerable school-age children in public primary schools, has succeeded in providing nutrition supplementation for over 8 million children. The program has also significantly increased and encouraged school enrolment. The children on the programme are also being weighed, enumerated and dewormed, with the plan to link them to the nearest primary health care centres for community health

insurance. As of May 2018, we have 87,261 cooks feeding 8,260,984 classes 1-3 pupils in 46,446 public primary schools across 24 States. The program has also created opportunities for others in the value-chain, inclusive of cooks, suppliers and smallholder farmers thereby easing unemployment and stimulating the economy. National Cash Transfer Program (NCTP) The cash transfer program, which serves to alleviate poverty, is a classical social welfare initiative involving transfer payments targeted at extremely poor and vulnerable households. A Social Register is being developed in every State, with information of the poorest and most vulnerable of our citizens, as the foundation for targeting only the poorest of the poor for the cash transfers. Coordinates relating to educational, health, connectivity, payment service provider and access roads in each of the communities are also being collated and shared with the State Governments, towards the strategic provision of critical infrastructure in the communities towards graduating communities out of poverty.

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Governance, integrity-deficit and strikes IK MUO Ik Muo is of the Department of Business administration, OOU, Ago-Iwoye

n 11/12 17, I had to go to UCH Ibadan for medical c h e c k- u p a n d I went with public transport. At the Oshodi terminal, the vehicle loading was short of one passenger. I requested the driver to reserve the space for me while I bought a newspaper about 50 meters away and he obliged. A few steps later, I decided to forgo the paper so as not to keep others waiting. By the time I came back, he had allocated the seat to another passenger and when I reminded of our agreement he retorted: you did not charter the car. No problem but he should have told me so earlier. I entered the next car and told the man I would stop at Iwo road which I believed was closer to UCH and he agreed. But when we got to Ibadan, the man discharged all of us at Challenge bus stop. When I asked him why he did not drop me at Iwo road as agreed, he did not even favour me w ith a response! True to the name of the bus-stop, I had some logistic challenges! On my return trip, I boarded a car where the earlier passengers were told that the fare was N1500. Suddenly, the driver ca m e b a ck a n d h i ke d i t t o N2000 and the whole passengers voted with their feet until

OLAMIPO OGUNSANYA Ogunsanya is Sub-Saharan Africa Banking Analyst, Renaissance Capital

uring Renaissance Capital’s 9th Annual Pan-Africa 1:1 Investor Conference in Lagos on 16-18 May, we met with nine banks. It is evident that the Nigerian banking sector is slowly returning to stability on the back of improving macro indicators, but asset quality issues and the declining yield environment remain a challenge. Despite a positive macro backdrop, we believe 2018 is a recovery story at best; in addition to a declining yield environment, we expect earnings growth will be challenged, with volatility in FX-related gains and limited scope for cost efficiencies. Tough economic decisions are likely to be delayed until after the 2019 general elections, but the po-

a counter order came. When we got to Lagos, the driver announced that he would drop all of us at Ojota terminal but the first passenger to board the car reminded him that they had agreed that he would be dropped at China To w n o n t h e O w o r o n s o k i expressway. My attempts to mediate were futile and as tempers were rising, I asked the driver whether he actually agreed to drop the man at China Town but he did not answer. Anyway, the passenger threatened to set the car on fire if he was not dropped as agreed and he spoke like one with the capacity and will to do so. The driver dropped the rest of us a little about 100 meters from Ojota and did a detour to drop the fiery p a ss e ng e r w h e re t h e y ha d agreed. All these four incidents (in just one day!) evidenced acute integrity-deficit in our s o c i e t y . I n t w o c a s e s, t h e driver got away with it because the victim was gentle while the other driver did not get away with it because as Fela would say, the people no be gentle man at all; they protested! People are integritychallenged when they agree to do what they cannot do or have no intention of doing s o a s t o o b t a i n t e mp o ra r y advantages. In so doing, they forget that all things being equal, the day of reckoning will surely come, when they would come face to face with the reality of their treachery. This is lack of integrity and disobedience to one of the cardinal principles of Total Quality Management : DWYSYWD (Do What You Say You

...trust and integrity are not all about individuals and firms. The government, elected by people who trusted them with national sovereignty, should also exhibit trustworthiness and integrity, keep to their words and comply with agreements Will Do!). My interest in this issue did not start today because as a self-certified poet, my shortest poem authored about 35 years ago was: Promise. Better made that made and not kept (Wole Soyinka should not see this!) Three months before then, (September 2017) was a season of strikes all over the country. ASUU, SSANU, NASU, JOHE SU (yes, the same JO HESU), NARD, United Labour Congress, Osun state NMA and NAFDAC staff, among others, were all on strike. Kogi worke r s w e re a l s o o n s t r i k e b u t their own had a peculiar twist as the government declared that it was only the blind that did not see their achievements and that those on strike were political civil servants. There was a common strand in all these strikes: The government refused or failed to implement and at times, even feigned ignorance, of agreements they willingly entered with the workers. And workers speak on the only language the oppressors, like the drivers I mentioned earlier, can hear! Let no one remind Nigerian workers

of the recent (February 2018), strange protest by 544 Quebec d o c t o r s, s u p p o r t e d by 1 6 2 medical students because the g overnment had increas e d their salaries! I am reminded of all these because JOHESU is now back on the trenches while several other unions are either on strike or are warming up for strike because the government had betrayed their trust through integrity-deficit governance! That of JOHESU, like the poor, will always be with us (Mark, 14:7) because as par a song by the Nwobodo-led Anambra Niger ian Peoples Party, people who know their p o s i t i o n o n t h e q u e u e a re deliberately jostling for other peoples positions in the same queue! Trust may be emotional (you believe that people will not exploit your vulnerabilities) or logical (you conclude that the other party will behave as expected). We reach agreement with people because we believe that they will keep to the terms of the agreement or that at worse, there are institutions that will compel them to do so. Trust and integrity are somehow related because you can always trust a person of integrity; someone who is honest, positively consistent and predictable and truthful. But trust and integrity are not all about individuals and firms. The government, elected by people who trusted them with national sovereignty, should also exhibit trustworthiness and integrity, keep to their words and comply with agreements. So, why should Nigerian

governments (yes; this is not a chaangi affair) make promises that they cannot or will not keep and therefore keep on fuelling a perpetual cycle of internecine labour strikes? Because they just want to get away with it, or they believe the implementation will be for the next government, or out of short-sightedness, mischief, ignorance of the issues at stake or because of weak negotiating capabilities? Whatever the case, governments should agree to what they can do and when they are unfortunately unable to comply, they should come out clean and plead mea culpa. Meanwhile, this integrity is not a strictly Nigerian affair because the OECD had not too long ago raised alarm over the increasing lack of tr ustw or thiness among governments, stating that only 43% of citizens can take their governments words to the bank. This adversely affe ct confidence of investors, success of various policies (especially those which require bahavioural response from the citizens) and economic health of the country. OECD was kind enough to advise governments, ( probono) that wish to raise their integrity quotient to improve their reliability, responsiven e s s, o p e n n e s s, re g u l at o r y capability, fairness and inclusiveness. My advice to Nigerian government then is to go and do likewise (Luke, 10:37) However, we still have to contend with one simple question I asked several years ago: who and, more painfully, where is the government? Send reactions to: comment@businessdayonline.com

Nigerian banking sector slowly returning to stability Asset quality issues and the declining yield environment remain a challenge litical risks that come with a preelection year render us cautious on the recovery ahead (“Nigerian banks: The path to recovery”; Feb 5, 2018). Feb 5, 2018) Many of the banks appear to have similar views as to how to navigate 2018 – no single bank stands out to us as adopting a differentiated approach in dealing with the potential short-term challenges that could constrain earnings growth. We see scope for monetary easing and a 2-ppt cut in the policy rate to 12% by the end of 2018. Loan growth of 10% remains the banks’ consensus guidance for the year, with none expecting significant capital projects to get underway. Instead, they expect loan growth from financing working capital

requirements for international oil companies (IOCs), manufacturing and trade finance customers. On noninterest revenue (NIR), the banks noted that volumes and spreads on swap contracts have narrowed. Revaluation gains will continue to feature; NIFEX (currently NGN340/$ vs NGN330/$ at YE17) has become the accepted rate for converting FX-denominated balance sheets and is slowly converging towards the investors’ and exporters’ (I&E) rate of NGN360/$. We highlight other key takeaways from the conference below: Politics: We do not believe politics is a key risk for the banks in 2018. The banks also mentioned that they will adopt a cautious approach towards lending. Regulation: The banks be-

moaned the fact that the effective cash reserve requirement remains above 30%, and they do not see the Central Bank of Nigeria (CBN) lowering this for fear of undermining the FX rate. Deposit growth: There has been no recovery in deposit growth across the sector; we had expected a decline in T-bill yields to be positive for deposit growth as the pressure on deposits in 2017 was partly the result of customers chasing higher yields on government securities. However, according to the banks, our expectations have not quite played out. We now see no strong drivers for deposit growth in the short term. Capital: The implementation of Basel 3, scheduled to take effect by end-2018, is likely to be

delayed. According to the banks, the CBN’s focus has been on the implementation of IFRS 9, and that is likely to take priority this year. For most banks, the impact of IFRS 9 has been fully accounted for in their 1Q18 results. Costs: In our view, the Nigerian banks are doing little in terms of cost management. A few banks cited the possibility of closing branches, pending approval from the CBN. We believe the overall operating environment still favours the big banks, but the small banks should enjoy some respite from asset quality issues in an improving macro environment. Our top picks are GTBank and UBA. 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)

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

Monday 04 June 2018

Leah Sharibu: A scar on Nigeria’s conscience

eah Sharibu, the only teenager negotiated away by the federal government on the basis of her religion, remains in captivity while the government and the country have moved on to other important matters. In his Democracy Day speech, President Muhammadu Buhari was quick to reel out the achievement of his administration including the release of captives held by the Boko Haram terrorists, including 106 Chibok and 104 Dapchi girls. But he remained silent on the fate of the only remaining Dapchi girl still in captivity, negotiated away by the federal government, and which the president and his top security officials have promised severally in the past to secure her release. We are still at a loss as to why the government will agree to leave out Miss Sharibu in the negotiations that secured the release of the 105 girls that were kidnapped by the Boko Haram. First, in a religiously sensitive country like Nigeria, it was a big blunder and a failure in strategic negotiations – and the government should

feel terribly ashamed of itself. It reflected very badly on the image of the government and its ability to manage Nigeria’s diverse religious and ethnic differences. We may even accept the views of the Catholic Secretariat which described Miss Sharibu’s continued detention by the terrorist sect as a demonstration of increased hostilities against the Christian religion in Nigeria. Secondly, we are at a loss as to why the government has failed to secure the release of Miss Sharibu almost 78 days after going by the so-called understanding and trust built between government’s negotiation team and the terrorists to such an extent that the terrorists were cleared to drive back into Dapchi the same way they came in the first time - in a convoy - to return 105 of the 110 girls abducted from the town. The terrorists were even given the freedom to preach and parade round Dapchi before their exit to loud cheers from the local community. During the preaching rounds, they were even said to have apologised for taking the girls saying they would not have taken the girls if they realised they were Muslim girls! Immediately after, the presi-

dency released a statement giving the president’s pledge to ensure that “the lone girl is not abandoned.” “The Buhari administration will not relent in efforts to bring Leah Sharibu safely back home to her parents as it has done for the other girls...President Buhari is fully conscious of his duty under the Constitution to protect all Nigerians, irrespective of faith, ethnic background or geopolitical location and will not shirk in this responsibility, the statement signed by Garba Shehu, said. Three days later the Inspector General of Police said Miss Sharibu will be released in a matter of hours. Since then however, the girl is yet to be released, the government or the president has not said anything more about her, and even when listing his achievements including the release of the Chibok and Dapchi girls, conveniently left her out of the narrative. Much more shocking is the revelation by the father of the teenager that the government has not contacted the family even by phone, since the abduction saga began. Hear him: No delegation has visited the family

since the February 19 episode. Not even a telephone call from anybody. Nobody has called me.” How more callous and insensitive can a government be? Sadly the Christian Association of Nigeria (CAN) that should be at the forefront of pressurising the government to fulfil its promise to secure the release of Miss Sharibu and the over 100 remaining Chibok girls, is mired in political, leadership and monetary squabbles and has not been able to do much beyond issuing ineffectual statements. How shameful! We commend the Bring Back Our Girls (BBOG) movement that have continued to put her issue and those of the other abducted Chibok girls in the front burner and for always demanding for their release. We also commend good-spirited Nigerians who celebrated Miss Sharibu’s birthday on May 14, on social media and using the opportunity to remind the government of its promise to rescue her. We encourage them and many other Civil Society and religious groups to continue to put pressure on the government to live up to its promise to bring back the girl and the over hundred Chibok girls still in captivity.

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Monday 04 June 2018

BUSINESS DAY

Monday 04 June 2018

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Extending the safety-net in Ethiopia

The balancing bear

Ethiopia’s scheme to help the poor is setting an example Safety-nets, in one form or another, have proliferated across Africa in recent years

SIDE ZEWIDE has lived in the shadow of the national palace in Addis Ababa for more than 50 years. Since her husband died four years ago the 73-year-old has cared for three orphans, the grandchildren of her late sister, alone in a rundown government-owned shack. She has no pension and, until recently, had no income. “I relied on the kindness of my neighbours,” she sighs. Last year Mrs Zewide’s fortunes changed. She and some 80 of her neighbours rise at dawn to sweep the streets of the Ethiopian capital for three hours a day. For this she is paid 1,200 Ethiopian birr ($44) a month, a fifth of which she is required to save. “It’s good for me psychologically,” she says. “It keeps me busy, and now at least I can tell people I have a job.” Her teammates nod in agreement. They are participants in Ethiopia’s Urban Productive Safety Net Project, which was launched in 2017 and is among the largest social programmes in sub-Saharan

Africa (outside South Africa) designed specifically for urban areas. About 400,000 poor Ethiopians in 11 cities are already enrolled. The government hopes it will eventually help 4.7m people in almost 1,000 towns. Beneficiaries are selected by a neighbourhood committee based on how poor and vulnerable they are. In addition to the paid work, they also receive training. Those who want to start their own businesses are given grants. Safety-nets, in one form or

another, have proliferated across Africa in recent years. Spending on them in sub-Saharan Africa now amounts to about 1.5% of GDP (see chart). In Tanzania 10% of the population is covered by its safety-net (at a cost of just 0.3% of GDP). Most schemes in Africa are focused on rural people and many are temporary, often implemented by donors in response to natural disasters or conflict. Few are designed to help households manage the private misfortunes—such as illness or the death of a family member—that can tip them into destitution. They also do a poor job of reducing the chronic unemployment that has taken root in many African cities. Ethiopia’s programme is a step towards building a national social-security system that will, in time, replace a hotch-potch of small ones. It builds on Ethiopia’s flagship rural safety-net, which is the largest of its kind on the continent and covers some 10m poor people in the countryside (out of a total population of about 102m). The government has committed $150m to fund the new scheme and the World Bank has stumped up the remaining $300m needed for the first five years. Ethiopia hopes that within ten years it will no longer need help financing the programme. For years the Ethiopian government flinched at terms like

“social protection”. Donors are hopeful that it now considers the safety-net a long-term policy rather than “a sticking plaster that won’t be necessary once industrialisation takes off ”, says Tom Lavers of Manchester University. But, he notes, antipathy towards Western-style welfarism remains strong. The government flatly rejected the idea of nostrings cash handouts, which are popular among donors and development economists, partly because they are cheap to administer. “People can’t expect a free lunch,” says Belynshe Regassa, the head of Mrs Zewide’s local committee. Ethiopia’s rural scheme is widely regarded as a success. It has reduced rural poverty and helped the poor buy food during a severe drought in 2016 that might have led to famine. But towns and cities are a different challenge altogether. It can be hard to know which people are most in need. Applicants must have lived in the district for at least six months to be eligible, so transient urban folk may slip through the safety-net. Mrs Regassa says locals complained to her when they were not selected by the committee. Critics say supporters of the ruling party are more likely to get picked. Despite such gripes, Ethiopia’s experience suggests that even poor countries can start extending safety-nets. But if Ethiopia is to achieve its goal of weaning the scheme off donor support, it may have to make cuts to wasteful subsidies, which would be politically painful. The biggest challenge lies in the fact that even the broadest safety-nets in Africa only cover a small portion of the poor. Mrs Regassa, for example, is not eligible for help because she owns her own house. But as a single mother with four children she hopes the programme will one day include her, too.

Russia struggles to balance between Israel and Iran Growing tensions in Syria are testing Russia’s ability to manoeuvre

S MISSILES rolled across Red Square during Russia’s Victory Day parade on May 9th, Binyamin Netanyahu, the prime minister of Israel, stood squarely beside President Vladimir Putin. He had come to secure Russian support for containing Iran in Syria. Pinned to his lapel was the orange and black St George’s ribbon, a symbol of the second world war that has become synonymous with Russian revanchism in Ukraine. The overtures appear to have worked: as The Economist went to press, Russia and Israel were finalising an agreement that would attempt to keep Iranian forces some 15 miles (24km) away from the Israeli

border in Syria. The agreement highlights Mr Putin’s delicate balancing act in the Middle East. Since intervening in Syria’s civil war in late 2015, Russia has positioned itself as the indispensable player, able to speak to nearly all sides. It has maintained contact with Turkey, America and the Arab countries involved in the conflict. Most notably, it has kept good relations with Israel, with which it shares strong cultural and economic ties, as well as Iran, its partner in propping up the regime of Bashar al-Assad, Syria’s blood-soaked president. But as the war begins to wind down in Syria, Russia may feel that it needs Iran less. In the past it looked the other way when Israel bombed convoys in Syria carrying weapons to Hizbullah, an Iranian-backed Lebanese militia that fought a bloody war with Israel in 2006. Some think Russia is now going further. As Iran tries to establish permanent bases in Syria, Israel has attacked its positions. The night of the parade in Moscow, Israel launched dozens of air strikes on Iranian forces, unimpeded by Russian Continues on page 15

Monday 04 June 2018

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BUSINESS DAY

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Into the danger zone

American tech giants are making life tough for startups Big, rich and paranoid, they have reams of data to help them spot and buy young firms that might challenge them

T IS a classic startup story, but with a twist. Three 20-somethings launched a firm out of a dorm room at the Massachusetts Institute of Technology in 2016, with the goal of using algorithms to predict the reply to an e-mail. In May they were fundraising for their startup, EasyEmail, when Google held its annual conference for software developers and announced a tool similar to EasyEmail’s. Filip Twarowski, its boss, sees Google’s incursion as “incredible confirmation” they are working on something worthwhile. But he also admits that it came as “a little bit of a shock”. The giant has scared off at least one prospective backer of EasyEmail, because venture capitalists try to dodge spaces where the tech giants might step. The behemoths’ annual conferences, held to announce new tools, features, and acquisitions, always “send shock waves of fear through entrepreneurs”, says Mike Driscoll, a partner at Data Collective, an investment firm. “Venture capitalists attend to see which of their companies are going to get killed next.” But anxiety about the tech giants on the part of startups and their investors goes much deeper than such events. Venture capitalists, such as Albert Wenger of Union Square Ventures, who was an early investor in Twitter, now talk of a “kill-zone” around the giants. Once a young firm enters, it can be extremely difficult to survive. Tech giants try to squash startups by copying them, or they pay to scoop them up early to eliminate a threat. The idea of a kill-zone may bring to mind Microsoft’s long reign in the 1990s, as it embraced a strategy of “embrace, extend and extinguish” and tried to intimidate startups from entering its domain. But entrepreneurs’ and venture capitalists’ concerns are striking because for a long while afterwards, startups had free rein. In 2014 The Economist likened the proliferation of startups to the Cambrian explosion: software made running a startup cheaper than ever and opportunities seemed abundant. Today, less so. Anything having to do with the consumer internet is perceived as dangerous, because of the dominance of Amazon, Facebook and Google (owned by Alphabet). Venture capitalists are wary of backing startups in online search, social media, mobile and e-commerce. It has become harder for startups to secure a first financing round. According to Pitchbook, a research company, in 2017 the number of these rounds were down by around 22% from 2012 (see chart). The wariness comes from seeing what happens to startups when they enter the kill-zone, either deliberately or accidentally. Snap is the most prominent example;

after Snap rebuffed Facebook’s attempts to buy the firm in 2013, for $3bn, Facebook cloned many of its successful features and has put a damper on its growth. A less known example is Life on Air, which launched Meerkat, a live video-streaming app, in 2015. It was obliterated when Twitter acquired and promoted a competing app, Periscope. Life on Air shut Meerkat down and launched a different app, called Houseparty, which offered group video chats. This briefly gained prominence, but was then copied by Facebook, seizing users and attention away from the startup. The kill-zone operates in business software (“enterprise” in the lingo) as well, with the shadows of Microsoft, Amazon and Alphabet looming large. Amazon’s cloud service, Amazon Web Services (AWS), has labelled many startups as “partners”, only to copy their functionality and offer them as a cheap or free service. A giant pushing into a startup’s territory, while controlling the platform that startup depends on for distribution, makes life tricky. For example, Elastic, a data-management firm, lost sales after AWS launched a competitor, Elasticsearch, in 2015. Even if giants do not copy startups outright, they can dent their prospects. Last year Amazon bought Whole Foods Market, a grocer, for $13.7bn. Blue Apron, a meal-delivery startup that was preparing to go public, was suddenly perceived as unappetising, as expectations mounted that Amazon would push into the space. This phenomenon is not limited to young firms: recently Facebook announced it was moving into online dating, causing the share price of Match Group, which went public in 2015, to plummet by 22% that day. It has never been easy to make it as a startup. Now the army of fearsome technology giants is larger, and operates in a wider range of areas, including online search, social media, digital advertising,

virtual reality, messaging and communications, smartphones and home speakers, cloud computing, smart software, e-commerce and more. This makes it challenging for startups to find space to break through and avoid being stamped on. Today’s giants are “much more ruthless and introspective. They will eat their own children to live another day,” according to Matt Ocko, a venture capitalist with Data Collective. And they are constantly scanning the horizon for incipient threats. Startups used to be able to have several years’ head start working on something novel without the giants noticing, says Aaron Levie of Box, a cloud and file-sharing service that has avoided the kill-zone (it has a market value of around $3.8bn). But today startups can only get a six- to 12-month lead before incumbents quickly catch up, he says. There are some exceptions. Airbnb, Uber, Slack and other “unicorns” have faced down competition from incumbents. But they are few in number and many startups have learned to set their sights on more achievable aims. Entrepreneurs are “thinking much earlier about which consolidator is going to buy them”, says Larry Chu of Goodwin Proctor, a law firm. The tech giants have been avid acquirers: Alphabet, Amazon, Apple, Facebook and Microsoft spent a combined $31.6bn on acquisitions in 2017. This has led some startups to be less ambitious. “Ninety per cent of the startups I see are built for sale, not for scale,” says Ajay Royan of Mithril Capital, which invests in tech. This can be enriching to founders, who can go on to start another firm or provide financing to peers with smart ideas. To the extent that such exits provide more capital to spur innovation, this is no bad thing. The tech giants can help the firms they acquire grow more than they might have been able to do on their own. For example, Facebook’s acquisition of Instagram took out

a would-be competitor, but it has thrived under the social-networking giant’s sway by adopting the technical infrastructure, staff and know-how that Facebook had in place. Friend or foe? But plenty of people in the Valley reckon the bad outweighs the good and that early, “shoot-out” acquisitions have sapped innovation. “The dominance of the big platforms has had a meaningful effect on the entrepreneurial culture of Silicon Valley,” says Roger McNamee of Elevation Partners, a private-equity firm, who was an early investor in Facebook. “It’s shifted the incentives from trying to create a large platform to creating a small morsel that’s tasty to be acquired by one of the giants.” And when startups are bullied into selling, as some are, it is even more worrying. Big tech firms have been known to intimidate startups into agreeing to a sale, saying that they will launch a competing service and put the startup out of business unless they agree to a deal, says one person who was in charge of these negotiations at a big software firm (which uses such tactics). There are three reasons to think that the kill-zone is likely to stay. First, the giants have tons of data to identify emerging rivals faster than ever before. Google collects signals about how internet users are spending time and money through its Chrome browser, email service, Android operating system, app store, cloud service and more. Facebook can see which apps people use and where they travel online. It acquired the app Onavo, which helped it recognise that Instagram was gaining steam. It bought the young firm for $1bn before it could mature into a real threat, and last year it purchased a nascent social-polling firm, tbh, in a similar manner. Amazon can glean reams of data from its e-commerce platform and cloud business.

Russia struggles to balance between... Continued from page 14

air defences in Syria. Some Iranians suspect that Mr Putin provided Mr Netanyahu with the co-ordinates of Iranian bases. Whether an agreement between Israel and Russia over the deployment of Iranian troops can be enforced remains to be seen. “Russia has limited levers of influence,” says Nikolai Kozhanov, a former Russian diplomat in Iran and professor at the European University in St Petersburg. “Much depends on the desires of Iran itself.” While Mr Putin has called for foreign forces to leave when the war is over, Iran’s foreign legion, the Quds Force of the Islamic Revolutionary Guards Corps, which some countries classify as a terrorist group, seems bent on staying. The interests of Russia and Israel, on the other hand, appear to be converging. “We have a good understanding with Russia and we can prevent another political crisis in Syria,” says a senior Israeli official. “As far as we’re concerned Assad will continue to rule.” That is bad news for rebel groups in the Syrian villages near the border, which Israel had assisted with food, medical supplies and the occasional shipment of light arms. Rebel commanders say they have already seen soldiers from Iranian-backed militias pulling back. An offensive by the Assad regime seems likely to follow. Only “representatives of the Syrian Arab Republic’s army [should] stand at Syria’s border with Israel,” said Sergei Lavrov, Russia’s foreign minister. Israel may not be satisfied even with that. Iranian forces continue to operate in other parts of Syria. An Iranian drone that entered Israeli airspace in February came from a base 150 miles away from the border. If Mr Assad and his Russian backers fail to contain Iran, more strikes are likely from Israel—and not just on Iranian targets. Israeli officials note that the sorties on May 10th also hit Syrian anti-aircraft missile batteries, provided by Russia. The balancing act may yet become more difficult for Russia. “The ‘let’s talk to everyone’ strategy will collapse sooner or later,” says Mr Kozhanov. “At some point a situation will arise when a serious choice has to be made.”

BUSINESS DAY

Monday 04 June 2018

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America and immigrants

A cruel and unusual border policy Separating migrant families is un-American and bound to fail

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AMILY values do not stop at the Rio Grande,” said George W. Bush. But that may depend on which bank of the river you have in mind. Even by the standards of President Donald Trump’s administration, the way America has begun separating migrant children from their parents is horrific. The policy, part of an effort by the attorney-general Jeff Sessions to curb a seasonal rise in illegal immigration, is repugnant and self-defeating. It is a disgrace to America and should be stopped. The Obama and Bush administrations both increased deportations of illegal migrants, yet avoided separating migrant families. Mr Trump’s, by contrast, appears to view its right to deprive migrant parents of their children, when pitching them into the criminal-justice system, as a useful deterrent against future immigration. There are reports of migrants having been deported while their children remain in the

United States’ foster-care system. Some were not told where their children are or whether they would see them again—and they may not (see article). Apparently unnerved by the controversy, Mr Trump blamed it on a “horrible law”, which in turn he pinned on the Democrats. It is in fact based on Mr Sessions’s effort to prosecute a lot more illegal entrants. “If you don’t want your child separated, then don’t bring them across the border illegally,” he said. The policy has

so far mainly been applied to immigrants charged with a crime, such as crossing illegally more than once. But Mr Sessions also wants to lock up first offenders, who can be detained for up to six months by immigration authorities. In the absence of an increase in family detention centres, that would lead to the break-up of many more families. It would also put huge pressure on the overburdened fostercare system—which is only one of the ways Mr Sessions’s tough line

is likely to be futile. There is little reason to think it will lead to a big drop in illegal immigration. Most migrants are motivated more by their miserable circumstances back home than the prospect of an easy life in America. Moreover, how countries treat migrants is an important advertisement of their character and values, which Americans underrate to their cost. America’s reputation for being fair and decent attracts highly skilled people. It is also among the reasons foreigners trust American diplomacy and admire its culture—despite the erosion of its reputation that has followed Mr Trump’s election. It’s greater to be good Mr Sessions’s cruelty will also widen the partisan gulf. It provides more ammunition to those on the left who accuse his party of racism. And that, paradoxically, entrenches Republican support. When accused by Democrats of racism, even moderate Republican voters are liable to defend the policy out of partisan

pique. There is little danger of the conscience of the right being awakened by the scandal in the way that European attitudes to migrants from Syria were softened by images of a drowned refugee child. A wiser government would reassure Americans that today’s levels of illegal immigration are modest by historical standards, far lower than a decade ago. But even if the goal is to cut the number of illegal migrants, there are better ways Mr Sessions might go about it. By recruiting more immigration judges, he could cut the vast backlog of cases that his draconian methods also threaten to make worse. By building more family detention centres he could uphold America’s tradition of decency as well as the law. By handling more asylum cases in Central America, where over half the immigrants originate, he might reduce the flow. Such steps would not only be more humane than terrorising migrants. They might even work.

Turkish baroque

Turkey’s central bank has streamlined its fight against inflation Bond markets and foreign investors have forced the president, Recep Tayyip Erdogan, towards a more orthodox monetary policy

HE baroque era in Turkish architecture lasted deep into the 19th century, leaving behind lavish buildings, such as the Lily Mosque in Istanbul and waterside pavilions that seem to float on the Bosphorus. The baroque period in Turkish monetary policy will last until June 1st, when the central bank will simplify its equally ornate monetary-policy framework. It will henceforth rely on a single interest rate (the one-week repo rate), which it will raise to 16.5%. This will supersede a jumble of interest rates (see chart) that has left the Turkish currency perilously close to submersion. Turkish baroque mingled Western and Ottoman styles. The country’s fussy monetary policy also reflects competing influences. Its central bank wants to stabilise the lira and quell inflation, which remains in double digits, far in excess of its 5% inflation target. On the other hand, the president, Recep Tayyip Erdogan, is eager to sustain the economy’s furious pace of growth (7.3% in the last quarter of 2017, compared with a year earlier) and to defy the usurious claims of what he calls the “interest-rate lobby”. According to the well-trained technocrats dotted throughout Turkey’s policymaking apparatus, higher interest rates would help stabilise the economy,

curbing excessive spending and luring back the foreign capital on which the country relies to finance its current-account deficit (5.6% of GDP in 2017). According to Mr Erdogan, however, higher interest rates do not curb inflation, but cause it. In apparent deference to Mr Erdogan, Turkey’s central bank has long refrained from raising the one-week repo rate, which had served as its monetary mainstay. Instead it increased the cost of borrowing from a more obscure facility, the late-liquidity window, which lends to banks that have run short of money at the end of the day. It also forced banks to turn to this expensive window for a larger share of their funding. In this way, it surreptitiously increased their

average cost of borrowing. In recent weeks, however, it became impossible to appease both Mr Erdogan and increasingly demanding bond markets. As American Treasury yields, the dollar and oil prices began to rise, foreign investors began to doubt Turkey’s commitment to keeping its imbalances in check. Any policy move big enough to convince the markets would also be stark enough to antagonise Mr Erdogan. For a frightening week, it looked as if Mr Erdogan’s sensitivities would prevail. But the more he bullied the central bank, the more the markets bullied him. The lira slid by over 12% in the two weeks before May 23rd, when the central bank finally decided to raise interest rates by three percentage points,

followed five days later by its decision to simplify policymaking. The new interest rate of 16.5% is almost six percentage points above Turkey’s rate of inflation. Foreign investors will now be asking themselves how long the central bank can persevere with its tightened stance, and whether it will raise rates again if the lira’s weakness or oil’s strength further threatens price stability. Other emerging markets have shown great persistence in the fight against inflation. Russia has kept its interest rates more than three percentage points above inflation for more than two years; Brazil has done so for more than four. By mid-2016, even the IMF called on Russia’s central bank to relent. As a sign of Turkey’s commitment for the long haul, its simplification of monetary policy may be as important as its tightening of it. The reform shows that the central bank is no longer trying to accommodate competing objectives. India sent a similar message when it began clarifying its inflationfighting goals in 2014 and adopted formal inflation targeting in 2015. Even before Mr Erdogan intruded so clumsily on its independence, the Turkish central bank was known for monetary intricacy. Unlike other central banks, it often let market rates wander quite far

from its target. And its overnight deposit and lending rates, which establish a floor and ceiling for interest rates, were often positioned “asymmetrically”, with one further from the target rate than the other. It felt that adding gratuitous uncertainty to interest rates would deter speculative inflows of capital. Its new framework abandons this asymmetry. Turkey has many problems. But the need to deter inflows of capital is no longer one of them.

Monday 04 June 2018

BUSINESS DAY

Monday 04 June 2018

Live @ The Stock Exchange NASD OTC market gains 0.67% Stories by Iheanyi Nwachukwu

he NASD OTC Market ended the trading week to June 1, 2018 with an increase in market metrics, as the NASD Unlisted Securities Index (USI) increased by 0.67percent, closing at 668.83 points as against 664.38 points the preceding Friday May 25, 2018. Consequently, total market capitalisation gained 0.67percent last week, closing higher at N452.62 billion compared to N449.61billion the preceding Friday. Central Securities Clearing System Plc share price recorded the biggest gain after its share price rose to N10.50, from N10, representing 5percent increase; Niger Delta Exploration & Production Plc share price followed with 3 percent gain to N170, from N165. The NASD OTC last Friday June 1 commenced a Trade Alert Notification Service which notifies all investors on the OTC Market with daily transaction summary

on their registered brokerage accounts. The NASD OTC Market has admitted 35 securities while 218 registered brokers and 127 Participating Institutions (PI) operate in that market for unlisted securities. The volume of trades in the NASD OTC market year-to-date (YtD) is 1.02 billion; number of trades (YtD) is 1,226; while the value of stocks traded (YtD) at the NASD OTC market is N4.92billion. At the Nigerian Stock Exchange (NSE), the All Share Index (ASI) depreciated by 6.38percent in just four trading days of last week. The NSE ASI and market capitalisation which stood at 39,323.62 points and N14.244 trillion respectively on Friday May 25, 2018 decreased to 36,816.29 points and N13.33trillion on Friday June 1, 2018. Twenty-five (25) equities appreciated in price during the review week, higher than fourteen (14) in the preceding week. Forty-eight (48) equities depreciated in price, lower than sixty-one (61) equities of the preced-

ing week, while ninety-six (96) equities remained unchanged higher than ninetyfour (94) equities recorded in the preceding week. Last week was a fourday trading session as the Federal Government declared Tuesday May 29, 2018, a public holiday to mark the Democracy Day celebration. Meanwhile, a total turnover of 2.699billion shares worth N84.775billion in 19,715 deals were traded last week by investors on the floor of the Exchange in contrast to a total of 1.372billion shares valued at N16.022billion that exchanged hands the preceding week in 21,099 deals. The Ordinary Shares of Paints & Coatings Manufacturers Plc was suspended from trading on The Floor of The Exchange on Wednesday May 30, 2018. The suspension of trading in the shares of the Company was to align with the effective date for determining the shareholders who will qualify to receive the scheme shares ahead of the implementation of the voluntary delisting of the company.

Conoil declares N1.4bn dividend

onoil Plc has proposed N1.4billion as dividend payout to its shareholders for the financial year ended December 31, 2017. This translates to N2 on every 50 kobo ordinary share. It is in line with the Company’s consistent dividend policy, over the years, to its shareholders. The proposed dividend is expected to be ratified by its shareholders at the Company’s next annual general meeting in Uyo, Akwa Ibom State.

As part of its Board resolutions to The Nigerian Stock Exchange, the Company approved that the dividend warrants will be dispatched on July 9, 2018 to members whose names appear in the register of members at the close of business on June 8, 2018. The Board also approved that the register of members and the transfer books of the Company will be closed from June 11, 2018 to June 15, 2018, both days inclusive to enable the preparation and payment of dividends.

It is on record that the oil marketing giant has a robust dividend payout history which it has maintained over the years; and this has continually endeared it to its teeming shareholders. Between 2012 and 2016, the company has paid a total of N8.4 billion as dividend. In the opinion of capital market operators, the Company’s consistent dividend payment history has raised the bar of the strategic positioning of Conoil as truly the nation’s marketer of choice.

SEC warns against activities of illegal operators

he Securities and Exchange Commission (SEC) has advised the general public to beware of illegal operators and promoters of ponzi and other fraudulent schemes. SEC in a notice issued Friday June 1, 2018 also advised the investing publics to always exercise utmost caution and conduct adequate due diligence –ex-

ample seeking professional advice and checking the Commission’s website to confirm the registration status of company/individuals marketing any products to them before taking a decision to invest. Section 38(1) of the Investments and Securities Act (ISA), 2007 requires any person who intends to operate as a professional in the capital market or carry

on securities business to be registered by the Commission before engaging in such activities. It is illegal to carry on any kind of capital market business without registration or to patronise such person. SEC also warned that any person dealing with any such persons in any capital market/investment related business is doing so at his/ her own risk.

Monday 04 June 2018

BUSINESS DAY

Monday 04 June 2018

BUSINESS

COMPANIES & MARKETS

DAY

NERC jettisons Multi Year Tariff Order

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Co 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

More ICT solutions underway as Vihaan Networks eyes Nigerian market CHUKA UROKO

t is good time for Nigerian information communication technology (ICT) solutions consumers as world manufacturers and vendors of ICT products are showing keen interest in the country’s burgeoning market. Nigeria’s large and growing market with high percentage of the younger generation presents a huge and compelling investment opportunities, especially in the ICT sector which is one the fastest growing sectors of the economy.

One of the latest interests in the market is coming from Vihaan Networks Limited (VNL), a leading IT company in India which says it is determined to fully launch into the Nigeria with its sustainable, mobile and broadband solutions, including the 4G LTE for rural and remote locations. The company which is already operating in many countries of the world and prides itself as the world’s largest Green Mobile Network promises Nigerian consumers good deal with its Digital Village solutions which offers e-education, e-governance and e-health

components that will be major attractions for Nigeria’s ICT market. Ankit Khanna, the general manager, channel sales worldwide of the company, who spoke in a session on ‘Emerging Technologies and their Impact on Economic Development’ at the just concluded 4th IndoAfrica ICT Expo in Lagos, stressed the need for partnership among countries to reap the full benefits of new technologies. The company’s products are already deployed in various sectors of the Indian economy and Khanna sees the need for Nigeria to em-

Schneider Electric, 21st Century Technology collaborate on Tier IV Data Centres DIPO OLADEHINDE

lobal specialist firm in energy management and automation, Schneider Electric has signed an exclusive partnership agreement with Leading ICT firm in Nigeria, 21st Century Technologies Limited to provide trusted EcoStruxture ITTM solutions in the first Tier IV data centres in Nigeria. During a business luncheon themed “Technology and Business Efficiency” hosted by the Franco-Nigerian Chamber of Commerce and Industry, Schneider Electric Nigeria and 21st Century Technologies official signed a partnership that ensure the delivery for Africa’s Largest Tier IV Data Centres. At the event, technology experts said this is the first Tier IV data centre in Nigeria that will help businesses, institutions and governments in Africa deploy necessary innovation solutions to remain secure, competitive, and win in the era of digital transformation and engagement. Speaking on the selection of Schneider Electric as its exclusive partner, Wale Ajisebutu, CEO of 21st Century Technology Ajisebutu said Schneider Electric has always delivered on its promises in his many years of working and studying the organisation therefore he feels very grateful for the partnership. “There is need to build Tier IV data centres in Nigeria

that will rival the global world which; we must note that Tier IV data centres was born out of the need to be ready for the ever changing technological landscape, Ajisebutu, CEO of 21st Century Technology said at the event. Ajisebutu added that what has happened in the technological world in the past 25 years will be like child’s play when compared to what will happen in the next five years. Viviane Mike Eze, marketing communication manager, Anglophone West Africa at Schneider Electric said EcoStruxure architecture and interoperable technology platform bring together energy, automation and softwares together for optimal use as It also provides enhanced value around safety, reliability, efficiency, sustainability and connectivity. “This advancement opens up the digital world to users across key ends of the market, enabling them to be competitive in today IOT economy,” Mike Eze said at the event. EcoStruxureTM is Schneider Electric’s Internet of Things (IoT)-enabled open and interoperable system architecture which enables key operational and energy efficiency solutions across the Buildings, Data Center, Industry, and Infrastructure end-markets. In the data centre market, it has proven increased efficiency, reliability and availability of infrastructure. Viviane Mike Eze added that Eco structure is tailored

to end markets in which Schneider Electric has decades of deep domain expertise an applied experience building, data center, industry and grid. Ecostructure technology platform enables scalable design and operation of connected systems with best in class cyber security built around three core capabilities such as core technologies for embedded connectivity and intelligence, Interoperable building blocks for smart operations and infrastructure for cloud- connected digital services. “Our communities of developers, data scientists and hardware and service partners are creating and cocreating solutions and applications that you can use in any combination of the innovation levels,” Mike Eze said. In the world at large, over 450,000 Eco structure systems have being deployed since 2007 with the support of Schneider Electric’s 9,000 systems however its biggest beneficiary includes, 20 of the largest oil and gas companies, 11 of the top brands companies within food and beverages world, 10 of the world top electric utilities, 100 water & wasterwater plants, 9 of the 10 largest mining, metals and minerals companies, 1 in 3 buildings uses our technology, 3 of the top 4 biggest hyper scale cloud providers and 8 of the top 10 packaging machine builders.

brace the 3As of connecting the unconnected, namely Accessibility, Availability and Affordability, noting that this has worked out well in India. He highlighted the company’s 4G LTE Telecom system recently introduced into the market which he described as a rugged systems designed and developed with due consideration for high speed voice and data connectivity, particularly for African rural and remote areas. “VNL’s LTE portfolio consists of compact, power-efficient systems which guarantee a superior radio performance and flexibil-

ity in various scenarios. The Self-Organizing-Network can self-configure, self-connect, self-heal and self-optimize. The LTE portfolio also consists of do-it-yourself installations, which can be setup in less than a few hours”, he assured. VNL’s connectivity solutions have been appreciated globally for offering low CAPEX and low OPEX in low ARPU regions. Because the offerings come with the company’s vision of creating sustainable and environment-friendly products, the deployed sites can be 100 percent solar powered. A major advantage of

solar power is that it can run without electricity for days and can be deployed in areas bereft of roads and basic infrastructural facilities. Additionally, the LTE systems can cover a variety of deployments such as remote enterprises (mines, off-shore fields, shipping yards); remote islands and forests, disaster and public aid agencies, homeland security communication solutions. VNL’s global telecom deployments have enabled the rural and remote citizens enjoy the benefits of e-governance, telemedicine, e-education and more,” he declared.

Renaissance Capital makes top list in 2018 equity research ranking …as institutional investors funds under management hits $430 billion

enaissance Capital, a leading emerging and frontier markets investment bank, has delivered a strong and improved performance in the 2018 Financial Mail Top Analyst Awards, conducted by South Africa’s leading weekly business and financial magazine, with excellent team results and outstanding individual rankings across a wide range of categories. The Firm was ranked fourth

for overall equity research at the Financial Mail Awards ceremony, a significant improvement on last year’s sixth position. This very strong team result was underpinned by continued excellence in individual categories, with three analysts in Renaissance Capital’s Sub-Saharan African research team in first place in their respective categories on a brokerage-weighted basis, and top-three positions recorded across 12 categories.

Johann Pretorius, head of Research, Africa, ranked number one in General Mining, up from second in 2017; Yvonne Mhango, head of Research, SubSaharan Africa, retained her top position in the Africa Ex-SA Non-equities category from last year; while David Ferguson was named the leading analyst in the Media category. Kabelelo Moshesha was among the top three in the Young Analyst of the Year category.

BUSINESS DAY

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Monday 04 June 2018

COMPANIES & MARKETS

NERC jettisons Multi Year Tariff Order STEPHEN ONYEKWELU

the purpose of the MYTO is to set cost-reflective tariffs which will allow the power sector to be properly funded and functional. Momoh said the commission under his watch, shall not adopt the MYTO software that was handed over to him because as a programmer, he does not believe in it. The essence of the method, he said, is to cross check whether consumers are being cheated with the computation.

nisance of macroeconomic indicators such as inflation rates, cost of fuel and exchange rate) and 5 yearly major reviews. Since the change in the Government electricity subsidisation policy, and in order to ensure financial sustainability of the Electricity Supply Industry, the Electricity Regulatory Authority through consultation with stakeholders established a quarterly tariff review methodology.

Total Health Trust donates to inclusive school in Lagos

s part of activities to mark its 20th Anniversary, Total Health Trust Limited (THT), one of Nigeria’s leading Health Maintenance Organizations (HMO), serving over 300,000 lives has donated stationery, food items and several other materials to the Ojuwoye Community Primary School, Mushin,Lagos. Ojuwoye Community Primary School is an inclusive school, training and teaching children with various forms of disabilities. The organisation had made a strategic decision three years ago to make its CSR initiatives more impactful and inclusive with a focus on giving back to the local community, through the active participation and donations of staff and partners. A key aspect of THT’s renewed CSR drive was to impact on underserved sectors within the local community and the education of special needs children became a focal area identified. The organization further conducted a formal search and discovered the inclusive unit of Ojuwoye Community Primary School. THT noted that the Ojuwoye Community Primary School is the only public inclusive school within the Mushin Local Government where children with special needs, learn

alongside their peers within the same school setting. On this year’s occasion, THT through its staff and partners donated provisions, food stuffs, stationery and exercise books to the school children, while teachers, were given basic home equipment. A representative of the organization also noted that the year 2018 marks THT’s 20thAnniversary, having started operations with less than 500 enrollees in 1998 and has grown to serve over 300,000 enrollees covering the public and private sectors and individuals, drawn from over 300 corporate entities. Omotunde Morufat Omolaye, head Inclusive Special Unit, Ojuwoye Community Primary School, Mushin, said she was elated at the gesture of the organisation. “THT has been extending a hand of support to us and we are very appreciative of this. The society often rejects these children, but we do not reject them. We have 76 registered children we teach here. “The categories of special needs children we have in this school are hearing impaired which requires us to use sign language, total communication and finger spelling to teach them. Some have speech defects and others intellectual disabilities.

Gtext Global plans big in 5-years L-R: Olanrewaju Buraimoh, head Finance, & accounts, Total Health Trust Ltd; Omotunde Morufat, head of Special Unit, Ojuwoye Inclusive School Primary Mushin; Olawole Awosina, head Risk and Compliance, Total Health Trust Limited; Ogunjobi Janet, assistant head master, Ojumoye Primary School, Munshin; Deola Majiyagbe, general manager, Stakeholder Management, Total Health Trust Limited and Abimbola Sobade, head Internal Audit, Total Health Trust Limited during a CSR donations to Ojuwoye Inclusive School Primary Mushin, Lagos.

Bestman Games host Nigeria’s second Annual Children’s Finance Fair

estman Games Ltd and Money Matters with Nimi has hosted Nigeria’s 2nd Children’s Finance Fair in celebration of Children’s Day. The purpose of the event was to celebrate the Nigerian child, and to empower the youth by equipping them with the basic skills in money management which will be very important throughout their lives. Sadly financial education is not in the school curriculum so the responsibility falls on parents, teachers and guardians to be deliberate about equipping their children with these lifelong skills of financial literacy from their earliest years. The event also addressed issues parents face in planning for their children’s education; the most important legacy they can bequeath them. The Children’s Finance Fair was declared open by Arinola Kola-Daisi, director Admin and HR, Lagos State

Internal Revenue Service (LIRS). She enjoined the children to take advantage of this important opportunity and left an important message for them that wealth is not gained, but rather it is gathered over time with discipline and consistency. Kola-Daisi also introduced the children to the purpose of Tax and its importance for all citizens. The event was very well attended and supported by leading players in the Nigerian financial and insurance sectors including FBN Trustees, Leadway Assurance, First Bank of Nigeria Ltd, Axa Mansard Insurance, Diamond Bank Plc, Zenith Bank Plc, GTBank Plc Fidelity Bank Plc, Vetiva, Capital, Coronation Merchant Bank, FSDH Merchant Bank and Avon HMO who showcased a suite of products that relate to the family finances including Educational Insurance, Health Insurance, Life Insurance, Mutual Funds, Trust

Funds, Children’s savings and teen accounts. Students from schools across Lagos visited the fair including Lagos Preparatory School, Greenwood House School, Caro Favoured College and Topfield College, Ajegunle. Children were engaged in a mini-Monopoly tournament; The Monopoly Board game is full of practical money lessons. They were also treated to an array of money quizzes, puzzles, games and lectures by Junior Achievement Nigeria (JAN) and Recycle Points. Bunmi Aboderin-Talabi, of Clever Clogs Books, also engaged the children in a delightful Reading Corner. The audience also enjoyed informative workshops with presentations by a lineup of seasoned speakers who shared their wealth of knowledge and experience. Lebari Edo-Ukpong (inside-edge Consulting) - Positioning Your Child for Scholarships; Yetty

William (Lagos Mums) - Preparing children for the digital age; Bowale Agboade (Kidentrepreneurs)- Raising kids with Entrepreneur mindset; Nimi Akinkugbe (Bestman Games Ltd) – Children, Money, and Values “We are delighted by the turnout of over 250 guests, and the support of so many leading institutions and individuals who have embraced our vision to empower Nigerians regarding their personal finances. We will certainly be making this an annual event as we have already seen the incredible value it presents our families and the Next Generation.” Nimi Akinkugbe is CEO of Bestman Games, the African Distributor of customized editions of Hasbro’s iconic Monopoly Board Game. She is the founder of “Money Matters with Nimi,” a leading personal finance platform with simple, actionable tips to improve one’s personal finances.

HOPE MOSES-ASHIKE

text Global, a leading digital marketing firm is planning to go public in the next

five years. After 10 years of operation, the firm has expanded into four Continents - Africa, Europe,USA and Middle East. It has several subsidiaries- Gtext Homes, Gtext Media, Gtext Soft, Gtext Farm, and GtextPrint. Consequently, the company which marked its 10th anniversary on June 2, 2018, is proudly thanking God for hard work, dogged commitment to have weathered the storm in the past 10 years. “In the next five years we are positioning ourselves to go to the capital and that is why we have begun to invest in brand ambassadors. We are rebranding for global audience”, Stephen Akintayo, managing director/CEO said. The firm’s staff strength both volunteer and non-volunteer is close to 100 and has trained over 1,000 people in real estate. Speaking about the company’s achievements, Akintayo said, “This year we are paying tuition fees of 1000 kids. We have raised entrepreneurs in hundreds and thousands across Africa. We have trained over three million people online, physically we have trained over 100 thousand people in differ-

ent opportunities entrepreneurship skills”. “We are expanding into critical sectors that are labour intensive. We can be the channel of helping a lot of Nigerians. One of those sectors we are taking serious in terms of our future is real estate. We are currently, at the verge signing brand ambassadors, which most of them would be unveiled at our 10th year anniversary. We are taking that industry by the horn because we believe it has a lot of potentials”. “We want be able to give back more. We want to strengthen our foundation as it has purely been more of our company’s contribution thus far”, he told journalists in Lagos. Gtext Global ‘s plan this year is to start construction of its orphanage home called Mercy orphanage home which would costs about N180 million. He said the real estate company, Gtext Homes has donated four acres of land to Infinity Foundation for the construction of the orphanage home. “We want to take certain sectors by the horn, particularly sectors that have the potential of creating jobs. We have a foundation we started 10 years ago called Infinity Foundation. In the last 10 years, we have directly and indirectly sponsored 5,000 children to school, giving bursary awards and scholarship to children.

Monday 04 June 2018

C002D5556

BUSINESS DAY

Business Event

L-R: Nkechi Onyenso, registrar/ chief executive, Institute of Chartered Secretaries and Administrators of Nigeria, [ICSAN], Samuel Kolawole, president/ chairman of governing council, Institute of Chartered Secretaries and Administrators of Nigeria, [ICSAN], Adeyinka Hassan, chairman membership and branch committee, ICSAN, During the 17th Induction ceremony of members Institute of Chartered Secretaries and Administrators of Nigeria, [ICSAN], at Batten Event Centre, Alausa Ikeja, Lagos . Pic by Pius Okeosisi

L-R: Mohammad Shagari, board trustees, PZ Cussons Foundation; Hajia Inna Ciroma; Emmanuel Edozien, immediate past chairman; Eyitayo Lambo, new chairman, and Nike Akande, board trustee, at a Dinner held in hounour of the Past Chairman recently in Lagos.

L-R: Nnamdi Okafor, managing director and chief executive officer, May and Baker plc; Edugie Abebe, director/acting chairman, and Adetoun Abiru, company secretary, at the 2017 annual general meeting of May and Baker plc in Lagos.

L-R: Mana Abraham, head, human resources, Relentech Specialists Nigeria Ltd; Olubiiyi Adesina, guest speaker; Nike Bajomo, head, business development, Stanbic IBTC Pension Managers Ltd (SIPML), and Oladele Sotubo, executive director, investments, SIPML, at the 2018 Stanbic IBTC Pension Managers pre-retirement seminar in Port Harcourt , River State.

Managing

24 BUSINESS DAY

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Monday 04 June 2018

C002D5556

GOVERNMENT

BUSINESS DAY

IBRAHIM HASSAN HADEJIA

BUSINESS

Deputy Governor of Jigawa State

Interview with Public Sector Leaders

On the wings of agriculture, economic diversification has occurred in Jigawa State – Dep. Gov. Hadejia His Excellency, IBRAHIM HASSAN HADEJIA, is the Deputy Governor of Jigawa State, North West, Nigeria. In this exclusive interview with the BusinessDay’s team led by BASHIR IBRAHIM HASSAN (GM, Northern Operations), he sheds light on the strategic steps taken and the successes recorded thus far by the state government in diversifying the economy away from overreliance on FAAC revenues. Excerpts:

ow was Jigawa State when your administration took over in 2015?

Jigawa State was essentially a salary economy when we took over in 2015. We inherited a significant amount of liabilities, not in terms of money borrowed from banks, but indebtedness in the form of contractors’ commitments with invoices in the treasury waiting to be paid. We met a significant amount of liabilities, work in progress, and contractors’ liabilities were close to N100 billion when we took over. and we had a little more than N16million in the treasury then. We took over with salaries unpaid, with the former administration waiting to see how we would pay salaries for the month of May and June 2015 with little or no significance capital inflow. The first thing we said was, when you have a situation like this, you either increase your revenue or you cut your costs. We don’t have control over the revenue that is coming in -- they are coming in from the federation accounts, proceeds which are all predicted on oil. We went on a cost-cutting exercise, starting with the Government House, where frivolous expenditures were dispensed with. The governor was not going to operate anything like security vote, so we don’t have security vote in Jigawa State. So, if we have to spend on security, we have to subject it to the same accounting principles any other spending is subjected to. The issue of sensitive nature was kept at classified level. So, on spending, about 80% reduction was achieved from protocol expenses both to the Governor and Government House. By so doing, we began to save a lot of money. And this was how we were able to keep our head above water. We took a look at the liabilities we inherited, and we put up a very strong committee to take a look at all the projects file and classified them into priority projects. Those we considered too critical to be shelved, we considered. But those that had barely started that we believed were politically embarked upon and were without any significance and economic benefit were cancelled ought right cancelled. For those we considered important, we called on the contractors and negotiated with them to reduce the contractual amounts they were deemed to have been inflated. In our transition committee, we engaged the services of PricewaterhouseCoopers (PwC) to review the array of projects. We invited all our contractors to a summit and we told them the reality of the situation. Some of them had not been paid since 2013; some of them had never been mobilized and had worked up to N700million in invoices. We

told the contractors the situation was very bad and what we wanted was an honest and open conversation with them. We told them they needed to give discounts on the projects if they were to continue with them. The governor himself chaired the session, some of the contractors agreed while some didn’t. So we engaged those that agreed. What was done to the contractors that disagreed with the government terms? We didn’t cancel the job, because we had contractors’ obligations, but if someone has given you a job and had not paid in 3 years and I’m calling you to give me a discount so as to be able to pay you and you say no, then you wait till I settle with the people we believe we can do business with. We started paying those that agreed to give discounts. After about 6 months, those who decided not to give discounts came forward and also offered 15-20% discounts. All in all, we got total infrastructure discount of over N11 billion on roads alone and another N8.2 billion in other areas.We were determined that no contractor’s certificate would spend more than two weeks in the treasury. We also set up small office within the treasury department for joint infrastructure projects with the local governments. The processes are very simple. We get our proceeds, we pay salaries as at when due, plan with the necessary committees and allocate the rest based on priorities. We began to see that we have some intervention funds that were not going to be utilized immediately and we also engaged consultant to get the best value for money on our projects. We have significant savings in banks generating interest income

which is in the range of N2-3billion naira per annum. This has also enabled us to offset some of our bills. In response to the financial situation of the state that was very bad, we used a a combination of discipline and effective planning -medium to long term -- to to keep our heads above water, particularly to ensure that all obligations in terms of civil servants were paid

as at when due. Jigawa is one of three states in Nigeria that do not owe salaries, pensions, and local government workers. We don’t have any of these liabilities. Salaries are paid as at when due, on the 25th whether there is money from federation account or not. We have never delayed salaries beyond the 25th. Jigawa did not receive salary

bailout funds from the federal government as we managed to do all we could on our own. It’s a significant achievement. We came up with biometric clocking system, apart from the normal payroll cleansing. So everybody in Jigawa state clocks in in the morning and after closing to ensure the laying off of ghost workers. We were thus able to clamp down on ghost workers who had jobs elsewhere but were still earning Jigawa State salaries. They didn’t have to be physically present to collect the salary. The only way to put an end to that is to ensure that we clock you every single day. And we pay you according to the numbers of days you come to work on a monthly basis. So we have wireless biometric devices in all our offices. If as a civil worker you are not punctual, you get a warning and where warning doesn’t the appointment is terminated according to civil service rules. So that has introduced a lot of discipline into the state’s civil service. Some people eventually resigned voluntarily later when they couldn’t meet up, because you cannot work in Jigawa and be running a Bureau de Change in Kano. Jigawa is a salary economy so we can’t afford not to pay salaries. The quantum of commercial activities takes place when you pay salaries, so we can’t afford a breakdown. The governor has always said we needed to create an alternative economy; we need to create an economy for Jigawa. We can’t depend on salaries alone because if we are like those states that do not pay workers for 11 months, the whole economy would collapse. It’s that monthly payment of salary that is really

keeping the economy going. In that regard, we decided to leverage on the agricultural sector because it will have an immediate impact on the economy . This is the only sector of the economy that is engaging about 80% of the population. We took a hard look at agriculture, in collaboration with a DFID consultant, and we came up with an agricultural policy which we didn’t have before. It took us about 5 months to produce the policy, which specified the percentage for agriculture funding in our budget, including the system we are going to put in place to ensure that we have that impact. We took the yields analysis of what all the farmers were planting and we found out it was abysmal10-15% below average and we said instead of taking everything we said let us do two or three things. We did some soil analysis and discovered where and what should be planted in a particular place at a particular point in time. At the beginning, we decided to focus on 4-5 crops, with assistance from the State’s agricultural training institute. The governor set up a 36-member agricultural council whose weekly meetings he chaired. I have only chaired the meetings on 6-7 occasions when the governor was unavoidably absent. Everybody is on his toes as we have a roadmap, a master plan based on that policy, and the meeting is held so that every attention is focused on the ball. We also decided that fertilizer allocation must be registered, that is, every farmer must be registered. Through registration, we have your farm holding and we know how many hectares you farm because someone will get your GPS coordi-

nates and map out the coordinates for your farm. The data were also used for fertilizer allocation. When we came in, there was 1,000 tons of fertilizer in the store, as against about 50,000 tons requested. After a careful analysis, we realised that there was something missing in the fertilizer distribution policy. We later realized that the fertilizer demand was not more than 30% of what was to be received. We decided we were not going to subsidize fertilizer. From day one, we engaged the fertilizer suppliers on the critical issues on hand, including transportation and other logistics, and we decided to sell a bag of fertiliser at N8, 100, without any. There is no queue, as only real farmers are involved. The President was fascinated by this, and the policy now applies nationwide. The result is that fertilizer price has plummeted not just at state level but at national level. Every part of this country is now getting fertilizer at N5, 500 Initially in some states there was as much as 50% subsidy on fertilizers. We have increased Fadama land cultivation from 40 hectares to 140 hectares in the last two years. Apart from registering, we went a step further and gave every farmer certificate for his land , under what we called simplified land title registration system, SLTR. Some states are using it for revenue generation. But we decided to use it for agriculture not for offices 0r shops. The beneficiaries are farmers. We have rolled out from 9 local governments to almost all across the state. Essentially, we take the geo data obtained from your farm, you go to your village, get everyone together and take satellite image of that area and paste on huge board for 30 days, and everybody agrees that this farm demarcated belongs to Mallam Bello. If there is an argument, it is adjusted. The village head signs, along with other important personalities. Thereafter, we give you your Certificate of Occupancy, C of O for about N5,000, With that you now have title to your land. When we started that, we began aggregating the farms, instead of dealing with individual farmers, we only have so many extension workers. We took our extension agents and trained them for almost 6 months. We trained them specifically for the various crop targets that we have, and we decided to take the framers and cluster them into 50 hectares clusters. You go to an area, everybody within that 50-hectare range is a member of that cluster. You have a leader and a secretary and we operate with you based on that cluster. If I am giving 50 bags of fertilizer, the leader would seat down and allocate that fertilizer, he would then assign an extension agent to go and distribute them to the cluster. For the first time, extension

agents are given assignments based on responsibilities. If the cluster succeeds or fails, the extension worker is held responsible. We bought motor cycle for all the extension agents and there is no excuse for mobility. We also set up a competition and we have distributed over 20 cars within the last two years to successful extension agents. If you are successful and if the yield in your cluster is better than anybody else, the governor gives out the car himself. We tidy up the business sense of agriculture which is the market for the farmers. The slogan of agric in Jigawa State is business. We are not just growing rice to feed, but to sell and make money, make profit. At the end of the season, all we do is go to cluster A harvest their rice get the yield, get the price and make deductions. You find that the government knows the farm, the size, what it has given you and how much you have actually made as a profit. The farmer on his own is happy, a situation where you are getting two and a half tons per hectare on an individual basis. We have clustered you ,we have given you better seedlings; we have given you appropriate fertilizer . What has been saved so far since the new fertilizer policy started? From an initial N3-4billion per annum on fertilizer, we have come down to about N1.5 to N1.6 billion. You know how much the government has saved in foreign exchange importing fertilizers, now that fertilizers is being produce and job is being created in Nigeria. That is about N1.4-2.4 billion is being conserved on fertilizers annually. What is the amount of tonnage of rice produced in Jigawa now? Jigawa is producing about 700,000 to 800,000 tons of rice. We have

moved from number 7 in rice production in the last three years to number three. This is not me saying it, but the result of the DFID survey and this was as at 2016 I haven’t seen the figure for 2017. Kano State is ranking first, Kebbi is second , and Jigawa is third. Let me also hint you that unlike Kebbi that took N17billion naira from the Anchor Borrowers Scheme loan from the Central Bank of Nigeria (CBN), we have not taken a kobo from CBN to achieve this feat. Our movement from number seven to number three is purely based on our internal mechanism and internal fund. We didn’t borrow from anchor borrower scheme; because the governor looked at the production figure and saw that something is missing. Why should you get a farmer to borrow money if his output cannot adequately service the loan? We did not start talking to CBN until we moved from an average of 2.5 tons per hectare up to 8 tons per hectare per farmer, and under tensed condition we have seen 11 tons of rice per hectares in Jigawa State. We used the competitiveness to check the impact on yield and on the cost of inputs. If I’m giving you fertilizers at N5,500, quality seeds and credit, I will be absorbing the cost, and at the end of the day I am going to recover my funds with even a small profit because I have tied you to someone that would buy it at the end of the day. When we came on board, Dangote had land allocation of 20,000 hectares to set up rice farms and we convinced him that if we have 70,000 registered farmers growing rice, we know where their farms are and their geo-data. You may not need 20,000 hectares. He was sceptical until he set out with a pilot scheme of 200 farms with him. He gave them everything they grew for him and got a repayment rate of about 98%. Today, Dangote is setting up a 32,000-ton per hour rice mill in Jigawa without owning

a hectare of land based on the commitment he has seen and based on the arrangement we have. He is one of our economic success stories, as we move from budgeting for salary and going to create our own alternative source of income for the economy. The second one is the sugar plant in Gagarawa , also involving about 8,000 farmers under our agro-growers scheme which utilise 6,000 hectares of land .Dangote rice is about 32,000 tons per hour and plus the sugar plant will have a combined daily output of about two million. How much has your IGR improved going from a salary to agriculture based economy? Our IGR has improved by about 400%. Our target was to double it when we came in. We have just launched the local government IGR initiative about two months ago and by the time you factor the increase from farm output and these investments that are coming in, the increase we are talking about will be about 674 increase in IGR in the next one or two years. How are the investment opportunities in Jigawa State different from other states? We are focusing on two areas. One is agriculture and I have already told you the comparative advantage we have in agriculture. We have huge tract of Fadama land that can be used for an all yearround cultivation with the capacity of producing a minimum of three crops a year if stretched. The President just flagged off an irrigation enhancement project that would add about 1,000 hectares of land, and we have had about 3000 hectares. In that area alone, the whole scheme is about 25 hectares. The key is agriculture policy that is focusing on five key major Continues on page 26

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Interview with Public Sector Leaders

On the wings of agriculture, economic diversification... Continued from page 25

crops that we scientifically have comparative advantage. Therefore, where rice will do well, we grow rice, and where sugar cane can do well, we plant sugarcane. Outside that, we have also established what we call land allocation and resettlement framework which is a document that has been developed in conjunction with our key investors where we try to achieve a balance between the demand for land between large scale agricultural investors. Instead of disrupting farmers and collecting their land we try to create some kind of balance and this land document is about 100 pages accessible to any investor willing to come into Jigawa. We say this is our grand norm, we help you look at it , we help you go through it and understand it, because this is the basic requirement for you to acquire large scale investment in Jigawa. Anything that the farmer can grow for you, we would make an arrangement and prove to you that we have an army of 6,0000 farmers. I can give you 5,000 farmers and make a long term arrangement with them to grow this thing for you for the next 15years. This is what we did with Dangote. Where you are growing a speciality crop like sugarcane , I will give you the minimum amount of land that you need , then the balance of crops would have to go to our group, we have done it with the lead groups and they are setting up four factories in Gagarawa. The sugar plant of 120,000 tons per annual sugar plant, seasoning plant for making Ajinomoto and fertilizer . Now we are even talking about livestock feed industry using their molasses because of all these herdsmen farmers clash we have here and there, and we are now looking at it from a long term perspective that the molasses they are getting from rice, we have something to produce quality food. When these two mega industries take off jointly in Jigawa, the turnover of the two is about 300% of the annual budget of the state. So, even if the Dangote rice takes off next year, in our first week we would be generating more than the budget that we met in 2014, by the time this also comes on board, we will now have that injection of cash flow into the economy and there is another one we are talking with Dangote again, a tomato plant of about 6,000 tons plant and that will also be generating a turnover of about N70billion. Don’t forget that we have existing industry that we met and we help to resuscitate, in form of smaller rice mills which have been in existence and have become moribund because of one problem or the other. There is also a crystal sugar mill that we are trying to sort out the land issues for, which is an existing mill that has challenges and we are trying to activate it. If we do that, we would create a N400 billion economy just within the agric sector and several direct and indirect jobs.

be taught live. We need to focus on quality teaching. The only way we can fill that gap now is using technology. We cannot manufacture a hundred thousand teachers. We have done a lot in terms of training teachers at our teachers’ training colleges and institutes. So you can’t just say okay graduates with 2:1 come and go and teach English. Some of them may fail, if you sit them down to take exam. What we are doing is reaching out to the little teachers that we have and give them the necessary teaching aide using phones, tablets etc. The basic infrastructure is there, so we don’t need to set up a satellite dish, handouts etc. As i said, the basic infrastructure is there, if I get 1,000 SIM cards from MTN and distribute them to directors of school, you will have it up and running within the next five to six days

We have given handheld harvesters on loan say about 40,000 and you will pay within two rice seasons. We make up clusters and they have your phone number. Once they know there is no more manual harvesting, they are going to call you to come and harvest and once you finish your harvesting, they sign a sheet for you and you go and get your money. When there was armyworm infestation in 11 states in Nigeria, we tackled that in 3 days. Before they knew what was happening we had brought in these youth to deploy the necessary insecticides and we cleared the local government on the border with Kaduna that was affected. In three days, we did not have the armyworm infestation. I think the economic diversification is already taking place. How have you been harnessing hide and skin for economic purpose? The hide and skin here is basically from goat and small ruminants and the local culture is to always skin the animal, and the skin is always preserved and there is a market for that. We have an agro savings scheme for women where the currency is a goat. We have 17,000 women across the state. We give two females and one male live goat to the beneficiaries and after 18 months we take three back from you. Goats don’t require much care. From the three goats, some of them have moved from three goats to 11. The minimum we have seen is 9 and some of them have sold these goats to pay school fees. For the initial 17,000 beneficiaries, we have started their repayment scheme and we are now expanding to another set made up of almost 40,000 women and the federal government is taking an interest in this scheme by saying they want to replicate it as part of the conditional cash transfer thing they are doing. What we are doing in a very simple way is to empower women. Secondly, we are even changing the

nutritional aspect of the women, just as we are making free meat available to households. Because we have registered these women in our data base, there is a company that requires a minimum amount of goat meat order, we believe that in the next two years we would have built up enough goats .Goat skin is the most expensive skin and the most expensive one is called the Sokoto red . Go to Italy, the finest Italian shoe makers , when you say Sokoto red, they know what you are talking about . They have acquired a taste for it in the Middle East because it has a unique taste based on its feeding habit. The taste is just like agric chicken. That is where we are headed for now in terms of hide and skin. We are now almost hitting 30,000 women with 11 goats. You will find out that in the next 2-3 years, we would probably have tripled the numbers of livestock within the rural communities and in an organised manner. What have you done in the area of education? We have adopted a 12-year plan for education because education is one of those sectors into which you pump a lot of money and it takes time for the results to manifest. For this reason, most politicians don’t make huge investments in education. They only try to enhance their standing in WAEC. We believe that that is not the issue because we have a very big problem in education and it not just about building classrooms. The last time a classroom was renovated was in 2014 or earlier than that because the previous government refused to pay the counterparty funds for education for two years. We are using our scare resources to grow that up and pay the backlog of two years. We have renovated and built 4,000 class rooms and provided about 90,000 items of furniture. But we realised that that is not the problem, the problem is also in

teaching,like how do you address teachers shortage. Kaduna is looking for 23,000 teachers and Kano has about 30, 000 teachers deficit. In Jigawa, we are looking for about 7,000 more teachers. These same teachers are also being sourced by private schools who are willing to pay about N120,000 monthly salary. So, where are we going to get the teachers? What we are invariably doing is, we get a physics graduate, send him to go and experience teaching. At times, some of them do not necessarily make a good teacher. We said we need to address education from the basic level which is from transfer. If i want to address education issue i have to be faced with the stack reality that whatever i invest in office i will not see the output. It takes twelve years for a child that we are starting now to get to the stage of GCE. Our twelve years programme have been in place for three years at the basic level, we are bringing what we call centres for excellence speciality schools that are built which are close to forty secondary schools, instead of sending people out there We said let’s build schools closer to communities so that children can go there. We have also revamped the education inspectorate division with help from our developmental partners. We are trying to introduce Information Technology (IT) into teaching. Years back, when we set up IT infrastructure in Jigawa, we realised that one good teacher is better than employing 500 average teachers. If we get an English teacher who is a Ghanaian at US$700 a month and have the infrastructure in place to enable him teach several people, it would be more profitable. That’s what is happening in India, South Africa, etc. There is no single local government in Nigeria that is not serviced by GSM -- at the very minimum, you have 2G, some are on 3G, or 4G. I can decide to giveout tablets to my students; it will enable them to

How would you rate your performance? We now have internal exams for teachers and students. We have introduced mock exams for students preparing for WASCE. What we met was the movement of students from one class to the other without consideration for academic performance. That’s what forced us to start creating additional classrooms, so that pupils would be forced to repeat if they fail promotion exams. We are beginning to assess every step of the system. Where we find out that there are lapses, you are going back. We give you special attention and ensure you don’t continue to crossover. Because if you continue to cross him over, that is what you will do till WASCE. At the end of the day, you would have somebody who has gone to school and school hasn’t gone through him. Apart from agriculture, we found out that we are uniquely situated for solar power generation with abundant sunshine, which only about 9-10 states have a unique opportunity in Nigeria and attracting further investment using this same land resettlement. The thing about solar is that they also need land, and the land at the end of the day cannot be used for agriculture. So, we have been able to map out where we have government land and we are selling it to solar investors. Jigawa has the largest solar portfolio in the country. We have three solar investors with combined 380MW of power, and then we have the Federal Government and state government initiatives to establish 1,000MW solar plant in Wiwa Local Government through Moroccan investors. The Ministry of Power has done their due diligence which includes the survey, right now we are in the phase of mapping out the first solar installation of 1,000MW. Jigawa has a combined solar investment of 1380MW at the moment and it is very significant. The total electricity consumption for the whole state is less than 25MW for the whole state,

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you will find out that all of that goes into the national grid, to be sold to distribution companies with a significant amount of revenue generation to the state.

N80billion has been expended and it doesn’t cost anything, just mobilise people and go.

How many investments have come into the state in the last two years?

The key lesson learnt is to understand that you are deputizing the deputy governor. It is an add on ticket because no primary is conducted to elect one, the governor chooses the deputy governor who he so chooses to create political balance and so on. The deputy governor position is getting to a stage where it is maturing. In the first dispensation in 1999, deputy governors were also people who contested for the position of governorship, when someone wins the primary, you are now deputising for him, you are now working with someone who is eying your job in the first place and you yourself is looking at the governor like I could have being the person there, bringing about friction from day one. Most deputy governors now are selected by their principals to work with them based on political talents or certain political asset that you are bringing to the table. Once you recognised the fact that you are deputising and you have a principal, your primary job is to ensure that you deliver that mandate together. Some people are ambitious and cannot hide their desperation to get to number one seat. That is usually the beginning of tension.. The deputy governor has a portfolio. I am lucky to have worked with the governor who has absolute faith in whatever I am bringing into the administration and who has complete trust in me. There is no time that the governor is out of town that he does not transmit power to me as the deputy governor. If the governor travels for three weeks, for those three weeks sometimes I don’t speak to him on phone. He always believes that you will do whatever things he didn’t do himself.

What experience have you garnered, haven been a deputy governor twice?

I would say significant. We have had $2 billion of investments in the last two years. What message do you have for prospective investors of Jigawa State? Our greatest selling point is that we are a business-friendly environment. The governor is a successful international businessman, who brought into the state practices that he himself would except as an investor. We have the highest political commitment in investment. The governor is the highest investment promoter in Jigawa. I chair the investment promotion council and we have one short cut for investors -- if you take what we have done in land acquisition and resettlement process. We have mapped out all the lands in Jigawa State. We now have a young farming population. We have incentives for investors. We know where lands is suitable for specific purposes. Our unique selling points are accurate and region-specific data, investment-friendly environment and a timeline within which you can actualise your projects. We have a compensation scheme where individuals are compensated. Everybody has tittle to his or her land. In Wiwa, we have 2000 hectares of land which we have acquired. The least time for solar investment is two years of which almost one and a half year of that is spent on land issues. If you come in as a solar investor today i can give you certificate for 100200 hectares of land depending on the size of the land in 24 hours. Because it’s been acquired, paid for and have been demarcated, just waiting for me to put your name on it if you are serious enough. These are some of the things we offer investors. Our land allocation system has been fast tracked and we are constantly reviewing things and acquiring new knowledge. We have not forgotten the existing investments we have because before almost all the small scale firms in Jigawa closed down. But now over 70% of them are back and running. One of those we met said he had been processing certificate of occupancy to set up a sugar industry for 6 years, and he said he wanted to use the certificate to obtain loan from the Bank of Industry. He came, went to the government house, the governor signed the C of O and handed it over to him. To what extent have you achieved your campaign promises?

I normally don’t like scoring myself. Our political promises made are a reflection of the political promises made at national level by the president along with APC. When you talk about security and economic diversification using agriculture, it is one thing we share with the federal government. When you talk of social investment, it is another thing we share with the federal government. I believe we have succeeded. We have succeeded in terms of the local economy. We didn’t believe we could achieve what we achieved in such a short term, although some are work in progress such as the factories that are coming up. The amount of employment

opportunities created has been enormous. From the agricultural perspective, we have increased output, made our farmers more competitive by teaching them how to produce crops at cheaper rate and get a better output. Fertilizer inputs have improved as farmers were initially over applying fertilizer to their crops. Hence saving money on input and getting a better output. I just finished explaining that of education. Education is a long term thing that no politicians want to delve into education because it’s not something that starts yielding results in the immediate. We are the first and only state in Nigeria to develop our own inhouse social investment policy.

And we are the first to start the fight against hunger, our own cash transfer programme. The federal government programme came; we did not drop our own but rather merged the two. That is why today, of all the states participating in cash transfer , 20-21 states, from North, South, East and West, Jigawa is the number one state involved in almost all part of it. We have in nine local government areas 42,000 beneficiaries of cash transfer while in some of my neighbouring states have 5-6000 beneficiaries. I have more in my state than the entire zone, because we had already started preparing our own social register before that of the federal government came in. The conditions for cash transfer are very stringent at the federal government level, because the president made a commitment to Nigerians; it’s not Sure-P which was distributed at party level. N-Power is online, it is non-discriminatory of whether you are an APC or a PDP member. If you register successfully, you are on; very transparent process. We already have the IT infrastructure in place and we also adopted the federal government system in the programme and we tell the local government chairmen, please this is not an APC programme. By the time a PDP man collects Buhari’s N30,000, for three months, we would have convinced him. So we are actually feeding the whole structure of the primary school system every day. We have 720,000 children feeding one meal daily, we employed 7,100 cooks for school feeding service. By the time we calculate for the rest of the local governments, i would probably have 120,0000 cash transfer beneficiaries and we will be getting N7.1 billion from the federal government on a monthly basis for cash transfer. We stick to the rules, the system is so stringent to the extent that if you try to manipulate it, it would throw you out. That is why some people are still trying to come back. About N500billion was voted for that programme and only about

What legacy is your administration leaving behind? We are leaving the legacy of prudence. They call my governor “Mr calculator” because he is very calculative in handling detailed information. He is a chartered accountant. So, when it comes to figures , I give him the credit for the whole financial structure in the state as you see it today, from medium to long term planning. The greatest legacies we are leaving are those of transparency, prudence and fiscal responsibility. All our contractors know that it is very difficult to pass through the processes in Jigawa State. But once you do and you get the job, like I said no contractor will come to Jigawa and present certificate and not be paid in two weeks. There is nothing hidden in Jigawa. Whatever spending we are doing or getting involved in is usually subjected to certain level of scrutiny.

BUSINESS DAY

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Monday 04 June 2018

INTERVIEW

‘Nigeria cannot continue ABEBE AEMRO SELASSIE is the International Monetary Fund Director, Africa Region. In this interview with ANTHONY OSAE-BROWN, Editor, BuisnessDay he shares his views on the economy and what he thinks the country will have to do to stimulate economic growth.

igeria’s GDP grew 1.95 percent in the first quarter of 2018. In line with your projection for Nigeria, seeing that growth slowed when compared with the previous quarter; you looking at reversing your growth projection? We are still expecting growth to hit the 2.1 percent mark this year. Up from 0.8 percent last year. This is below expectations but we still think growth will be 2.1 percent so we are holding our forecast. What is the basis for the optimism? Several factors go into this. First and foremost I think the external environment as you know has been improving. We’ve seen growth globally doing better than a year or two ago so that sets the international environment alongside several factors, which are favorable for Nigeria. Commodity prices have gone up quite a bit in the last couple of years by about 75 percent, we’ve been talking about high oil prices that should help remedy the export side and that will filter to the rest of the economy. Secondly, capital flows are still coming to Nigeria although that we cannot rely on. So the external environment is helpful. Domestically also we are seeing both the oil and non-oil sectors beginning to recover from the 2015- 2016 recession. So provided that continues, we still are hopeful that the 2 percent mark can be reached. What deliberate actions will you recommend that the government take to boast the economic growth potential? I think the policy requirement is very well stated in the ERGP. What is needed really is quick implementation to the fullest degree those things that will help facilitate higher growth for Nigeria. First one I’ll say is paying attention and addressing government resource needs. Tax levels here as you know is in the order of 6 percent to GDP and this is too low. It needs to be closer to 15 percent of GDP or more. Finding revenue handles to increase that will provide government with resources to invest in infrastructure, school;

health etc. second is the energy sector. I think the provision of electricity, I cannot state how important it is both for economic diversification and to facilitate higher economic activity so addressing the energy sector problem in Nigeria really is fundamental. Third, there remains a need to continue with structural reforms that facilitate economic diversification and address governance and corruption challenges. Good progress has been made on this front especially under this administration but I think there is still more to be done. What structural reforms are you talking about? Basically sector specific reforms, you have to look at all sectors of the economy to determine what is preventing productivity and increase production. The outlook for crude is looking very positive, do you think this could be a disincentive for the hardcore economic reforms the country needs? I really hope not. I think the difficulties that Nigeria has faced over the last 3 - 4 years are still fresh in the mind of everybody and a reminder that this country which is incredibly dynamic and resilient cannot continue to rely on oil, there is a need to diversify and not be held hostage by the price of oil. Nigeria has much more than oil, hence the importance of the diversification

objectives of the government. Have you seen this trend of higher oil prices being an incentive to hardcore reforms? What happens in Nigeria has been that when oil prices are high, there hasn’t been a strong enough attempt to save resources for rainy day. So over time, the benchmark for budgeting purposes keeps rising as the price for oil rises. Oil prices don’t stay up high for a long time so that has to be avoided at all cost. For savings and investments, there is evidence that we are not seeing enough public and private sector saving to drive investment, how do we solve this? Low saving in most developing and a low income country is mostly a demographic issue. Countries like Nigeria still have very young population; the level of dependence is still very high so savings tend to be very low. It is structural. As we see a transition in demography, we should see some contributions to growth. Pubic-sector saving are low because the government doesn’t have enough resources to itself, so addressing revenue short falls will go a long way. Unemployment among young people that are supposed to contribute to saving is nearing 50 percent, how are we to handle that? That underpins the need to move forward with

economic reforms quite aggressively because you want higher growth which will engender more employment, absorbing more people approaching the labor force. This is why these reforms are needed. An economy that is growing around 6-7 percent brings a lot more employment and the more employment the more savings to spur investments. Is there a window for these reforms to be made else you miss the chance to get this young people to work and contribute growth? These reforms are imperative to engender the growth needed. Without the reforms, without the economy growing more rapidly, you have less of this young people being able to have Jobs. The federal government has been talking about creating special economic zones as part of the need to drive economic growth what is your opinion. Special economic zones done right can be very beneficial but ultimately what is important is the spill over that these zones have to the rest of the economy. If the government is finding it very difficult to provide electricity across the country and provide required services to foster industrialization in a broad way, then there is a case to be made for special economic zones. Some countries have done very well using these but at the end of the day, the key is not just what happens in the zones but the spill over in the rest of the economy. The IMF has raised concerns about special economic zones, as some of the incentives especially taxes tend to take away or allows room

Monday 04 June 2018

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BUSINESS DAY

INTERVIEW

to rely on oil’ for reduction in government revenue? One of the challenges of relying too much on taxed sectors to engender industrialization and diversification is that the new sources of economic activity become untaxed. So you’re going to have to find way to shift more and more of the burden from these sectors to the untaxed sectors. There’s also the equity consideration that you have to bear in mind. The best and durable way of intensifying industrialization and diversification is by providing the core services that the government has to provide, roads, ports, electricity etc. in a steady way. These are areas where the focus should be. Are you concerned about Nigeria’s debt profile in the last 2-3 years? Debt stock itself is not the source of concern quite frankly, one of the strength of the Nigerian economy going into the recession was the fact that debt level was low and that has allowed the government to pursue more of the Keynesian fiscal policy response. It has allowed the government expands their deficit and I think that is the appropriate policy response. The increase in debt in recent years has been consistent with the total output, so there is no issue there. The concern rather is forward looking, debt service to revenue ratio is high, which is why we emphasis the need to generate more revenue both to be able to service debt better so that too high a share of revenue don’t go to just paying interestand also to have enough revenue to address tremendous development spending needs the country has. Interest Payment to revenue ratio is going by your report was as high as 70 percent in 2017 and is expected to come around 50 percent in 2018, do you think that is sustainable? More work need to be done in this respect. In the ideal world, you don’t want more share of your revenue going to paying interests, you want higher share of your revenue going to infrastructure, health and education spending. Hence the importance of revenue mobilization. How vulnerable are we to a reversal in crude oil price? I believe crude export accounts for about 90 percent of exports and 75 percent of revenue even though it’s just 10 percent of output, so there is high reliance on oil. It is important again to foster diversification and reduce reliance on oil revenues which is why we think the first order of priority here is higher non-oil revenue mobilization. Are there things you will want to see the government do asides the VAIDS incentive scheme? The ERGP has identified a broad set of tax policies and administrative reforms that need to be pursued; I think making strong progress on that front is imperative.

We think that over 15 percent tax to GDP ratio outlined by the ERGP is really at the low end of where Nigeria needs to be. To get from the current 6 percent to the 15 percent will take time; so you need a steady framework which allows you get there. How you do that is up to the government, parliament and civil society. There’s a broad range of option, property taxes could be one of them, this is one option we have not exploited well enough in this country, reviewing exemptions you have on corporate income tax could be another option, VAT could be another option and these are choices that the society and political systems will have to make but I cannot stress enough how vital they are. Have there been simulations done to see how much revenue we could mobilize to move our tax to GDP ratio from 5 percent to 15 percent? We have done quite a lot of work and provided technical assistance to the government. An example is the work with the VAT; I believe Nigeria collects a quarter of what ECOWAS countries do. Total revenue collection from VAT is 0.9 percent of GDP compared to 4 percent of GDP on the average for other ECOWAS countries. We done tax by tax comparison with neighboring countries and also internationally to show what the total scope is and then what kind of reforms will help Nigeria get there. But as I said, the specific revenue handles that are appropriate for Nigeria is something the government and parliament has to look at. Your report listed four vulnerable banks within the system, with one actually insolvent. Are you worried about the health of the Nigerian financial system? The economy was just hit by recession recently; you can see the impact on the fiscal sector, export sector and the private sector. Whenever an economy goes through this kind of recession you always see non-performing loans in the banking sector. I think the CBN has done a good Job in monitoring and identifying where the weaknesses are emerging. So what is required now is that these identified banks find a way to recapitalize themselves and address the challenges their balance sheet is faced with. Provided those are addressed, we think the banking system will be fine. However, given the shock; the challenges are not out of order. Would you recommend another round of consolidation the financial services sector? Frankly this is for the CBN to look at closely. From examples around the world how do you deal with a situation where four of your banks are not doing well? The important thing to note is that these four banks account for a relatively small share of the sector so the risks are fairly contained but the key is addressing this very quickly. Considering that they account for a small share of the sector, do you keep them on for so long or just get them out? As always in policy making, you have to strike the right balance to make sure that you find a way forward. So striking that balance is very important. The CBN have left MPR unchanged since July 2014, with declining inflation rate, there have call on them to reduce it. Would you advise they do? I think very good progress have been made getting inflation down from 18 percent a year and half ago. However, inflation still remains above the central bank target zone. The key is for the CBN to be data driven. Inflation outlook a year and half ahead should determine the policy direction of the CBN and what their reactions should be going forward. If it looks like there’s going to be rapid decline in inflation, I think there would be scope to lower that rate. However, if outlook is for

higher inlation, , probably the case for adjustments down is going to be narrow. I think the CBN has done a good job keeping the balance. On your recommendation that the CBN look at multiple exchange rates in the country, tell us more? Again this is an area when compared with a year and half ago have made good progress. There’s been a lot of stability. Two factors there, one is the domestic reforms. Another is the change in global sentiments and the capital inflows that have been coming to Nigeria. Right now you still have multiple exchange rates, what you want in your exchange market is for all major market to be very liquid, efficient and transparent but the multiplicity of rate doesn’t help in that regard. So the idea is that you move to the direction of single, liquid, efficient and transparent exchange rate. That was our recommendation in the past and is still our recommendation It would seem as though the CBN is doing more of exchange rate targeting than an inflation targeting, what do you think? In any developing economy, you cannot be completely agnostic as to what the exchange rate does because it is such important signal, but it is also one where you don’t want to be too

focused on the particular level of exchange rate, it’s a price that you have to allow to minimize the shocks in the real sector of the economy. So I think it is appropriate that the CBN keeps an eye on what is happening to the rate of exchange. It is however also important to focus on getting inflation down. This has to be the focus of monetary policy. Pricing efficiencies in the Economy comes down to energy, power, petrol and even the Naira; we haven’t seen the IMF talk more about this in its reports. The priority area we have identified is the energy sector. Again we need incentive to increase power generation for example to make sure that the pricing structure across all sector is one which will allow for adequate production and demand for electricity. In the old day we had utility tariffs lower than what is needed so you had very large subsidies, which creates disincentives for higher production of energy. Having reforms that make sure we have a system that provides sufficient incentives for energy production, including through cost-recovery, is important as reliance on off the grid sources of power forces people to rely on generators which are even more expensive. So striking a balance to make sure that the system generates adequate electricity and demand for it is crucial.

BUSINESS DAY

Monday 04 June 2018

CityFile 5 nabbed for diverting USAID mosquito nets

Students of Abubakar Tafawa Balewa University (ATBU), during a peaceful protest against lack of social amenities on campus in Yelwa Campus, Bauchi. NAN

85 arrested as NDLEA seizes 668kg of drugs in Zamfara …2 sentenced in Ibadan

ighty five suspected drug dealers have been arrested the National Drug Law and Enforcement Agency (NDLEA), with a total of 668.6 kg of illicit drugs seized between January and May 2018. Gabriel Eigege, NDLEA commander, Zamfara, who disclosed this to journalists in Gusau, said that the number comprised 81 males and four females. According to Eigege, 11 of the suspects have been convicted; six ongoing trials before the Federal High Court in Gusau while 52 were counselled. Giving details of the activities of the command, he said: “On January 20, 2018, our operatives during a search operation at Magami town in Gusau local government arrested 10 persons in possession of firearms, assorted charms and other dangerous weapons. The suspects were transferred to relevant authorities for further action. “On May 23, our officials from Tsafe area command office intercepted and seized

503.4 kg of cough syrup with codeine and rohypnol and arrested two suspects. “We have finished investigation, all the suspects would be charged to courts,’’ he said. Eigege further said that on May 30, a team of NDLEA officers from Gummi area command on routine patrol on the Gada Zaima road intercepted three persons with some suspected explosive devices. “We have concluded the preliminary investigation, the suspects along with their exhibits will be transferred to relevant authorities for further action,’’ he added. In Ibadan, Oyo State, Justice Joyce Abdulmaleek of the Federal High Court, Ibadan, on Friday sentenced two persons; Monday Nwodo and Shina Adeleke, to two years imprisonment for dealing in illicit drugs. In two separate judgments, Abdulmaleek held that the duo were convicted based on the evidence before the court and the fact that they pleaded guilty to the offence.

“In view of the harmful effects of psychotropic substances like tramadol and Indian hemp on the society and to serve as deterrent to others, Nwodo and Adeleke are hereby sentenced to one year imprisonment each. “All the exhibits found in possession of the convicts are forfeited to the National Drug Law Enforcement Agency (NDLEA),” the judge said. Nwodo had pleaded with the court to temper justice with mercy in sentencing him. “My lord, I was not aware of the danger inherent in psychotropic drugs and the punishment attached to it,” said the convict. Raphael Himinkaiye, counsel to the NDLEA, had informed the court that the convicts were arraigned for unlawful dealing in harmful substances. Shedding more light on the matter, Himinkaiye explained that the convicts committed the crime on September 12 and September 18, 2017 at Idi-arere and Gbagi area of Ibadan respectively.

Expert raises alarm over pollution of Abuja Usuma Dam KEHINDE AKINTOLA, Abuja

ead of Reservoir and Production Department, Federal Capital Territory (FCT) Water Board Lower Usuma Dam, Sunday Agbontaen, has raised an alarm over the pollution of the dam by impurities from Mpape community, resulting in increased cost of water treatment the water. Agbontaen raised the alarm during a cleaning exercise at the Lower Usuma Dam, in Bwari area council, to begin the commemoration of the 2018 World Environment Day, which will be celebrated on June 5. The exercise was organised by the Abuja Environmental Protection Board (AEPB) on Friday, in collaboration with FCT Water Board, FCT Park and Recreation Service and Centre for Peace and Environmental Justice.

Agbontaen said pollutants in the water attracted toxins, which were dangerous to human health. He added that the dam’s facilities had the capacity to screen the solid pollutants and disinfect the water for human consumption. “In checking of pollutants from Mpape zone, these pollutants not only cause increase in cost of production but also attract toxins that might be dangerous to health. But all the same, that is why we have the treatment plant to eliminate the pollutants in the water. “That is why when the water comes in, even at the catchment area up the Mpape zone, we monitor the water quality. When it comes to the plant, we also monitor non water quality. That will now give us the standard of what type of treatment the water will go through. So, in the treatment process, we will be able to understand that this amount of pollutant is higher in the water.”

Agbontaen noted that the Lower Usuma Dam was also spending additional cost to evacuate the pollutants embedded by the side of the dam. The dam official said that a new plant would be designed to address the emerging pollutants such as plastics, steels and other pollutant substances. Muktar Ibrahim, head of AEPB information and outreach unit, said that the AEPB held the cleaning exercise to begin its three-day programme for the commemoration of the 2018 World Environmental Day (WED). Ibrahim said that the WED was the UN principal vehicle for encouraging awareness and action for the protection of our environment. “First held in 1974, it has been a flagship campaign for raising awareness on emerging environmental issues from marine pollution, human overpopulation, and global warming, to sustainable consumption and wildlife crime,’’ he said.

ive persons have been nabbed by the police in Kebbi for allegedly diverting a truck loaded with 132 veils of USAID mosquito nets meant for distribution in Bagudo ocal government area. The police public relations officer in the state, Mustapha Suleiman said the suspects were intercepted in Jega local government area while trying to divert the truck. “We have arrested five suspects in connection with the crime. The truck contains 132 veils loaded with the nets for Bagudo local government area,” he said. According to him, the investigation is still on as the chief suspect is still at large but four of the suspects were arraigned in court for prosecution. “Three of the suspects have already pleaded guilty of the offence,” he said. The spokesperson said the suspects were staff of the local government council who connived with health personnel to perpetrate the crime. The state commissioner for health, Umar Kambaza, who confirmed the incident, said that the police did not, however, submit the report of their investigation to him. “The matter is still under investigation with the police, I would not want to comment on a matter which is under investigation,” he said. The state government with support from the U.S. President’s Malaria Initiative (U.S. PMI) had distributed over 2.6 million free mosquito nets to people in 1,027 distribution points across 21 local government areas of the state from April 28 to May 2, 2018.

Police foil attack on Zamfara community

he police in Zamfara have foiled an attempt by unknown gunmen to attack Dokolo village in Tsafe local government area of the state. Deputy Commissioner of Police, administration, Bukar Biu, said at the weekend in Gusau that one of the attackers was killed in the encounter Biu said that the police responded after receiving a distress call from the area that armed bandits on motorcycles attempted to invade the village. “Fortunately, a combined team of mobile policemen and vigilante group led by Divisional Police Officer, Tsafe Division quickly responded and engaged the bandits in a gun duel. “They eventually empowered the bandits and forced them to beat a retreat back to the forest with possible bullet wounds. “One of the bandits was killed and we recovered one AK-47 rifle and two operational motorcycles”, he said. According to him, security has been beefed up within the area to forestall any violence or reprisal attack. He reiterated the command’s efforts under the Police Commissioner Kenneth Ebrimson to ensure protection of lives and properties of people in the state. Biu appealed to members of the public to cooperate with the police and other security agencies by providing useful information on criminals and their activities. (NAN)

Monday 04 June 2018

C002D5556

BUSINESS DAY

Monday 04 June 2018

This is M NEY A daily guide to your Personal Finance

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

Will your family wealth survive ‘Three Generations’?

e’ve heard of the expressions “ f r o m s h i r t sleeves to shirtsleeves in three generations,” in the United States, and “from rice paddies to rice paddies” in Asia. Does anyone know the Nigerian term? These expressions are so common regardless of culture or country. According to a study, “wealthy families across countries lose about 70% of their wealth by the second generation, and a stunning 90% by the third”. Parents are driven by a natural instinct to love, nurture, and provide for their offspring. We all want to see our children happy and our greatest desire is to give them everything we ever had, or never had, and more. This desire can push us to spoil them. The danger is that whilst we are deriving pleasure from overindulging them, we may actually be interfering with their development and diminishing their own sense of accomplishment and fulfillment. We all work so hard to create wealth not only for ourselves, but to pass a legacy to our children and future generations. For some reason, this has not been the reality for the majority of families. The reality looks more like this; the first gen-

eration works very hard, sacrifices so much, and sets aside savings and investments over three to four decades or more. Often, people who have had to build wealth from scratch are extremely frugal and disciplined when it comes to accumulating and preserving wealth. There are clear reasons why it can be a challenge to transmit lasting wealth to future generations particularly in the accumulation and preservation phases. In many families, the second generation tends to lack some of that initial drive and discipline that it took to build the wealth; perhaps at the back of their mind is the knowledge that there is always money to fall back on when the going gets rough. Often, they will spend more than their inheritance’s investment returns. The third generation can be almost totally oblivious to the need to accumulate wealth and is deep in the spending phase. Because they haven’t experienced what it took to build it, and did not have to work for it, they sometimes fail to appreciate what it takes to truly build family wealth that lasts; they are just so far removed from how it was made and how frugally the founder lived. As a result, they may literally consume the capital away and sadly many will end up penniless having decimated a family fortune built over decades. Lack of motivation and drive In general, it is human nature to take the path of least resistance to achieve goals. Easy money can

slowly make children lack the necessary motivation and drive that most people need to achieve goals. When children are deprived of the opportunity to be self reliant, they develop a sense of entitlement that shields them from the need for sheer hard work and motivation. Sadly, they may never reach their full potential, if they constantly have their parents’ largesse at their disposal. A loss of personal self-sufficiency comes from never having to take care of your own basic needs. It is a case of “easy come, easy go.” It is psychologically a lot easier to spend money that you have not had to work hard for. This makes too many children of wealth more vulnerable to a dangerous sense of entitlement that sadly, is hard to recover from. A large number of descendants From generation to generation, naturally the wealth is divided between more and more people; among children, grandchildren and great grandchildren. Here are some things to consider that can help families break the cycle of “new wealth to no wealth” in three generations. It’s about planning, education and communication. Financial education is important Financial education is an important aspect of wealth preservation. Sadly this is completely ignored in the school curriculum. Research shows that when heirs receive significant amounts of money without any prior instruction

of how to handle it, “they typically have a strong inclination toward spending the money on possessions, pleasures, or other purposes without lasting significance”. A significant percentage of wealth transfer failures are caused by inadequately- prepared heirs. Prepare your heirs to receive wealth. Teach your children about money early; earning, saving, investing, borrowing, giving. Ideally financial advisors should be seriously engaging the next generation in matters of wealth management and educating them in the basic economic concepts. Teach them the responsibility for building wealth that truly endures, through next gen seminars tailored for heirs. Succession Planning Planning for the transfer of wealth from one generation to another is essential in order to have any chance at successful transmission. Trusts are effective vehicles for protecting and holding assets on behalf of beneficiaries. They are usually tax efficient and also a good defence against family spendthrifts who are capable of wiping out a family fortune in the twinkling of an eye. It is an important civic duty to pay your taxes. It is also important to have knowledgeable advisors to ensure legally, that your assets will not be depleted by poor tax planning. How are your children spending the long vacation? It is always nice to catch up as a family, spending weeks of quality time together. However, the long school vacation presents an

enormous opportunity for children to learn to earn. One of the most powerful ways to teach children the value of money is to let them work for it. Full or part time vacation jobs, internships, volunteering for a few weeks in the holidays, are effective ways to build responsibility, a good work ethic, accountability and it helps them foster a respect for money as they earn it. Hands on work experience in the family business has been successfully practiced by Lebanese and Asian families in preparing the next generation. Children are brought into the business from tender ages, working during holidays through which they develop a deep sense of the business and gain the respect of colleagues. Nigerian families, on the other hand, often impose their offspring on the business at senior levels even where they may be ill– equipped for a role. Exceptional educational credentials, even from the world’s greatest establishments, are not all that it takes to step into a patriarch’s large shoes. Many businesses have fallen by the wayside as a result of this phenomenon of imposing “oga’s” or “madam’s” child on a thriving business without adequate preparation. Often wealth managers focus solely on the patriarch or matriarch, ignoring the next generation almost entirely. This does not help the smooth transmission of wealth. Communication is key. Involve the next generation through family meetings and discussions; one must be proactive about

engaging them as opposed to hiding things away from them until they inherit. With careful planning and communication, families have a better chance at ensuring the sustainability of their wealth across future generations. Be proactive about making the time to educate, nurture and collaborate with your future heirs. This can mean the difference between the successful transmission of your wealth and the loss of your family legacy.

Instagram and Twitter: @ mmwithnimi, Facebook and Google+: ‘Money Matters with Nimi’. www. moneymatterswithnimi. com, or send us an email info@ moneymatterswithnimi. com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance. For more personal finance tips, contact Nimi: Email: info@ moneymatterswithnimi Website: www. moneymatterswithnimi. com Twitter: @MMWITHNIMI Instagram: @ MMWITHNIMI Facebook: MoneyMatterswithNimi

Monday 04 June 2018

BUSINESS DAY

C002D5556

BUSINESSINTELLIGENCE

Monday 04 June 2018

In association with

Board diversity: A key imperative BISI ADEYEMI

iscussions around diversity typically revolve around gender. However, diversity entails more that gender as is the variation of social and cultural identities among people existing together in a defined employment or other setting. To ensure effectiveness, the Board of Directors should be composed of a broad spectrum of demographic attributes and characteristics that ensure the Boardroom is less homogenous. Diversity in the Boardroom entails the following: Skills, Expertise and Experience: Having the optimal mix of skills, experience and expertise is important in ensuring that the Board of Directors is collectively equipped to guide the business

and strategy of the company effectively. The Board of a Bank will not be robust in its composition if majority of the Directors are Bankers or ex-bankers. Ethnicity: Ethnic diversity connotes a mix of individuals from various racial, cultural and religious backgrounds. The ethnic mix of a Board should ideally represent the area in which the company operates or intends to operate. Age: Age diversity is often overlooked in the Boardroom. Board members tend to be older as many Directors equate age with experience. While older Directors provide a wealth of knowledge, younger Directors introduce fresh perspective into the Boardroom. Given the place of innovation and disruption in business growth, a Board that will add value to the organization cannot afford not to have the

younger generation represented in its composition as this allows for adaptability and faster reaction to changes in the environment. Geography: In an increasingly global world, neglecting this element of diversity would be particularly imprudent for a multi-national company as it may result in Boardroom perspectives lacking a robust understanding of the company’s operating environment. Similarly, any business that seeks to do business nationwide should give careful consideration to achieving a good balance in the composition of its Board such that it is perceived as truly “national”. Gender: Historically corporate boardrooms have been largely male dominated. The benefits of gender balanced Board are now being recognized with 80% of buying decisions globally

6th DCSL Audit Committee Seminar Theme: “Improving the Performance of the Audit Committee” ©

Audit Committee Members, Directors, Internal & External Auditors, Accountants, Compliance and Regulatory Oﬃcers, Company Secretaries, Risk Managers Date: June 27th & 28th 2018 Location: The Wheatbaker Hotel Ikoyi, Lagos Enrolment & Registration: N180,000 (discounts available for early and multiple registration) Modules: • Financial Forensics -‐ Dynamics of IFRS • Reporting Responsibilities of the Internal Auditor to the Audit Committee -‐Form and Structure of Reporting • The Board, Management and the Audit Committee – Communication Channels • Tenure, Membership and Rotation of Audit Committee Members • Evaluating the Eﬀectiveness of the Internal Audit Function • Understanding Current and Emerging Issues – Cybersecurity and Information Technology • Identifying Priorities for Disaster-‐Recovery and Business-‐Continuity Planning For enquiries and registration: • Nike Taiwo: ntaiwo@dcsl.com.ng or 08090381864 |Mobile:08052800715 • Anne Agbo: aagbo@dcsl.com.ng or 08090381864 |Mobile: 080053038482

made by women. “It is clear that boards make better decisions where a range of voices, drawing on different life experiences, can be heard. That mix of voices must include women” Lord Davies of Abersoch, CBE. Women typically tend to bring new perspectives to issues, ask more questions and pay significantly more attention to detail. Many Boards have started to recognize the tremendous value women bring unto corporate Boards and are consciously giving priority to women when appointing new Directors. To ensure that this does not end up as mere tokenism, women need to properly equip themselves with the appropriate skillset that will enable them make valuable contributions to Board effectiveness. They also need to strengthen and deepen their networks to enable them take advantage of opportunities in this regard. Independence: Independent directors bring a balanced perspective to the boardroom as they assess matters more objectively. They are also able to help the Board find a middle path when seeking to balance conflicting stakeholder interests. The benefits of having a diverse Board cannot be over- emphasized. These include; More Effective Decision Making - A diverse Board will take decisions more effectively by paying more attention to managing and controlling risk as well as having a better understanding of the company’s customers/ clients. The diversity of its composition will ensure that diverse perspectives are considered in decision making. Better Utilization of Talent Pool - A diverse Board is likely to possess different personal characteristics which lead to dissimilar leadership, thinking, emotional styles, risk preferences and behaviors. It also opens up wider networks and business connections to the Board. Enhancement of Corporate Reputation and Investor Relations – Attention to diversity in the composition of the Board of Directors establishes the company as a responsible corporate citizen. Having a heterogenous Board signals positively to internal and external stakeholders that the organization emphasizes diverse constituencies and does not discriminate against minorities. Increasingly, “social stakeholders” are paying closer attention to Board composition and calling out those organizations whose Boards and senior management do not reflect the diversity of their constituencies. Companies like Apple have been called out by shareholders on ac-

count of male dominated Boards. Wider Range of Perspectives: Diversity generates effective challenge of status quo (groupthink). As there are benefits to board diversity, there are also challenges. The search for suitable candidates could be time consuming and expensive as a result of which the Board often settles for Directors with little experience and inadequate qualifications. Secondly, the more diverse a Board becomes the more difficult Board communications become. Diversity leads to changes in Boardroom dynamics which could challenge the involvement, engagement and individual contributions of Directors. There is also the fear of outsiders or relinquishing control, leading to the appointment of “puppet directors” who will not upset the apple cart. However, the benefits of having a diverse Board far outweigh the challenges of putting one together. Having established diversity in its composition, it is inevitable that at some point, group think will ultimately set in, as the more Directors interact, the more similarly they think. Therefore, regular Board replenishment is imperative in achieving effectiveness. The boardroom is where strategic decisions are made, and it is imperative that Boards are made up of competent high caliber individuals who offer a mix of skills, experience and background. To derive the benefit of diversity, it is important that the Board does not approach this from a compliance or “box – ticking” perspective, rather it should be incorporated in a way that effectively improves the performance of the Board. Whilst paying attention to diversity, it is unassailable that Board appointments must always be made on merit, with the best qualified person getting the job.

Bisi Adeyemi is the Managing Director of DCSL Corporate Services Limited. Kindly forward comments and reactions to badeyemi@dcsl.com.ng

Monday 04 June 2018

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Week Ahead

BUSINESS DAY

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ECONOMY

glimpse at the books of banks reveals profit are growing at a slower pace compared to a high of two years ago. The reason for the above may be because of a precipitous drop in short term government securities that squeezed major revenue at the top line otherwise known as interest income. For the first three months through March 2018, after tax profits for the 12 lenders that have reported results increased by 11.11 percent to N192.61 billion from N173.25 billion the previous year. (2017). This compares with the 30.17 year on year growth in profit recorded in the 2017 compaared to the 2016 period when higher yields on treasury bills and the devaluation of the currency that resulted in foreign exchange ga i n s u n d e r p i n n e d lenders’ performance. The banks are Zenith Bank Plc, Access Bank Plc, Fidelity Bank Plc, First City Monument Bank (FCMB) Plc, Guaranty Trust Bank (GTBank) Plc, Stanbic IBTC Holdings Plc, First Bank Nigeria Holdings Plc, Sterling Bank plc, Wema Bank Plc, United Bank for Africa (UBA) Plc, Diamond Bank Plc, and Diamond Bank Nigeria Plc. Analysts are of the view that firms have the capacity in terms of robust customer base and improved efficiency could maintain growth momentum.

This means if lenders are to see margins expand, they will have to generate higher revenue from non-interest income such as credit related fees, current account maintenance fees, and foreign currency transaction fees while taming costs to fend off risks associated foreign exchange gains and the 2019 elections. Drilling down the numbers shows Zenith Bank Plc, the largest lender by asset, saw first quarter profit increase by 25.54 percent to N47.07 billion from N37.50 billion the previous year. This compares w i t h 4 1 . 1 1 p e rc e nt g row t h i t re c o rd e d in the 2017 period. GTBank Plc’s net income increased by 8 percent to N44.67 billion in March 2018 from N41.77 billion the previous year. This compares with the 61.93 percent increase in net income between 2017 and 2016. Access Bank Plc’s net income dipped by 1.29 percent in to N22.11 percent in the period under review, this compares with the a 33.98 percent increase in net income recorded in the 2017 and 2016 periods. United Bank for Africa (UBA) Plc’s net income increased by 6.20 percent to N23.73 billion in March 2018 from N22.35 billion the previous year. This compares to a 31.57 percent increase in net income in the 2017 and 2016 periods. Stanbic IBTC Holdings Plc’s net income rose by 43.48 percent to N23.06 billion in March 2018 from N16.07 bil-

P.E

SHORT TAKES

Will Banks profits slow as end of free money nears? BALA AUGIE

1.14 billion Stanbic IBTC Holding sold 1.14 billion shares at 53.75 naira each,the stock exchange said on Friday in a block deal valued at about $195 million. The deal was negotiated trade between seller Rencap Securities Ltd and buyer Stanbic IBTC Stockbrokers Ltd. Stanbic IBTC Holding’s shares closed at 46.60 naira.

$47.62 billion

lion the previous year. This however is in start contract to the 106.31 surge in net income witnessed in the 2017 and 2016 periods. Fidelity Bank Plc’s net income increased by 7.20 percent to N4.62 billion as at March 2018 from N4.31 billion the previous year, this compares with a 20.45 percent increase in profit in the periods 2017 and 2016. However, some lenders bucked the trend as their profits grew at a faster pace in 2018. Sterling Bank Plc’s net income increased by 65.24 percent to N3.210 in March 2018 from N1.87 billion the previous year. This compares to a 26.17 drop

in the profit between 2017 and 2016 period. First Bank Holdings Nigeria Plc’s net income fell by 8.07 percent to N14.80 billion in the period under review from N16.10 billion the previous year. This compares a 23.34 billion drop in profit in the 2017 and 2016 periods. There is a silver lining for lenders as experts are upbeat that a rebound in crude oil price and favorable foreign exchange regime will underpin earnings. The economy of Africa’s biggest oil producer expanded 1.95 percent in the three months through March, 2018 from a year earlier, after contracting

in 2016. It is forecast to grow 2.1 percent this year by the International Monetary Fund. However, analysts at Fitch a global ratings agency in a recent report said they expect Banks’ profit to take a hit in 2018 on the back of the decision of federal government to cut back on the issuance of treasury bills in 2018. “We expect falling T-bill yields and lower issuance to put pressure on Nigerian banks’ profitability in 2018. The CBN’s latest issuance schedule shows N1.1 trillion (USD3.6 billion) of rollovers in the first quarter of 2018 against N1.3 trillion of maturing bills,” said Fitch.

Nigeria’s foreign exchange reserves rose 0.27 percent from a month ago to $47.62 billion as of May 30, central bank data showed on Friday. Nigeria’s forex buffer stood at $30.36 billion, up 57 percent from a year ago, but is still far off a peak of $64 billion hit in August 2008.

$331.41 million Nigeria’s central bank said on Friday it had injected $331.41 million into the interbank foreign exchange market, continuing its efforts to boost liquidity and alleviate dollar shortages. The bank said the funds were allocated to companies in the agricultural, airline, petroleum and machinery sectors.

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: DIPO OLADEHINDE, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: DAVID OGAR )

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

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Monday 04 June 2018

Markets Intelligence ECONOMY

Insurers’ premium income spikes as economy improves BALA AUGIE

he gradual recovery in the Nigerian economy combined with higher oil prices is beginning to show up in the numbers of insurers as their premium incomes spiked. For the year ended December 2017, gross premium income for the 14 firms that have reported results spiked by 35.76 percent to N265.48 billion from N195.54 billion the previous year (2016). Similarly, the cumulative gross premium income and net premium income were up 22.59 percent and 24.22 percent to N247.08 billion and N192.64 billion in the period under review from N201.55 billion and N155.02 billion the previous year. The insurers are: Leadway Assurance Limited, FirstBank Insurance (FBN) Limited, Aiico Insurance Plc, AXA Mansard Insurance Plc, Wapic Insurance Plc. Mutual Benefit Insurance Plc, NEM Insurance Plc, Lasaco Insurance Plc, and Consolidated Hall Mark Insurance Plc. Other are: Law Union and Rock Plc, Equity Assurance Plc, Continental Reinsurance Plc, Sovereign Insurance Plc, and Prestige Insurance Plc. Experts are of the view that the performances of these firms reflect resilience deliberately imbued through a determined focus on portfolio diversification that broadens their revenue base. The growth at the top lines means these firms have surmounted the headwinds brought on by lower oil price that

resulted in severe dollar shortage. In 2016, Nigeria slipped into its first recession in 25 years last as a battered cash flow hindered many firms from taking up a cover. However, the country has existed a recession and it on the path of recovery, thanks to higher oil price and output, the relative calm in the Niger Delta region combined with a favorable foreign exchange policy.

The economy expanded 1.95 percent in the three months through March from a year earlier, according to a recent data from the office of National Bureau of Statistics (NBS). The economy is forecast to grow 2.10 percent this year, according to the International Monetary Fund (IMF). The recovery in oil price and an uptick in ports activities are expected to underpin oil and gas and Marine revenues of

these insurers as many oil firms have gone back to the rigs. Drilling down the figures shows Leadway Assurance Limited, the largest insurer by assets and premium, saw gross premium income increase by 60 percent to N84.46 billion in December 2017 from N52.70 billion the previous year. The company said the major growth in revenue came from annuity business. A breakdown of Leadway’s gross premium written shows revenue from life business surged by 94 percent to N61.28 billion in the period under review from N31.58 billion the previous year. FBN Insurance Limited’s gross premium written surged by 91 percent to N23.09 billion in December 2017 from N12.10 billion the previous year. Prestige Assurance’s gross premium income grew by 46 percent to N3.80 billion in December 2017 from N2.61 billion the previous year. Sovereign Trust Insurance’s gross premium written (GPW) increased by 33 percent to N8.51 billion in the period under review from N6.40 billion the previous year. AXA Mansard’s gross premium income rose by 30 percent to N28.82 billion in the period under review from N20.71 billion the previous year. Experts say revenue of insurers can get a boost from an increase in Third Party Motor Insurance (TPMI) and that the current charge of N5000 is abysmally poor. “I got my first car for N3000 in the 70’s and people still pay N5000 for TPMI,” said Peter Irene,” said Peter Irene, interim Managing Director/Chief Executive Officer, of International Energy Insurance Company Plc

GTBank, Stanbic Bank has the highest ROE and ROA in Q1 2018 DIPO OLADEHINDE & UJU IKEDIONU

uaranty Trust Bank (GTBank) and Stanbic Bank have the highest Return of Equity and Return on Assets (ROA) among Nigerian banks in first quarter 2018. GT Bank and Stanbic Bank recorded an ROA of 1.30 percent and 1.65 percent as at first quarter 0f 2018 respectively, however in terms of Return Of Equity(ROE) , Stanbic Bank had the highest of 12.10 percent while GT Bank had a 7.70 percent in first quarter 2018. “GT Bank has had great success in Nigeria’s affluent segment, based on high service levels. It has been rated best in class in terms of CSAT, a measure of client experience,” Mckinsey Global consulting firm said in its 2018 report. Mckinsey said African customers

have a strong need for affordable financial solutions, which points directly to the second winning practice in African retail banking: targeting the right segments with compelling offers of which Nigeria GT Bank is a good example. What this means is that these lenders are effective in turning the cash put into the business into greater gains and growth for the company and investors. The higher the ROE, the more efficient the company’s operations utilises available funds while the ROA is a financial ratio that shows the percentage of profit a company earns in relation to its overall resources. This is unsurprising as the share prices of the two lenders have been growing since last year and the rally has continued into 2018, and of course investors will buy into the

stock of firms with strong earnings growth, excellent risk management strategy and solid capital buffers. Both banks have a higher price to book ratio, which reflect greater expected future gains because of perceived growth opportunities and/or some competitive advantages and/or lesser risk. GTBank and Stanbic bank are trading at 2x and 2.5x book values, while their shares gained. According to the CBN’s stability report, the pre-shock ROA of the banking industry, large, medium and small banks were 0.25, 0.26, 0.22 and 0.18 per cent respectively, while the ROE of the banking industry, large, medium and small banks were 3.84, 3.53, -5.06 and 1.04 percent in June 2017. Tier1 lenders otherwise known as the big banks in Africa’s most populous

nation and largest economy have been navigating the storm of headwinds. Income from interest income on loans and advances and short term government securities, excellent risk management strategy, solid capital buffers helped these lenders overcome legacy issues like the power sector loans. The New York based consulting firm said although competition is heightening and regulation is tightening, there is still much room to grow as Africa’s retail banking penetration stands at just 38 per cent of GDP, half the global average for emerging markets. Mckins e y cautions that Afr i ca’s fast-growing, profitable banking markets, global media reports, are more likely to highlight Africa’s social and political problems than its rise as a business market.

BUSINESS DAY

Monday 04 June 2018

Start-Up Digest

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Oyinkansola Alabi: Providing Nigerian professionals with emotional stability ers talk to the head, we talk to the soul. The Youthmax Academy isn’t just an academy; we are a unique journey of life. No one encounters our impact and remains the same”. Youth Max Academy has invested $50,000 already, with a target to raise emotional intelligent millennials. “It’s important that organisations engage Nigerians professionals who are of global reputation to attend to the training needs of their workforce as against foreigners. There’s always an additional benefit local knowledge brings to the fore”. Alabi tells Start-Up-Digest that her academy is collaborating both nationally and internationally to drive several initiatives to promote the subject of emotional intelligence locally. She says that one of such is the EQ Week starting on June 4. This is a free five-day intensive training sessions that address different aspects of emotional intelligence and audiences.

KELECHI EWUZIE

nly very few entrepreneurs are driven by passion to solve societal problems in Nigeria. For Oyinkansola Alabi, founder, Youthmax Academy, her motivation is to help emotional flustered adults gain some stability. Through her audio and video products and personal training sessions, Alabi is committed to redefining culture and raising thousands of emotionally intelligent professionals across the globe. Alabi was inspired to establish Youthmax Academy owing to her experience as a licensed therapist, certified life coach,and licensed emotional intelligence practitioner. She promotes emotional responsibility as a critical pathway to purposefulness at any level of development. According to her, “While oth-

Oyinkansola Alabi

“What makes us different is that we are the premier emotional intelligence academy for millennials in Africa and also have the best minds and trainers at the academy,” she says. Responding to questions on the people that make up her staff in terms of their professional background and experience, she says all staff members have deep knowledge of individual differences and are also emotional intelligence certified specialists. “Our faculty has over 99 years combined experience in influence, coaching, therapy, social change, behavior, governance, emotional intelligence, leadership and transformation,” she says. On where she sees the Youth Max academy in the coming years, she says: “I would be the leading female doctor of psychology in Nigeria. We would also have launched our own 24 hours coaching, therapy and wellness facility”.

How Nigerian start-ups can access crowdfunds JOSEPHINE OKOJIE

finance for your business.

Kickstarter Kickstarter is the world’s largest and oldest crowdfunding platform for gathering money from the public for creative and merchandising projects. Since starting, Kickstarter has reportedly received more than $1.9 billion in pledges from 9.4 million sponsors to fund 257,000 creative projects. It assists in funding projects such as games, films, arts, music, technology, comics, photography and design, among others. Jide Ipaye, founder of Keexs Footwear, an African- inspired range of casual footwear such as sneakers and smart shoes, leveraged on the Kikstarter platform to raise funds to start his business. Jide put up a video with a writeup that told a story of his challenges, looking at the Nigerian context, saying what the challenges were and how the problem of unemployment in the economy could be solved by looking internally and creating value through manufacturing. And in forty days, he was able to raise $20,000 from the website to start his business. “Over a period of 40 days— from November 2015 to December—, we raised $20,000. The money was paid to the manufacturer to produce the first batch of the sneakers,” he told Start-Up-Digest.

inance is the fuel that propels every business. When it is absent, start-ups with wonderful business ideas risk failure or stagnation. Seed capital for start-up businesses is becoming increasing challenging to locate. Understanding the critical importance of funding to Nigerian business owners and entrepreneurs, Start-Up Digest, in its characteristic manner, has dug up some of the places where start-ups can access crowdfunds. Over the years, crowdfunding has become an effective alternative for entrepreneurs to raise funds for their business ideas. It is the practice of funding a project or venture by raising money from a large number of people who each contribute a relatively small amount, typically via the Internet. It is initiated by some organisations or people to support a broad array of activities such as journalism, disaster relief, political campaigns, start-up funding, movie development, support of artists by fans, and scientific research amongst others. Though its knowledge is still low amongst Nigeria’s start-ups, some entrepreneurs are already talking advantage of it to raise funds for their businesses. On this note, Start-Up Digest is providing a list of top crowdfunding platforms you can search to raise

Indiegogo Indiegogo is an international crowdfunding platform. Start-ups have raised over $30,000 through

the Indiegogo platform since starting. Also, it provides a market place for innovations in tech and designs products before they go mainstream. Imeela Imeela is a Nigerian fundraising platform that allows businesses in the country gather enough funds for different projects. It provides a fantastic opportunity for filmmakers, operators of small businesses, traders, fashion designers, shoe makers, farmers, NGO’s, caterer, and artists to raise money. Crowdfunder Crowdfunder is a Los Angelesbased crowdfunding platform that allows entrepreneurs to source for finance and network. The platform allows businesses to put connections, tools and advice in the hands

of investors at all the phases of the business life cycle. Although, its focus is mostly entrepreneurs in the US, it is a window still provided for other entrepreneurs globally. Wefunder Wefunder is a crowdfunding service connecting start-ups with investors online. It was founded by serial entrepreneurs Nick Tommarello, Mike Norman, and Greg Belote in 2012. The platform makes use of a provision act in the 2012 JOBS Act, which allows unaccredited investors to provide equity for entrepreneurial undertakings. Quirky Quirky is a crowdfunding site for inventors. It has created 241 products, possesses 188 retail partners and contains a community of more

L-R: Waheed Olagunju, executive director, Small and Medium Enterprises, Bank of Industry; Olabintan Famutimi, president, Nigerian-American Chamber of Commerce, and Jude E. Akhidenor, agricultural counsellor, U.S. Consulate General Lagos, at the African Food and Products Exhibition & Conference held in Lagos recently

than 283,000 individuals, according to its website. Quirky makes inventing and selling products possible by pairing inventors with product designers and big manufacturing companies that can bring their ideas to life. For decades, being an inventor has been a difficult thing to crack. Complexities associated with engineering, financing, legalities and distribution have stood in the way of smart individuals executing their excellent ideas. Since its launch in 2009, Quirky has rapidly altered the way the globe thinks about product creation. SeedInvest SeedInvest is a leading equity crowdfunding platform, opening up access to venture capital and angel investing to everyone. It was founded by Ryan Feit and James Han in 2012 due to the difficulty encountered by their classmates in Wharton to raise capital for their businesses. Ryan and James joined a movement to change 80-year-old securities laws to make it easier for entrepreneurs to raise capital online. Since then, the SeedInvest team has grown to over twenty team members, helped over 220 companies raise capital, and built a rapidly growing network of over 224,180 investors. In June 2015, SeedInvest was the first equity crowdfunding platform to open up to the other 98 percent of Americans who were previously restricted from investing in start-ups.

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Start-Up Digest ‘Nigeria has what it takes to become Africa’s IT hub’ Wole Akeju is the CEO of Reitigh Group, a people-oriented IT and entertainment firm based in Lagos. Wole Akeju has a B.sc in Computer Engineering from the University of Lagos. In an interview with BUNMI BAILEY, he shares his vision, experience and how his company provides people- oriented IT and entertainment solutions for businesses. What inspired you to set up this business? hat inspired the business is my passion to drive efforts and see results. I have always wanted to be an ‘entrepreneur’.

diversify the country’s economy? Yes, I think so, so long as the government is ready to support the industry, especially with regard to infrastructure, and stable power, among others. Putting these and other things in place will make IT more appealing to possible investors, hence promoting economic growth.

What was your initial start-up capital? My initial start-up capital was N150, 000 How would you say your business has grown since starting? Very well, I would say we have grown so well, looking at www. BusinessCenter.NG, which is now the brain power behind visibility for many small verified businesses. Through it, small businesses get small grants of up to N100,000 weekly. We also have Reitigh POS (inventory management software), and RG5 Management (for entertainment, events & lifestyle company), which is home to Dj Consequence, Alatika, and MC Lively, amongst others The IT industry is highly competitive. What have you done differently to ensure you remain in business? Firstly, we ensure that every client

What are some of the challenges facing your business? The challenge is majorly funding. Adequate funding from investors or even proper access to funds, such as bank loans, will drive our products and services farther than where it is at the moment. Infrastructure, stable power – as a lot is spent regularly to run the business— and also internet cost are key.

Wole Akeju

who patronises any of our services is given the best delivery. That speaks mostly for me and keeps me relevant and my clients returning. Secondly, with our productbased business, we ensure that

our products remain the best indigenous ones coming from this side of the world. The Nigerian government is talking about diversification; do you think the IT industry can help

How can government address some of these challenges? They can address these challenges by providing proper financial accessibility and good interest rates when taking bank loans. Providing a stable power supply to reduce the cost of running a business in the country is important. There is a need for a good Internet service plan with internet providers, as this is a major requirement for the success of any IT company. I would also implore the govern-

ment to set up well-equipped IT research lab centers in all local council areas in Nigeria and grant access to registered Nigerians who are willing to work on collaborative efforts to develop solutions just like Co-creation Hub. Does Nigeria have what it takes to be Africa’s number one IT hub? Most definitely. We have the best brains in Nigeria, empowered with amazing IT-related solutions. So a proper structure from the government can push us to rule the African IT hub. The government is trying to diversify the economy. What role can tech play in this regard? Well, I feel that data collection and data retrieval have to be properly managed to ensure good results. And these are IT-related roles. Data can help support the diversification plan of the government. Nigeria has a huge infrastructural gap. How can the government address issues with logistics and infrastructure? The government can address these challenges by making it a priority and taking steps to ensure basic infrastructures are adequately provided for all to facilitate internal growth within the populace.

How Toyin makes millions from processing baby foods ODINAKA ANUDU

luwatoyin Onigbanjo is making millions from processing baby foods. Toyin, as she is fondly called, is the founder and head cook of August Secrets, which produces baby foods such as Veggie Beans, Nutty Meal, Fish Powder and Crayfish Powder. Toyin is a journalist, but her achievement shows that men (no ‘woman’ in journalism) of the pen profession can do well in other areas of endeavour. Toyin exports packaged baby foods to Ghana; New York and Atlanta in the United States, and other countries, making her money in hard currency. Like all entrepreneurs, Oluwatoyin’s story is unique. After having a baby abroad, she returned to Nigeria only to notice that the child was reluctant to eat the locally available food. She started sharing her experience with neighbours and church members who offered different pieces of advice. A matron in one of the hospitals suggested two local foods she could give the child, and this worked. At the end of the day, she realised that a lot of children were allergic to certain types of food. For her, this was not a problem but an opportunity. “I said to myself, ‘Why not pack-

age all of these foods and give them to Nigerian children?’ In the process of doing that, I realised that a lot of mothers also had the same problem. A lot of them wanted foods that were natural and from the African soil. That was a lot of motivation for me,” she explains to Start-Up Digest. Toyin started this business officially in July 2016 and has been a rewarding experience. The first raw materials she bought cost her N20, 000. She then spent between N200, 000 and N500, 000 on purchasing the next set of raw materials and setting up the factory. Fewer than two years down the line, this revenue of this firm (in the last 12 months) is about $100,000. “We are selling in about 24 Nigerian cities and states of the country now. We sell in Ghana; we sell in Atlanta, and we sell in New York. We sell outside Nigeria. It is amazing that we now take our foods to places where we bring our foods from,” she says. Oluwatoyin has 24 direct and indirect staff members and 24 distributors across the country. “We decided to fill in the gap when we realised that about 90 percent of what the Nigerian children ate were imported and were foreign goods. We are producing Nigerian foods, nutritious foods that are attractive and also nourish the Nigerian children across Africa,” she states. The entrepreneur has always been

a good cook and loves children. In fact, before Oluwatoyin set up the food processing factory, she had established a kids’ store. “The interesting part for me is that I love coking and I love food. This is something I am passionate about, and right from time, I have always run a kids’ store. Even as a journalist, I run a children’s store for children that are malnourished. It is one thing to have a passion and another thing to do the right thing,” she explains. It was not completely easy for her when she started. She had to wade through the challenge of getting necessary certifications such as the National Agency for Food and Drug Administration and Control (NAFDAC) approval.

For her, there are more grounds to cover. According to her, a lot of produce from farmers is wasting away and need off-takers and people who will market them. “The link between the farmers and the market is very weak. There are still a lot of issues in logistics. We also have a lot of market gap, and there is a gap in warehousing. Being a journalist, Oluwatoyin believes in the power of the digital media. Through various platforms made available by technology, she reaches 100,000 mothers at the moment. She is a strong believer in the made-in-Nigeria brands and wants the citizens to appreciate and buy locally made goods. “We are taking advantage of the

digital media and it has really helped us. We are able to reach more people. Without digital media, we can hardly reach Ghana and other places.” Being a married woman, the entrepreneur appreciates the role played by her family and says a big ‘thank you’ to them. She says cost of production is high, but her firm has adopted a strategy to cut it. “It has really been tough. What we try to do is to watch when there is power and we quickly run our production,” she discloses. Oluwatoyin says moving from journalism to manufacturing is not easy, adding that she needs funding to acquire more machines. “We are looking to get support in terms of machines and the technology we need for production,” she tells Start-Up Digest. She has some pieces of advice for the upcoming entrepreneurs. “I was not cut out to be an entrepreneur. I would rather be in my house and string stories together as a journalist. But I realised that people needed my services. If you know how to cook, cook it, put it together and give it those who need it. Don’t just stay in your house. If anybody told me that I would be going out to speak in conferences and talk to people about entrepreneurship, I would not believe that,” she advises.

BUSINESS DAY

Monday 04 June 2018

Start-Up Digest Diasporans make inroads into Nigeria’s entrepreneurship space ODINAKA ANUDU

igerians living in the Diaspora are returning home to set up mega businesses. You will find these people in technology, fashion, food processing, educaion and other related areas. With their exposure, these Diasporans are aggressive and trailblazers. They are also more successful in accessing locally and internationally available funds. In many cases, they initiate fresh ideas not seen anywhere before. Some of them bring in ideas they stumbled upon abroad, which are not yet tested in the Nigerian environment. These entrepreneurs are succeeding and are the reasons why many others are mulling return. Jason Njoku might not have thought before 2011 that he would be described as a ‘film magnate’ seven years after. Jason was born and raised in Deptford, South-East London. He had attempted 10 businesses

Onyekachi Ekezie

before iROKO TV clicked in 2011. As at 2011, no Nigerian firm was providing online movies. He saw this as an opportunity to bring quality films closer to Nigerians, partnering Nollywood. It started as a mainstream online movie and within the first year provided instant access to over 5,000 Nollywood film titles not only to Nigerians but also people

Temitope Ogunsemo

across the globe willing to pay $5. After securing $3million from Tiger Global in 2010, the then 30-year-old Jason and partners launched iROKOtv, on December 1, 2011. The site drew viewers from 178 countries around the world. As of 2014, iROKO was the largest distributor of African content globally on YouTube with 950 mil-

lion video views across its managed channels. The number is over one billion today. iROKOtv announced multiple deals of $19 million from French media giant CANAL+ and an existing investor Kinnevik AB in January 2016. Jason is not the only one in this. Onyekachi Ekezie attended primary school in Port Harcourt and secondary school at Igbin-

Blondie Okpuzor

edion Education Centre Secondary School, Benin City, Edo State. But the entrepreneur left mid-way for the United Kingdom, where he completed secondary education, later obtaining a degree in Computer Science from the Bowie State University, USA. Kachi, as he is fondly called, is back as the CEO of Kaptain Foods Limited and Ready Stews, producing and packaging Nigerian-made stew and fully cooked foods. Like any average Nigerian graduate anywhere in the world, Kachi’s dream was to work in an oil & gas firm, a feat he eventually achieved. He had a stint at Halliburton ESG, Houston, USA, where he worked as a field engineer. He equally worked in Kongsberg Oil & Gas Technology in Houston as a software support engineer. Altogether, he spent eight years in oil & gas industry in the USA before returning to the country in 2012. Incidentally, Kachi did not return to the country to pick a juicy, white-collar job in Shell or Chevron. He found a business opportunity while in the USA and decided to tap into it. “It dawned on me I could package an authentic, easy to prepare stew in an appealing way. We thought Nigerians at home and abroad, especially students, would appreciate the convenience,” he told the United States Agency for International Development (USAID), in an interview in November, 2017. After living and working abroad for some time, Blondie Okpuzor returned to set up BathKandy, a beauty company that creates dessert-inspired beauty treats. Blondie makes natural skin care products from locally available raw materi-

als, including jollof rice and shea butter. She has over 50 soap brands, lotions made from goat milk, among others. “They are all manufactured here in Nigeria. I make them by hand and we infuse delicious things like oils, tea, chocolates,” she told StartUp Digest. Temitope Ogunsemo, after a brief stay in the UK, returned to Nigeria to found Krystal Digital, an educational technology company creating, developing and deploying customised software applications for schools in Nigeria. More so, Attah Anzaku studied Petroleum Engineering in Covenant University as well as Gas Engineering and Management at the University of Salford, Manchester. He has returned to set up AgroEknor, an international commodity trading firm. Attah exports hibiscus flower and other agricultural products to Europe, South America and Asia. “Why I studied engineering basically was because of the exposure. It was not really what I wanted. After that level of education in 2013, when I was coming back to Nigeria, I met my partners—Timi Oke and Ayomide Oke. “Timi Oke and I were in Covenant University and the University of Salford, Manchester. We started rubbing minds together and said, ‘We are coming back to Nigeria. Why don’t we set up a company.’ Ayomide Oke was in Nigeria and had set up a business. We said, ‘Let’s do this in the meantime before we get jobs.’ But it got so serious that we had to reject many job offers. I had a job offer in the Middle East by a renowned petroleum company but I left it,” he told Start-Up Digest.

it is a national cake so they do not have to meet the criteria to access the fund. There are lots of lowinterest funds for MSMEs, even grants, but all these barriers have prevented small and medium enterprises from accessing available funds. MSMEs should constantly seek strategic information to leverage for growth.” She pointed out that most start-ups fail to build

capacity in the industry in which they operate, which has increased their failure rates. “ You need the r ight skills to scale up your business and if it is lacking, the growth of the business would be limited. Applying the method you us ed for your sur vival stage at your growth stage will not grow the business sustainably,” she counselled.

‘Many SMEs do not have structure in place to access finance’ ODINAKA ANUDU

unke Susan Medun, director at Leapworld Limited, a firm helping micro, small and medium enterprises (MSMEs) access funding and write good bankable business plans, says many small businesses do not have proper structure in place to access funds.

“From the internal processes, a lot of small businesses do not have the system and structure in place to access needed finance to grow their businesses, and this is a huge barrier,” she said. According to her, financial institutions want a guarantee that small businesses have the capacity to repay back loans, stressing that small business owners need to keep

good books. “You can’t provide what you don’t have. MSMEs need to start keeping proper records and there is a need to also separate the expenses of the owners from the business so that the business can have a life of its own,” she said. She added that information is not available to a lot of MSMEs. “Lagos state is doing great with the Lagos

State Employment Trust Fund (LSETF), and I think other states should emulate them. You would be shocked to know that a lot of businesses that operate in Lagos do not know about LSETF. Some are aware but do not know the criteria needed to access it. Some believe the fund is only meant for businesses whose operators are indigenes of Lagos State. “Some also believe that

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Three types of diversity that shape our identities CELIA DE ANCA AND SALVADOR ARAGÓN

n a study of 180 Spanish corporate managers, we explored perceptions of diversity and found that depending on who is answering, diversity usually means one of three things: demographic diversity (our gender, race and so on), experiential diversity (our affinities, hobbies and abilities) or cognitive diversity (how we approach problems and think about things). Demographic diversity is tied to our identities of origin; characteristics that classify us at birth and that we will carry around for the rest of our lives. Experiential diversity is based on life experiences that shape our emotional universe; it influences what we might call identities of growth. Cognitive diversity makes

us look for other minds to complement our thinking, what we might call identities of aspiration. What kind of diversity does your company focus on? Could you benefit from broadening your

perspective? Let’s take a closer look at each in turn. MANAGING IDENTITIES OF ORIGIN. Since the 1980s, most global companies have developed diversity and inclusion policies led by human

resources. The most frequent include: assessment tools, human resources programs, communication campaigns and training programs. Talented individuals in general, but from minorities in partic-

ular, select companies in which they expect to feel appreciated. MANAGING IDENTITIES OF GROWTH. Identities of growth often provide us with a feeling of security. Our likes and dislikes change over time, and our affinity groups change. Identities of growth dictate who we spend time with. Our research suggests that the best policy for dealing with these communities is through minimum intervention. Emotional communities will emerge in organizations, whether management likes it or not, and will have a life of their own. For that reason it is best to take a neutral position. MANAGING IDENTITIES OF ASPIRATION. Our cognitive differences find their place in a community of aspiration. In these communities, we

are valued for our unique way of understanding and interpreting the world. The most effective strategy for companies to manage these communities is to create the contexts and the projects for them to emerge. Each form of diversity is different and requires its own management strategy to effectively integrate people. Diversity is a journey and, like any journey, requires careful navigation.

formation is often made necessary by market and technology factors outside the company, but here people analytics is a critical factor for execution. A people analytics team can serve as an instrument panel of sorts to

track resources, boundaries, capacity, time use, networks, skill sets, performance and mindsets that can help pinpoint where change is possible and can measure what happens when you try it. As organizations increasingly look to data to help them in their transformation efforts, it’s important to remember that this doesn’t just mean having more data or better charts. It’s about mastering the organizational muscle of using data to make better decisions; to hypothesize, experiment, measure and adapt.

(Celia de Anca is currently the director of the Center for Diversity in Global Management at IE Business School. Salvador Aragón is professor of innovation and information systems at IE Business School.)

How people analytics can help you change CHANTRELLE NIELSEN AND NATALIE MCCULLOUGH

eople analytics — the use of data about human behavior, relationships and traits to make business decisions — can help replace decision making based on anecdotal experience, hierarchy and risk avoidance with higher-quality conclusions based on data analysis, prediction and research. We’ve observed companies using people analytics in three main ways to help understand and drive their transformation efforts. In core functional or process transformation initiatives, which are often driven by digitization, we’ve seen people analytics used to measure activities and find embedded expertise. In one example, a people analytics team at a global

CPG company was enlisted to help optimize a financial process that took place monthly in every country subsidiary around the world. They discovered that one country was 16% more efficient than the rest on average; the same results were achieved in 71 fewer working hours per month and with 40 fewer people involved. The transformation office approached the country finance leaders with their findings and made them partners in process improvement for the rest of the subsidiaries. It’s unlikely the CPG company would have been able to recognize and replicate these bright spots if they had undertaken transformation with a top-down approach. And, perhaps more important, it involved and engaged the people on the ground who had unwittingly discovered a

better way of doing things. In bottoms-up cultural transformation initiatives, the way things are done can be more important than what is done. Feedback loops and other methods of data-driven storytelling are our favorite

way that people analytics makes culture transformation happen. Data storytelling is a lightweight way to build trust among stakeholders and bring behavioral science to culture transformation. Top-down strategic trans-

(Chantrelle Nielsen directs research and strategy for Workplace Analytics, a new organizational productivity category at Microsoft. Natalie McCullough is general manager for Workplace Analytics and MyAnalytics at Microsoft.)

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KEY MACROECONOMIC INDICATORS Indicators

Current Figures

Comments

GDP Growth (%)

1.95

Q1 2018 — lower by 0.11% compared to 2.11% in Q4 2017

Broad Money Supply (M2) (N’ trillion) Credit to Private Sector (N’ trillion)

24.52 22.25

Increased by 0.90% in Apr’ 2018 from N24.30 trillion in Mar’ 2018 Decreased by 0.85% in Apr’ 2018 from N22.44 trillion in Mar’ 2018

Currency in Circulation (N’ trillion) Inflation rate (%) (y-o-y)

1.96 12.48

Increased by 17.31% in Apr’ 2018 from N1.67 trillion in Mar’ 2018 Declined to 12.48% in Apr’ 2018 from 13.34% in Mar’2018

Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor)

14 14 (+2/-5)

Raised to 14% in July ’2016 from 12% Lending rate changed to 16% & Deposit rate 9%

External Reserves (US$ million) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

47.62 77.89 1.79

May 30, 2018 figure — an increase of 0.23% from May start June 1, 2018 figure— a decrease of 2.49% from the previous week Apr’ 2018 figure — an decrease of 0.44% from Mar’2018 figure

Friday 1/6/18 36,816.29

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

Friday

Change(%)

25/5/18 39,323.62

(6.38)

13.34 0.52

14.24 0.30

(6.38) 74.61

7.20

2.95

143.99

MONEY MARKET NIBOR Tenor

Friday Rate

Change

(%)

(Basis Point)

1/6/18

25/5/18

3.3300 4.4200 4.1625 13.0582 14.7720

17.7000 19.6700 31.8750 13.4844 14.5934

OBB O/N CALL 30 Days 90 Days

(1437) (1525) (2771) (43) 18

FOREIGN EXCHANGE MARKET Market

Friday

1 Month

(N/$)

Rate (N/$)

1/6/18

25/5/18

2/5/18

Official (N) Inter-Bank (N)

305.95 340.75

305.90 340.28

305.70 338.87

BDC (N) Parallel (N)

361.00 363.00

361.46 366.00

359.50 362.00

BOND MARKET

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

Tenor

Friday

Change (Basis Point)

(%)

1/6/18

25/5/18

3-Year 5-Year 7-Year

0.00 13.03 12.73

0.00 13.30 13.17

0 (27) (44)

10-Year 20-Year

13.17 13.41

13.40 13.43

(23) (2)

Indicators

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

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

YTD Change (%)

77.89 2.96

(2.49) 0.34

20.14 (3.14)

2456.00 123.75

(6.47) 3.34

26.86 (4.95)

92.38 12.88 520.25

7.12 5.23 (3.03)

19.20 (15.98) 20.01

1298.02 16.43 307.40

(0.61) (1.62) (0.89)

(1.48) (4.42) (6.22)

Friday 25/5/18

Friday (%)

Change (Basis Point)

18/5/18

1 Mnth 3 Mnths

9.87 12.00

11.96 12.61

(209) (61)

6 Mnths 9 Mnths

12.21 13.22

12.95 13.33

(74) (11)

12 Mnths

13.15

13.20

(5)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Friday (%)

Index

Disclaimer

1-week Change (%)

(%)

Indicators

Friday

1/6/18

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

AVERAGE YIELDS Tenor

Global Economy In the U.S, Q1 2018 GDP growth rate was revised to 2.2% according to the Bureau of Economic Analysis. This contraction from the earlier rate (2.3%) is due to a slower than expected growth for personal consumption, services and exports which grew at 0.71%, 1.8% and 4.2% respectively as opposed to 0.73%, 2.1% and 4.8% in that order while fixed Investments rose faster at 1.05% from 0.76% and investments in equipment, structures and intellectual property inched higher. Elsewhere in the Eurozone, inflation rate rose to 1.9% year-on-year in May 2018 from 1.2% in April as recorded by Eurostat. This marks the highest annual inflation in Eurozone since April 2017. The rate was driven by energy (6.1% compared with 2.6% in April), followed by food, alcohol & tobacco (2.6% compared with 2.4% in April), then services and non-energy industrial goods. In another development, Japan’s Statistics Agency reported that the unemployment rate stood at 2.5% in April 2018. This signifies a year-on-year decline in unemployment rate from 2.8% in April 2017. Employment declined to 66.93million, a decrease by 10,000 while labor force fell to 68.62million.

COMMODITIES MARKET

STOCK MARKET Indicators

BUSINESS DAY

Friday (%)

Change (Basis Point)

1/6/18

25/5/18

2687.37

2676.49

0.41

9.07 5.90 8.96

1.08 1.24 0.44

-46.32

0.42

Date

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

9.17 5.97 9.40

YTD return (%)(US $)

-45.90

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

Rate (%)

91 Day 182 Day 364 Day

4,960.59 24,802.94 19,842.35

10.2557 30-May-2018 10.8576 30-May-2018 12.3554 30-May-2018

Local Economy Total transactions at the nation’s bourse slipped in the month of April 2018 by 22.11% to N212.23 billion from N272.48 billion recorded in March 2018. This information was disclosed by the Nigerian Stock Exchange (NSE) in its monthly Domestic & Foreign Portfolio Investment report for the month of April 2018. According to the report, total foreign transactions likewise fell by 7.32% to N122.53 billion from N132.21 billion the prior month. Total domestic transactions also declined, falling at a higher rate of 36.05% to N89.70 billion from N140.27 billion in March. A breakdown of foreign transactions revealed that a decline of 7.79% in monthly foreign inflows was recorded at N64.28 billion from N69.71 billion in March. Foreign outflows also fell by 6.8% to N58.25 billion in March from N62.50 billion in the previous month. In a separate development, the Manufacturing Purchasing Managers' Index (PMI) stood at 56.5 index points in May 2018, the latest PMI report of the Central Bank of Nigeria (CBN) showed. This indicates an expansion in the manufacturing sector for the fourteenth consecutive month. The index grew at a slightly slower pace when compared to the previous month (56.9 points). A composite PMI above 50 points indicates that the manufacturing sector is generally expanding, while a reading below 50 points indicates a contraction. Ten of the fourteen sub-sectors surveyed reported growth during the month. However, the transportation equipment; fabricated metal products; non-metallic mineral products; and furniture & related products subsectors declined in the month under review. Stock Market The Nigerian Stock Market continued descending in the week ended June 1, 2018. This drop was due to sustained sell offs that happened in the week. The All Share Index (ASI) fell by 2,507.33 points or 6.4% to settle at 36,816.29 points from 39,323.62 points the preceding week. Simultaneously, market capitalization declined by 6.4% to N13.34trillion from N14.24 trillion the previous week. Stocks in the industrial goods and consumer goods sectors led to the plunge witnessed in the market. A rebound in

buying momentum is anticipated this week as investors position for short-term gains. Money Market Money market rates trended downwards last week due to inflows from Federal Accounts Allocation Committee (FAAC) fund of about N320bn. Short-dated placements such as Open Buy Back (OBB) and the Over Night (O/N) rate crashed to 3.33% and 4.42%from 17.70% and 19.67% respectively the previous week. The 30-day NIBOR finished lower at 13.06% from 13.48% while the 90day NIBOR slightly rose to 14.77% from 14.59%. This week, we expect rates to tick upwards as a result of expected Retail Secondary Market Intervention Sales (SMIS). Foreign Exchange Market The naira-dollar exchange rate closed on a negative note this week. The interbank window depreciated slightly to N340.75/$ from N340.28/$ representing a drop of 47 Kobo from the previous week. At the parallel market, the local currency appreciated by 0.82% to N363/$ from N366/$. The local unit however depreciated at the official market by 5 kobo to settle at N305.95 from N305.90 the previous week. This weakness in the currency could be attributed to an increase in foreign portfolio outflows and increased demand for dollar. This week, we expect the naira to remain close to prevailing levels due to sustained CBN interventions in the retail segment of the market. Bond Market Bond yields closed on a bullish note for the week driven by local client demand as a result of bond maturity of about N300 billion and heightened level of liquidity especially on the short and medium buckets. Yields on the five, ten- and twenty- year debt papers closed at 13.03%, 13.17% and 13.41% from 13.30%, 13.40% and 13.43% respectively the previous week. The Access Bank Bond index rose by 10.89 points or 0.41% to close at 2,687.37 points from 2,676.49 points the previous week. This week we expect bond yields to trend downwards as demand persists. Commodities Market Oil prices nudged downwards last week as rising US output overshadowed speculations on plans by Russia and Saudi Arabia to boost production. Bonny light, Nigeria’s benchmark crude retreated to $77.89 per barrel from $79.88 the previous week representing a fall by 2.5%. In a similar vein, precious metals prices dipped due to political and economic tensions between U.S, Eurozone and Canada. Gold fell by $8.03 or 0.61% to close at $1,298.02 per ounce from $1306.05 per ounce in the previous week. Silver settled lower at $16.43 compared to $16.70 a fortnight ago. Oil prices may trend higher next week as a result of fears of global trade war emerging from U.S. tariff decision and precious metals prices may fall as a result of speculated interest rate hike this month which will strengthen U.S. dollar.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Jun’18

Jul’18

Aug’18

Exchange Rate (Official) (N/$)

340.80

341.00

341.02

Inflation Rate (%)

11.89

11.50

10.80

Crude Oil Price (US$/Barrel)

75.2

75.9

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

REAL SECTOR WATCH BUSINESS DAY

C002D5556

Monday 04 June 2018

Inside PZ Wilmar’s oil palm estate ODINAKA ANUDU

t was a Tuesday night. I had left Owerri, Imo State capital, at 2.42 pm owing to lack of passengers at the popular Imo Transport Company (ITC). My expectation was to get to Odukpani junction in Cross River State before 7pm. It ordinarily takes about four hours to drive from Owerri to Odukpani, but this was not to be. Police check points and bad roads dotted Owerri-Akwa Ibom-Odukpani highway. There were also other checkpoints manned by the military, the National Drug Law Enforcement Agency (NDLEA), the Federal Road Safety Corps (FRSC) and other government security agencies. As good as these checkpoints were, they caused delays. Even immigration officials would ask all passengers to recite the names of their home towns. Anybody who could not do this mechanically would face interrogation. Long vehicles fought for spaces on the narrow highway. Frequent mentions of the Niger Delta Development Commission (NNDC) were made by frustrating passengers who felt that the commission had not lived up to its expectation. I arrived at Odukpani Junction at 8.20pm and headed for the Calaro Estate in Akamkpa Local Government Area. Thirty to 40 minutes later, I was at the entrance of the estate. It was a historic place, even though many natives do not seem to know. Calaro Estate happens to be the place where the Malaysians and Indonesians ‘stole’ their muchtouted oil palm. Today, what Nigeria has ignored is the mainstay of the Indonesian economy. The Southeast Asian country produces 36 million metric tonnes (MT) of palm oil annually, earning up to $18 billion from it yearly. Several studies have proved that oil palm is native to West Africa, nay Nigeria. But this is a story for another day. The estate is symbolic, being where PZ Wilmar’s 5,549 hectares of oil palm plantation sits. Calaro Estate is a village of its own. Between the entry point and PZ Wilmar’s staff quarters are palm trees big enough to cover a typical Nigerian village. Cars and motorcycles drive in and out. The rule is simple: Do not over-speed. The caveat is necessary because as oil palm trees are planted on both sides (right and left), someone can easily come out suddenly and gets hit by a moving vehicle. It was already late so nocturnal animals were having a field day. I slept at the plantation. But I was not the only one. Senior managers of PZ Wilmar too have a home

Kernel Crushing Plant (l) and Palm Oil Mill (POM)

within the estate. There are quarters for different levels of staff who work for PZ Wilmar. This is seen as exemplary, unlike what is seen among firms, where staff members live far away from their farms or factories. The quarters are also close to PZ Wilmar’s automated offices inside the estate. The offices airconditioned and provide comfort for the hard-working staff members. One exceptional finding is that the estate is not only filled by Nigerians but also occupied by foreigners from Malaysia, Indonesia, Ghana and other countries. It is a mixed grill, which is necessary for the achievement of oil palm result. With the assistance of Jun Mirasi, PZ Wilmar’s project manager and Antigha Essien Essiet of the communications department, I visited the two palm oil plants (now completed). One serves as Kernel Crushing Plant (KCP), while the other is the palm oil mill (POM). The two plants are now being test-run. The POM has a capacity to produce 45 tons per hectare, while the KCP is estimated to produce 2.5 ton per hectare. There is a reservoir, which

PZ Wilmar’s investments in oil palm plantations and associated infrastructures in the Cross River State are estimated at N45 billion, Santosh Pillai, managing director, PZ Wilmar company

Oil palm plantation

Water reservoire

provides water whenever there is a need for it at the factory. Calaro Estate also hosts a treatment plant, which ensures that water that is used in the production process is clean enough. I entered the bush where oil palm fruits were planted. Some are already fruiting, while others may take some time. Before entering an oil palm plantation, ensure you are well kitted—from head to toe. If you ignore this warning, snakes may try to kiss and this may not be palatable. It is an integrated farm, where all the production processes happen in an environmentally sustainable manner. I was later brought into a board room for a lecture. I left the room educated on oil palm industry much more than my peers. Asen Ako, sustainability manager at PZ Wilmar, told me that nothing is wasted in oil palm, as all by-products are either converted into other forms of oil or energy. Ako said oil palm is refined to remove cholesterol from it, adding that firms process red oil into vegetable oil because the former may not be stored for long. Around 2010, PZ Cussons Nigeria entered into a joint venture (JV) agreement with Wilmar of Malaysia, with a view to reawakening dead oil palm estates across Nigeria, particularly in Cross River State. The JV became a reality in 2012 when PZ Wilmar acquired the defunct Calaro Oil Palm Estate, formerly owned by Cross River government. Calaro Estate is also known as Biase plantation. PZ Wilmar also has other plantations. The firm also acquired a proximate area known today as Calaro Extension with 2,369 ha. It also acquired Ibiae plantations with 5,595 ha; Ibad plantations in Akampa with 7,805 ha; Kwa Falls in Akampa Akpabuyo with 2,014 ha, and Oban plantations, also in Akampa, with 2,986 ha. PZ Wilmar plantations in Cross River are altogether estimated at 26,318 ha. Target is to hit 50,000 ha in a few years. PZ Wilmar’s investments in oil palm plantations and associated infrastructures in the Cross River State are estimated at N45 billion, Santosh Pillai, managing director, PZ Wilmar company, said. About N20 billion has also been pumped into an oil palm refinery in Lagos. “Plantation establishment and palm oil production are our core business and we have vast experience doing this business in Malaysia, Indonesia, Ivory Coast, Ghana, Uganda and other countries. Nigeria has the biggest market in Africa and is the largest consumer of the palm oil in the region,” Pillai said.

Monday 04 June 2018

C002D5556

BUSINESS DAY

REAL SECTOR WATCH MAN requests policy review to tackle land, tax, credit, energy drawbacks SIKIRAT SHEHU, Ilorin

he Manufacturers Association of Nigeria (MAN) has solicited government intervention through policies to confront challenges relating to land, access to capital, taxes and energy, which are hurting the industrial sector. MAN says such policies are required to reposition local industries, make them positive contributors to state and national development and as well provide lasting solutions to the poverty bedevilling the people. The association, however, posited that governments at all levels have roles to play to avert reoccurrence of such a recession and rebuild the industrial base for sustainable development. K a m o r u d e e n Yu s u f , chairman, MAN, Kwara/ Kogi States branch, stated this at the 4th Annual General Meeting (AGM) of the association held on Thursday in Ilorin, the Kwara State capital. Ac c o rd i n g t o h i m, a number of state policies have over the years threatened the survival of the industries, thereby impeding the realisation of their full potential in national and state industrial development. “In view of the theme for

L-R: Joyce Akpata, director-general, Nigerian-American Chamber of Commerce (NACC); Olabintan Famutimi, President, NACC, and Funke Opeke, CEO, MainOne at the NACC MAY 2018 breakfast meeting held in Lagos on 17th May, 2018.

this year’s AGM, ‘Rebuilding the Post -Recession Nigerian Economy: Government’s Industrial Initiative as Panacea to poverty’, our choice of this theme was informed by the harrowing recession experienced which just swept across Nigeria for over two years,” Yusuf said. He highlighted chall e ng e s c o n f ro nt i ng t h e manufacturers to include: complex bureaucracies in the grant of land for the establishment of industries, undue delays in obtaining certificate of occupancy, heavy and excruciating state

taxes and sundry levies; inadequate loan facilities for industries; moribund industries aid; inadequate power supply; difficult foreign exchange procedure, and high interest rate on insufficient loans, among others. “We solicit government intervention in all the challenges identified so as to reposition our local industries and make them positive contributors to state and national development and as well provide lasting solutions to the poverty that keeps ravaging the people,” he said Yusuf, who is also the chairman of Kam Indus-

tries, further stated that his council would appreciate the logistics assistance of the government in ensuring the involvement of MAN Kwara/ Kogi states branch as the board member of some state related agencies such as the Kwara State Environmental Protection Agency (KWEPA), the Kwara State Internal Revenue Service, (KWIRS), and Kwara State Water Cooperation, among others. This, according to him, is not only legal but necessary for MAN to join forces with the state government and lend their voices to the developmental strides of

the state. He expressed appreciation to the state governor, Abdulfattah Ahmed, for his several interventions on progressive cycle of implementing economic policies to place the industries in the state on the right footing. Frank Udemba Jacobs, president of the association, submitted that the association has been working tirelessly to improve the manufacturing sector of Nigeria. “This, we do, by positively engaging heads of government, its agencies and parastatals on policies that have the potential to impact the real sector.” The president, who was represented by Segun AjayiKadir, director-general of the association, spoke on African Continental Free Trade Area (AFCFTA) agreement, saying, “Most recently, our inter vention resulted in the non-signing of the AFCFTA agreement by Nigeria. “AFCFTA, if signed at this stage of our infrastructural development where we generate our own water, power, our own machines and make payment of electricity bills based on estimation, pay exorbitant fees for other input materials, could decelerate the performance of the manufacturing sector.” The MAN president stressed that the government needed to give serious consideration to supply constraints and agree at the

highest level of government to cushion the possible negative impact of the agreement on the industries. He clarified that MAN is not completely against the agreement as the association’s original contention was that there was inadequate consultation with relevant stakeholders in the country. “We are also concerned that we don’t know the market offer proportion of Nigeria, neither are we assured of the efficacy of the rule of origins provisions that will govern the operations of the AFCFTA.” The AFCFTA is a trade agreement between African member states with the goal of creating a single market, followed by free movement and a single currency union. The guest lecturer at the occasion, Aderemi Medupin, stressed that the government at levels should focus on providing infrastructural development to boost economy. “We cannot fight poverty by alleviating its symptoms but attacking the factors of poverty because there is no excuse for poverty in a wealthy society like Nigeria. We lack proper infrastructure, we do not follow our plans. “Poverty and inequality in Nigeria are not due to lack of resources but the ill-use, misapplication and misappropriation of resources in the country.”

African Foundries bridging demand-supply gap in steel—Structural engineers …firm receives engineers’ endorsement ODINAKA ANUDU

he Institution of Structural Engineers says African Foundries Limited is bridging the gap between demand and supply in Nigeria’s steel sector. The engineers also endorse the company and back it to meet the country’s demand for steel products. The executives of the engineering group, who visited the plant, said they were amazed to see African Foundries fully automated, noting that AFL’s quality standards were high. The engineers said they witnessed the testing procedures which were very

stringent. The endorsement, the institute said, was as a result of the company’s proven track record of churning out quality and durable steel products that had continued to surpass consumer’s expectations, maintaining that it was no surprise AFL was the number one choice for industry giants in the steel industry. Eddy Atumonyogo, president of the Institute, during a facility tour of AFL’s factory, said: “Based on what we have seen, we will let our members know. We have been specifying your Tiger brand for quite some time now and most of the industry giants in the steel industry have also confirmed the

quality of your brands. I am sure this will not be the end of collaboration between the Institute and AFL. We have a lot of programmes

where I can give you visibility when we have our conferences for you to tell us more about your brands.” He acknowledged the

L-R: Gabriel Idahosa, vice president/chairman, Trade Promotion Board, Lagos Chamber of Commerce and Industry; Aremu Olajide, chairman, Technical, Association of Licensed Telecom Operators of Nigeria; Elizabeth Nwajei, executive assistant, central Africa, HP; Babatunde Ruwase, president, LCCI, and Leye Kupoluyi, MD, Universal Power Systems Nigeria Limited, during the media launch of the 2018 ICTEL EXPO in Lagos.

fact that the company had the capacity to meet the nation’s demand for steel products, after listening to a presentation that illustrated that it had installed capacity of about 500,000 metric tonnes per annum. On his part, Bright Ukponu, secretary of the Institute, stated that the company had bridged the demand and supply gap for steel products, adding that it was proving to the world that good and quality products could be produced in the country. He added that the endorsement was required to boost the confidence of consumers in made-inNigeria products which he said would go a long way in

complementing the federal government’s plan to diversify the nation’s economy away from hydrocarbon resources. The institution expressed joy that despite all the challenges hindering the manufacturing sector of the economy, the company had been waxing strong, saying that if the federal government could address infrastructural challenges, Nigeria would be a big player in the global steel industry. The company was commended for being the only CARES certified mill in the country, a certification that is the most respected in the world. The company said it was one of the major exporters of steel products to ECOWAS.

44 BUSINESS DAY NEWS Nigerian banking sector slowly Lifemate Furniture turns 11 returning to stability T

Friday 04 June 2018

C002D5556

…Asset quality issues and declining yield environment remain a challenge OLAMIPO OGUNSANYA,

Sub-Saharan Africa Banking Analyst, Renaissance Capital

a differentiated approach in dealing with the potential shortterm challenges that could constrain earnings growth. We see scope for monetary easing and a 2-ppt cut in the policy rate to 12% by the end of 2018. Loan growth of 10% remains the banks’ consensus guidance for the year, with none expecting significant capital projects to get underway. Instead, they expect loan growth from financing working capital requirements for international oil companies (IOCs), manufacturing and trade finance customers. On noninterest revenue (NIR), the banks noted that volumes and spreads on swap contracts have narrowed. Revaluation gains will continue to feature; NIFEX (currently NGN340/$ vs NGN330/$ at YE17) has become the accepted rate for converting FX-denominated balance sheets and is slowly converging towards the investors’ and exporters’ (I&E) rate of NGN360/$. We highlight other key takeaways from the conference below: Politics: We do not believe politics is a key risk for the banks in 2018. The banks also

mentioned that they will adopt a cautious approach towards lending. Regulation: The banks bemoaned the fact that the effective cash reserve requirement remains above 30%, and they do not see the Central Bank of Nigeria (CBN) lowering this for fear of undermining the FX rate. Deposit growth: There has been no recovery in deposit growth across the sector; we had expected a decline in Tbill yields to be positive for deposit growth as the pressure on deposits in 2017 was partly the result of customers chasing higher yields on government securities. However, according to the banks, our expectations have not quite played out. We now see no strong drivers for deposit growth in the short term. Capital: The implementation of Basel 3, scheduled to take effect by end-2018, is likely to be delayed. According to the banks, the CBN’s focus has been on the implementation of IFRS 9, and that is likely to take priority this year. For most banks, the impact of IFRS 9 has been fully accounted for in their 1Q18 results.

hegiantfurnituremanufacturing company in Nigeria, Lifematefurniturewillclock 11 years this June 2018. To make its anniversary celebration memorable and very exciting to consumers and stakeholders, the leading furniture making company has decided to roll out key celebrative activities under what it has called buy more and get more at a give away price event. Lifemate started its manufacturing operations as a small company at its Ikosi road Oregun, Ikeja current head office location some eleven years ago, and it has since grown to become a household name in quality furniture making in Nigeria. Currently, it has 13 branches spread across Nigeria; and 5 area head offices in Lagos, Abuja, Ibadan, Warri and Port Harcourt. Speaking to journalist on the continued success of Lifemate, the Managing Director of the company Mr. Derick Dai explained that Lifemate has come to make live and living better in Nigeria. He said the company has consistentlymanufacturedquality homefurniture,outdoorfurniture, office furniture, kitchen cabinet, sanitary ware and lately massaging machine to demonstrate its commitment to making the lives of its customers better. He further said that Lifemate products are manufactured here

in Nigeria with global standard in mind. Though few quality accessories are sourced abroad, the raw materials for the company’s products are majorly sourced in Nigeria thereby contributing to the GDP and enhancing government’s efforts to revamp the nation’s economy. In her own response, the Sales Director of the company, Mrs. Allan ... said Lifemate products is now popular among the people of Nigeria. Hence, the company is poised to open more world-class showrooms to ensure availability and easy access to its products in Nigeria. She said the company would need more Nigerians on its workforce in the nearest future to copewiththeincreasingdemands for its products. She said this eleventh year is unique because it coincides with the opening of the largest showroom in Lagos by the company as an avenue to increase its products offerings. Describing the buy more and get more at a give away price season, the Head of Advertising at Lifemate,Mr.YemiAkindelecommended the good gesture of the company to delight its consumers by ways of sales discount promo, price slash, special gifts and stakeholders party. He said most companies wait till festive period to compensateloyalconsumers,but Lifemate consistently give back to reward consumers loyalty.

Oduoza emphasises courage, resilience to aspiring business leaders at Babcock University

n order to start and build a successful business, aspiring entrepreneurs and business owners have been advised to be courageous and resilient, two necessary conditions for overcoming obstacles critical to business growth and success. Chairman of NOVA Merchant Bank Limited, Phillips Oduoza, gave the advice while delivering the convocation lecture to the 2017/2018 Leo Graduating Class at Babcock University in Ilisan Remo, Ogun State. Oduoza, who was the former group managing director/CEO of United Bank for Africa (UBA) plc, said, “Courage and Resilience are character traits common amongst all entrepreneurs who have been successful as it enabled them to take risks and overcome various obstacles on the road to success.” Explaining further, Oduoza stated courage is not the absence of fear but the ability to persist in spite of it while resilience is the ability to recover from or adjust easily to misfortune or change. Oduoza challenged Nigerian youths to take advantage of opportunities currently available in the country, especially in agriculture, FinTech, arts and entertainment. “The government’s focus on the diversification of the Nigerian economy has created opportunities across the agriculture value chain for aspiring entrepreneurs covering inputs (e.g. fertilizer), farming, storage, processing, manufacturing and transportation.

Monday 04 June 2018

NPA seeks presidential intervention to handle agencies’ failure to obey Executive Order

Dangote to launch 200 housing units for IDPs in North East

AMAKA ANAGOR-EWUZIE

another rare gesture from private sector operator Itonahelp government in the

igerian Ports Authority (NPA) has threatened to seek the intervention of Vice President Yemi Osinbajo to handle the high level of non-compliance to the Presidential Order on the Ease of Doing Business at the nation’s seaports by some government agencies. The office of the Vice President oversees the P re s i d e n t i a l E n a b l i n g Business Environment Council (PEBEC), which issued the Presidential Order, also streamlined the activities of all agencies in the seaports in order to achieve the 24-hour cargo clearance. In a statement issued at the weekend, Hadiza Bala Usman, managing director of the NPA, issued the threat in reaction to the complaints by some stakeholders that the level of compliance to the Presidential Order by some government agencies, one year after the order was issued, had left much to be desired. Re ceiving a dele ga tion of the Association of Nigerian Licensed Customs Agent (ANLCA) in her office at the weekend, Usman said that the way some government agents float the order has limited its positive impact and the Federal Government needs to know those floating the rules. According to ANLCA leadership, there are some operational difficulties and encumbrances to doing business at the ports, which explained that some agencies have not fully complied with the order. While assuring that the Authority would continue to fulfil its own part of the order, Usman stated that the organisation has the limitation of compelling other agencies to do what they are supposed to do under the presidential directives. Reacting to the complain on the incessant cases of multiple checks on cargoes exiting the ports by officers of the Marine Police Command, Usman promised that she would report the matter to the Inspector General of Police for necessary action especially as regards the alleged cases of extortion.

rehabilitation of Internally Displaced Persons (IDPs) in parts of the insurgency ravaged areas in the North East, the Aliko Dangote Foundation has concluded plans to commission a multi-billion naira housing estate. The commissioning of the 200 housing units for IDPs in Borno, which has been slated for later this month according to the CEO of Aliko Dangote Foundation, Zouera Youssoufou, is coming even as the Foundation has also completed the construction of a state-of-theart hostel in Ahmadu Bello University Zaria. The 10 block of hostel has the capacity to accommodate 1,440 students conveniently. Youssoufou, who made the disclosure at an event in Maiduguri, Borno state stated that the housing units is one of the many critical interventions the Foundation had mapped out for execution in the North Eastern part of Nigeria to restore life to the area and help IDPs live a normal life again. Governor Kashim Shettima of Borno State while reacting to this development said Mr. Dangote is the single largest benefactor of the IDPs after the Federal and state governments. The governor stated that Dangote’s contribution does not only stop at feeding and clothing the IDPs which he has been doing over the years, it also stretches to resettling and rehabilitating them, a feat no other private organisation has been able to match. Just recently the Aliko Dangote Foundation flagged off its 2018 Ramadan Food distribution in the state with the distribution of food items worth N150 million to some 200 households from Dalori Community in the state. The items include: Rice, Sugar, Salt, Spaghetti, Semolina, Wheat Meal, Maize and Millet. On the 10 blocks of hostel constructed for the ABU, the Group Executive Director, Stakeholders Management and Corporate Communication of the Dangote Group, Ahmed Mansur, said the Aliko Dangote, the chairman of the Foundation was not resting on his oars, as he plans to up his stakes in the act of philanthropy.

CBN mandates banks to pledge N1bn securities for OTC trade settlement HOPE MOSES-ASHIKE

he Central Bank of Nigeria (CBN) on Friday mandated deposit money banks to pledge collateral of N1 billion worth of government/CBN securities for OTC trading settlement. The directive, which takes effect from June 1, 2018, is part of CBN’s efforts to enhance efficiency in trading and post-trade

45 NEWS 2019: Buhari commences issue-based campaign, reels out fact-sheet C002D5556

activities and build confidence in the financial markets. In circular signed by Alvan Ikoku, director, financial markets, the pledge requirement is mandatory for all DMBs that wish to participate in the OTC trade settlement. “Lack of the provision of the pledge or failure to topup a pledge when required will result in exclusion for the market”, the circular reads.

TONY AILEMEN, ABUJA

gainst the backdrop of recent criticisms hinging on poor performance on the economic front, Presidency this week released what it described as “Factsheet” on the achievements of the policies and programme, under the Buhari Administration since it assumed office three years ago. The 41-page document, highlights successes in the economy, security and the fight against corruption – the three priorities of President Buhari’s Change Agenda. The document which is to be updated regularly according to a statement by the Senior Special Assistant to the President on Media and Publicity, Garba Shehu, is warehoused and it opened to public scrutiny on the State House website http://statehouse.gov.ng/ wp-content/uploads/2018/05/ BUHARI-ADMINISTRATION3RD-YEAR-FACTSHEET_MAY29-2018-1.pdf

The document is divided into several subsections such as, Resetting the Economy; Restoring Growth, Growing What We Eat, Making Business Work, Doing More With Less, Investing In People, New Vision for the Niger Delta, Plugging Leakages and Justice Sector Reforms. “The Factsheet, which will be updated regularly, showcases improving economic indices, rising investment in agriculture and infrastructure, successes in the fight against terrorism, and ongoing efforts to improve security in the North Central” The document has also listed several measures taken to promote transparency and accountability in government finances. The Presidency credited the Buhari administration as restoring Nigeria’s economy to the path of growth, after the recession of 2016-17 (1.95 percent growth in Q1 2018), even as it added that the “ Administration’s priority Sectors of Agriculture and Solid Minerals maintained consistent growth

BUSINESS DAY

throughout the recession” Others Include that falling Inflation for the fifteenth (15th) consecutive month, from 18.7 percent in January 2017 to 12.5 percent as of April 2018, External Reserves of US$47.5 billion, regarded as “the highest in 5 years and double the size as of October 2016” Presidency has also harped on increase in exports in 2017, which is 59.47% higher than that of 2016. According to the report also, the “first quarter of 2018 saw the fourth consecutive quarterly increase in capital importation since Q2 2017. The total value of capital imported in the quarter stood at US$6.3 billion, which is a year-on-year increase of 594.03%, and a 17.11% growth over the figure reported in the previous quarter.” Government said its new “Foreign Exchange (FX ) Window introduced by the CBN in April 2017, now sees an average of US$1 billion in weekly turnover, and has attracted about US$25 billion in inflows in its first year (and a total turnover of

$47.14 billion) – signalling rising investor confidence in Nigeria” “Nigeria’s Stock Market ended 2017 as one of the bestperforming in the world, with returns in excess of 40 percent. Federal government said Five (5) million new taxpayers were added to the Tax Base since 2016, as part of efforts to diversify Government revenues, under the current administration, while tax Revenue increased to N1.17 Trillion in Q1 2018, a 51% increase on the Q1 2017 figure. President Buhari said infrastructure development also got a big boost under his administration with N2.7 Trillion spent on Infrastructure in 2016 and 2017 fiscal years, describing it as “an unprecedented allocation in Nigeria’s recent history “ As part of plans to boost agriculture, fourteen moribund Blending Plants revitalized so far under the Presidential Fertilizer Initiative (PFI); with a total capacity of 2.3 million MT of NPK fertilizer.

Phillips Oduoza (l), chairman, NOVA Merchant Bank Limited and Convocation Lecturer, being received by the President/Vice Chancellor, Babcock University , Ilisan Remo, Professor Adeola S. Tayo on his arrival in Babcock University for its University Convocation Lecture held at Ilisan Remo, recently

SEC seeks fiscal incentives for listed firms to deepen market ONUAH YVONNE

ecurities and Exchange Commission (SEC) has advocatedsomemeasureoffiscalincentivesforlistedcompanies on the Nigeria Stock Exchange (NSE) in order to mitigate their cost burden and encourage more entitiestolistsharesonthebourse. Apart from reduction of costs, the measure, according to the SEC, will translate to huge investment benefits to shareholders and also further position the quoted companies to contribute more to national development through improved capacities and job creation potential. The acting director general of the commission, Mary Uduk, who advocated the fiscal necessity on the sidelines of the Alliance Law Firm’s Maiden LectureSeries,

Luncheon and Book Presentation event with the theme ‘Contemporary Corporate Governance Issues in Nigeria’ in Lagos, also believes that creating some form of fiscal incentivesforlistedentitieswilladd further mileage to ongoing efforts to improve corporate governance in the country. Represented at the event by the Director Zonal Offices Coordinating Department, ZOCD, Edward Okolo, the investment expert cited experiences with some investors in the manufacturing sector, who claimed that despite fulfilling their fiscal obligations, the nation’s public procurement and contractual processes had continued to favour foreign companies to their disadvantage. She explained: “Our case for fiscal incentives for listed compa-

nies on the NSE is actually based onexperience.Whatwearesaying is that Nigerian companies doing the same business these foreign companies are doing if they are listed should be encouraged in terms of public procurement or whatever government is doing. “We don’t want to keep taking from them because they incur a lot of cost and you cannot reduce the cost more than a limited amount of percentage. The best is to begin to givethemsomeincentivesandwith thatyouhavemorecompaniescomingtothemarket,youhavemorejobs andthenpeoplewillhavedividends of investing. You must have companies to regulate and if people are not coming to the market, then who are yougoingtoregulate? “The market will create jobs. If you go to Brazil, you go to Asia you see small scale companies

coming to the market. You see fund managers and others playing the roles they are supposed to play. So, we need those incentives to encourage them to come to the market,” Uduk added. At the end of the day she said, Nigerians will get the value in terms of dividend payout if the company is listed, adding that there should be incentives for companies coming out to get listed so that there could be an alternatives to savings by Nigerians. Speaking earlier as one of the panellists at the forum on the level of observance of corporate governance code by listed companies, the SEC boss disclosed that level of compliance with the SEC Code 2011 remained low even as provisionsrelatingtoindependentdirectors’ roles in companies were being violated by some listed companies.

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AMCON Act allows CBN to increase bank levy – Kuru PATRICK ATUANYA

anaging Director/Chief Executive Officer, Asset management Corporation of Nigeria (AMCON) Ahmed Kuru has said that the Central Bank of Nigeria (CBN), has the power to tweak the charges banks currently pay into a resolution cost fund (AMCON levy), imposed on the industry after a bad loan crises necessitated a bailout for the sector. Lenders currently pay a charge of 0.5 percent of assets to the fund which is controlled by AMCON and used to help pay down liabilities incurred from acquiring about 12,537 Non-Performing Loans (NPLs) worth N1.7 trillion from 22 financial institutions, following

…Contributions can continue after sunset clause the 2009 banking crisis. While setting up the trust fund the modelled projection was for Bank assets to grow at about 20 percent per annum, however the reality has been less than 10 percent, leading to a gap in projections versus actual amounts paid by banks into the fund. In 2016 there was a gap of N180 billion, while it was N202 billion in 2017, according to Kuru. “The AMCON act, allows the CBN to increase the rate and contributions can run even if the sunset clause is activated,” Kuru told BusinessDay at an event in Lagos at the weekend to unveil the Corporations 2017 Full Year results. “Payments to the fund is today

running at about N120 billion to N130 billion per annum,” Kuru said. AMCON however currently spends N259 billion on interest payments alone to service its N5.6 trillion in outstanding debt obligations to the CBN. Kuru said AMCON is in the process of dealing decisively with the top assets in its portfolio just as he hinted that Corporation has indeed stepped up its recovery drive in line with its fast approaching sunset. Going by the new stance, the AMCON MD hinted that all obligors of AMCON especially the politically exposed individuals and business heavyweight who hitherto thought they were untouchable will not be spared in

the enforcement process that are being fine-tuned by the recovery agency. Kuru said, AMCON is determined to pursue every obligor in its book with all the powers the laws avail to deal with each and every one of them especially the 350 debtors of AMCON who account for almost 80 per cent of the over N5 trillion huge debt burden, which must be recovered because AMCON borrowed to purchase the Eligible Bank Assets (EBAs) during the first and second phases when it bought over the bad loans from the banks. He continued, “Like I said earlier, we will deal with some of those key assets very soon like the Peugeot Nigeria Limited in

Kaduna, CDL, Aero Contractors, Arik Air and a host of others. But I must tell you, as we close in on these individuals and entities that owe us, I want you to know that they will call us names, they will blackmail us, and they will threaten us, malign and harass us. However, I can tell you that hard as they will try, we will not be deterred in going about our normal duties as mandated by law.” On the 2017 Audited Account, which he described as better than 2016, he said although the Corporation was not established to make profit like commercial banks, it could still return to profit this year after losses in 2017 narrowed as the economy rebounded from its worst contraction in more than two decades. Continues on wwwbusinessday online

Police invites Saraki, Lexus SUV used in Offa... Continued from page 1

people were brutally killed. In a statement signed by Jimoh Moshood, the spokesperson of the Nigeria Police, the police alleged that some of the arrested Offa gang robbery suspects “confessed and volunteered statements that they were political thugs of the Senate President, Federal Republic of Nigeria, Senator Bukola Saraki and the Executive Governor of Kwara State, Abdulfatah Ahmed.” According to the police statement, “investigation into the Offa Bank Robbery and gruesome killings of more than THIRTY THREE (33) Innocent persons in Offa, Kwara State on the 5th April, 2018 directed by the Inspector General of Police, IGP Ibrahim K. Idris, NPM, mni, has made significant progress, successes and more revelations have been recorded. The Gang Leaders and some of the principal suspects arrested for their active participation in the robbery and the killing of innocent persons have made confessional statements admitting to the various criminal roles they and their sponsors played in this dastard and heinous crime. “The Five (5) gang leaders namely; Ayoade Akinnibosun, Ibukunle Ogunleye, Adeola Abraham, Salawudeen Azeez, Niyi Ogundiran and some of the other Seventeen (17) suspects arrested for direct involvement and active participation in the Offa Bank Robbery and the gruesome killing of THIRTY THREE (33) innocent persons which includes (some pregnant women and nine (9) Police personnel) admitted, confessed and volunteered statements that they were political thugs of the Senate President, Federal Republic of Nigeria, Sen. Bukola Saraki and the Executive Governor of Kwara State, Alh. Abdulfatah Ahmed.” “The arrests of the above mentioned Five (5) Gang Leaders and seventeen (17) others were made possible after the arrest of two principal suspects (Kunle Ogunleye aka Arrow 35yrs and Michael Adikwu an Ex-Convict) whose pictures captured by CCTV in one of the Banks during the Banks robbery were circulated to the media and the public. The two (2) principal suspects confessed to be among the suspects led by the five (5) gang leaders listed in paragraph 2 above to carry out the Offa Banks Robbery, the attack on the Divisional Police Headquarters, Offa and the

killings of THIRTY THREE (33) innocent persons on the 5th of April, 2018.” “During interrogation, the five (5) gang leaders mentioned in paragraph 2 further confessed and volunteered statements that they carried out the Bank Robberies, the attack on the Divisional Police Headquarters in Offa and the killings of THIRTY THREE (33) innocent persons. “Millions of Naira from the Banks and Twenty One (21) AK47 Rifles belonging to the Nigeria Police Force in the Armoury of the Police Divisional Headquarters, Offa were admitted to have been carted away by the Five (5) gang leaders and the other Seventeen (17) principal suspects during the Banks robbery.” “The Five (5) gang leaders confessed and volunteered statements to the Police investigators, giving a clear account of how they planned L-R: Oye Hassan-Odukale, MD, Leadway Assurance; Rasaaq Salami, deputy director, National Insurance and carried out the Banks robbery Commission (NAICON); Ebele Nwachukwu, MD, NSIA Insurance, and Toye Odunsi, MD, Custodian and operation in Offa, the attack on the Allied Insurance, at a press conference on the launch of the rebranding the insurance industry in Lagos, at Police Division in Offa and how they the weekend. Pic by Olawale Amoo killed the THIRTY THREE (33) innocent persons during the robbery.” Continued from page 1 “The Five (5) gang leaders further confessed during investigation that they are political thugs under the Abia State, as case study, may suf- viable, the Federal Ministry of Works implementation of the Ariaria stable plans to replicate it around Nigeria name Youth Liberation Movement fer temporary setback. This is due to a court injunction to supply power to universities, ma- power supply scheme. a.k.a “Good Boys” admitted and conThe work seemed to receive a fessed to have been sponsored with procured by Emeka Offor’s Enugu jor markets, and some other centres, huge shock on Friday, June 1, 2018, firearms, money and operational Electricity Distribution Company through the off grid system. This is when a court injunction flew from vehicles by the Senate President, (EEDC) from a federal high court said to hold the prospect of reducing the Unuahia Federal High Court to Bukola Saraki and the Governor of in Umuahia, Abia State capital. pressure on the national grid and Ariaria. EEDC is said to insist that The order is meant to stop work provide alternative power supply Kwara State, Abdulfatah Ahmed.” their purchase of the entire Eastern “ In the course of discreet investi- on the Federal Ministry of Works’ system that is cheaper, stable, regu- Nigeria area under the 2011 privagation into the confessions of these plan to supply uninterrupted and lar and clean, according to industry tisation scheme meant that Ariaria five (5) gang leaders and the other cheap electricity to the famous Ari- insiders who spoke to BusinessDay belonged to them. They are said to seventeen (17) principal suspects, aria market in Aba, Abia State, and Friday evening. be demanding huge sums as ‘damAMESL is said to have acquired ages’ in the court case. a Lexus jeep GX-300 (Ash Colour) boost productivity and revenue with a sticker plate number with generation in the popular market the necessary approval and licenses A competent source in EEDC to begin the Ariaria project which confirmed to BusinessDay that such inscription “SARAKI” “Kwara, State that serves most of West Africa. The Ariaria experiment is said was inspected by the Minister of of Harmony” used by the gang leader an injunction was obtained and (Ayoade Akinnibosun ‘M’ 37Yrs) to be a private sector driven proj- Works, Babatunde Fashiola, and served on Total Support. The source during the bank robbery and the ect with full backing of the Ariaria later by the Vice president, Yemi could not give details because he killing of the THIRTY THREE (33) in- International Traders Association, Osinbajo. President Muhammadu had no authorization to speak to nocent persons was taken to Govern- the Abia State government, and the Buhari is equally said to be keen on the press. ment House, Ilorin on 16th May, 2018 federal government ostensibly to the experiment and could be the One of the investors in AMESL, where the sticker plate number with find solution to power disruptions one to personally commission it in Ubani Nkaginieme, told Busiinscription “SARAKI” “Kwara, State in the country even after privatiza- August 2018. nessDay that AMESL was aware The attractive point of the Ariaria of moves in a court in Umuahia of Harmony” was removed before tion of the nation’s electricity sector. another plate number (Reg. No. Kwara, It is said to be part of the ‘Energise experiment is said to be the hope against the Ariaria Project but said KMA 143 RM) registered in the name the Economy’ project of the present that over 32,000 shop owners who his firm was yet to be served. of Ayoade AKinnibosun the Overall administration aimed at targeting spend a minimum of N600 per day He however described the AriCommander of the Offa Bank Robbery some viable centres for steady sup- to run their generating sets may now aria experiment as a blessing to get steady and clean power supply was then attached to the vehicle to ply of power. The project owner is Ariaria for about half of that cost. This is said the Enyimba City and a win-win cover up the identity of the said vehicle. to the traders, the association, the The exhibit vehicle was subsequently Market Energy Solution Limited to have won the hearts of the trad- investor (AMESL), the Abia State recovered from the premises of the (AMESL) which is to generate and ers and artisans especially as about government, and the federal govMinistry of Environmental and For- distribute off-grid power to the 24 shops have been connected as ernment. He wondered how any 32,000 shops in Ariaria in three sample to show what the real deal estry in Ilorin, Kwara State. phases, starting with the first 12,000 would look like. Other shop own- person would want to stop such a laudable project that could transContinues on wwwbusinessday online shops. Should the experiment prove ers are said to be yearning for full form Aba into a highly productive

Emeka Offor’s EEDC slams ‘stop work’ injunction...

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BUSINESS DAY

FMDQ unveils critical Clearing... Continued from page 1

L-R: Aliko Dangote, president/CE, Dangote Group; Amir Shamsi, managing director, Cadbury Nigeria plc, and Bala Yesufu, director, corporate and government affairs, Cadbury Nigeria plc, during a courtesy visit by Cadbury to Dangote Group corporate headquarters in Lagos.

Stocks gains fade as investors ‘sell in May and go away’ …NSE sees 2018 returns wiped-off, N900bn loss Iheanyi Nwachukwu

n what seems to have followed the trading adage; “Sell in May and go away”, the Nigerian stock market has reversed all the gains made in 2018. Stock investors became worse off following over N900billion loss they booked in the trading week ended June 1, 2018. After returning approximately 16 percent in January, the Nigerian equity market began a free fall that has now seen the stock market return minus 3.73percent year-todate (YtD). At the current levels, many analysts view is that the equities market presents an opportunity for domestic players, in search for a bargain, going into June. They also expect that if the new Pension multi-fund structure is implemented (from July 2018), it will provide a level of support for the stock market. The recent journey into the negative region was further fuelled by a decline of 6.37percent by the Nigerian Stock Exchange (NSE) All Share Index (ASI) in just four trading days of the review week. Though higher than the 3-year average of N3.4 billion, stocks average daily market turnover has fallen

from N8.9 billion in January to N4.4 billion in May. Total transactions at the nation’s bourse decreased by 22.11percent from N272.48 billion recorded in March 2018 to N212.23 billion (about $0.70 billion) in April 2018. The cumulative transactions from January to April increased by 114.22percent from N509.38 billion recorded in 2017 to N1.091 trillion in 2018. Also, foreign transactions reduced by 7.32percent from N132.21 billion to N122.53 billion within the same period. There was a 7.79percent decrease in foreign inflows from N69.71 billion in March 2018 to N64.28 billion in April 2018. Foreign outflows also reduced by 6.8percent, from N62.50 billion to N58.25 billion within the same period. “Initially triggered by profittaking after the January surge, the turn in sentiment has been sustained by the early onset of political jitters ahead of the February 2019 Elections and possible capital reversal as a result of monetary policy tightening in the United States,” said analysts at Lagos-based Vetiva equity researchers in their May 31 note. “In the absence of any other catalysts we foresee sustained

Nigerian banks lead African peers on ROE, .... Continued from page 4

of 31.1 percent and 22.73 percent while trading at price to book ratios of 1.49 times and 2.08 times respectively. Co-operative Bank of Kenya trades at a price to book ratio of 1.49 percent and its stock has returned 17 percent in the past year. Okunrinboye added given the high interest rate environment in Nigeria, Nigerian banks would need to dig deeper than South African peers to command rich P/B multiples which only two banks (GT Bank and Stanbic IBTC) seem to currently be able to do consistently. “Perhaps you can blame this P/B discount on the environment which is what market

pricing seems to also suggest but there is no getting away from it,” Okunrinboye said by mail. Leading financial institutions have upgraded Kenya’s growth prospects for this year, citing a return to political stability after political uncertainties following a bruising presidential contest that put hold on many investment decisions. Also, due to improved rain, agricultural outputs have improved after the biting drought in the first half of 2017 which hit farming activities hardest. The confidence of investors in the economy is also reflected in increased diaspora remittances that hit $210.36 million in first two months of the year and foreign inflows into the Nairobi bourse.

pressure on the market as investors continue to monitor election activities,” Vetiva added. In their view, research analysts at United Capital Plc noted that the downturn came amid sharp sell-offs observed across emerging market (EMs) equities, “driven by capital flow reversal by Foreign Portfolio Investors (FPIs), hammering Emerging Markets (EMs) currencies.” According to the analysts, while the Nigerian naira seems to have maintained an early resilience against the dollar, relative to peers, the local equity market reported one of the largest decline, below Brazil (-10.9percent), Egypt (-10.3percent) and Ghana GSE (-9.2percent), in May. “Although stock market selloff appears to follow the “Sell in May and go away” trading adage, considering the sharp decline observed in May, we think the on-going volatility is linked to the events in the global space. Precisely, policy normalisation in the United States (US), amplified by increasing political and trade uncertainties in the US, European Union (EU), and China alongside the US/Korean talks, are the key concerns,” United Capital analysts said in their June 1 note. Global consulting firm, Mckinsey, stated this in its 2018 report that Nigeria and other African countries provide a refreshing contrast as their markets were fast-growing and nearly twice as profitable as the global average. “African customers have a strong need for affordable financial solutions, which points directly to the second winning practice in African retail banking: targeting the right segments with compelling offers of which Nigeria GT Bank is a good example,” Mckinsey said. The New York based consulting firm said although competition is heightening and regulation is tightening, there is still much room to grow as Africa’s retail banking penetration stands at just 38 per cent of GDP, half the global average for emerging markets. Mckinsey cautions that Africa’s

regulation as key drivers for this development. As part of its continued pursuit to strengthen the Nigerian financial markets, and in a bid to promote settlement finality on products traded, FMDQ activated the Clearing House to deliver highly efficient post-trade services across Nigeria’s fixed income and derivatives markets, addressing some of the key drivers for the development of the markets – risk mitigation, capital efficiency and price transparency, while ensuring safety, stability, confidence and ultimately, inclusiveness in the marketplace. FMDQ Clear, having assumed the responsibility of a critical financial market infrastructure (FMI) in the Nigerian financial market landscape, has commenced initiatives to ensure that its risk management activities underpin its effectiveness, reliability and long-term sustainability, as it strives to resolve key clearing and settlement issues that led to the birth of the franchise, with the development of a robust risk management framework that provides the structure for risk policies, processes and internal control mechanisms to manage, assess and contain the risks posed to the clearing house, in compliance with the global standards set out in the International Organisation of Securities Commissions (IOSCO) Principles for Financial Market Infrastructures (PFMIs). To ensure a full understanding of the needs of the market, and its readiness for growth and development, FMDQ, in 2015, engaged Salonica, an international-based consortium, to conduct a feasibility study on the introduction of OTC derivatives to the Nigerian financial market, and one of the strong recommendations of this study was the activation of a clearing house to ensure certainty of settlement finality and enforceability; promote market confidence among participants, and facilitate orderly markets in periods of stress. Furthermore, in 2017, FMDQ, supported by Frontclear Management B.V. (“Frontclear”), a Netherlands-based development finance company, engaged Catalyst Development (UK) Limited, a specialised consulting company focused on clearing, risk and regulation, to conduct a feasibility study on the activation of a central clearing house infrastructure in Nigeria, culminating in the birth of FMDQ Clear. Furthermore, FMDQ Clear, positioned to becoming a world-class central clearing house, has formally partnered with Frontclear, which provides third-party settlement guarantee funds (SGFs), to further strengthen the clearing house risk waterfall framework, with a third-party settlement guarantee arrangement that improves on settlement finality, a first of such infrastructure in Africa. The SGF is aimed towards mitigating settlement failure, usually triggered by the inability of Clearing/Dealing Members or clients to meet their settlement obligations, and ensuring the complete settlement of trades, thereby mitigating settlement failure by providing compensation on replacement costs (adverse market risk movement) for clients whose trades are not settled on the agreed settlement date due to default of a Clearing/

Dealing Member. The governance structure of FMDQ Clear also conforms to the IOSCO PFMIs, with the Board of Directors chaired by Daisy Ekineh, an independent Non-Executive Director of FMDQ, and a capital market doyen with over 30 years of experience, garnered from various roles, including but not limited to being a former acting Director-General of the SEC, who has played a critical role in driving several policy initiatives in the Nigerian capital market. She was also a Chair of the African and Middle East Regional Committee of IOSCO. She is ably supported by Ahmad Abdullahi, the Director of Banking Supervision of the Central Bank of Nigeria (“CBN”), whose experience in financial system stability will be brought to bear in providing guidance to the Company; Vivien Shobo, the Chief Executive Officer of Agusto & Co Limited, a risk management expert and the Chairperson of the SEC-registered Credit Rating Agencies Association in Nigeria; Bola Onadele. Koko, Managing Director/CEO of FMDQ, an experienced financial market architect, amongst other shareholder representatives also on the Board. The Board will also consist of representatives of Clearing Members such as banks, to ensure that key market participants are duly represented. The establishment of this clearing infrastructure, FMDQ Clear, will greatly contribute to making the Nigerian inter-bank market globally competitive, operationally excellent, liquid and diverse, in line with FMDQ’s GOLD Agenda for the transformation of the Nigerian financial markets, as participating Clearing/Dealing Members will have expanded access and in turn, be better able to serve the needs of their client base and the real economy. The support of and input from key Nigerian financial services regulators, including the SEC, CBN, the National Pension Commission (“PenCom”), as well as the local banking industry and other key market stakeholders cannot be over-looked in the achievement of this milestone in the Nigerian financial markets and such collaborative efforts have helped to place Nigeria on a global pedestal. The recent circular, released by the CBN, directing all deposit money banks who wish to participate in OTC market to pledge a collateral of 1.00bn worth of Government/CBN Securities, in an effort to enhance efficiency in trading and post-trade activities, and build confidence in the financial markets, is a strong indication of its continuous support for the development of the Nigerian financial market. FMDQ, as a change agent, and in its quest towards becoming a fully diversified and integrated market infrastructure, providing a securities exchange – an efficient platform for registration, listing, quotation, noting, trading, order execution and trade reporting within its markets (fixed income, currency and derivatives); a central clearing house – facilitating the clearing, settlement and delivery of securities and financial market products within the Nigerian capital market; as well as offering a full suite of products, inter alia, remains resolute in its commitment to its strategic mandate of aligning the markets within its purview to international standards.

Monday 04 June 2018

BUSINESS DAY

Monday 04 June 2018

BUSINESS DAY

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NEWS Tobacco, alcohol prices to spike soon as Buhari approves new duty rates … no increase in excise duty on other locally excisable products HARRISON EDEH

onsumers of tobacco and alcohol beverages across Nigeria should brace up for new price regime soon, as President Muhammadu Buhari approved an amendment to the excise duty rates for alcoholic beverages and tobacco with effect from Monday, June 4. The President has also granted a grace period of 90 days to all manufacturers before the commencement of the new excise duty regime. There is however no increase in excise duty of other locally excisable products. Minister of finance, Kemi Adeosun, who made this policy announcement over the weekend in Abuja, said in a statement on Sunday that the new excise duty rates were spread over a three-year period from 2018 to 2020 in order to moderate the impact on prices of the products. The minister said the new excise duty regimes followed all-inclusive stakeholder engagements by the Tariff Technical Committee of the Federal Ministry of Finance with key industry stakeholders. According to Adeosun, the upward review of the excise duty rates for alcoholic beverages and tobacco was to achieve a dual benefit of raising the government’s fiscal revenues and reducing the health hazards associated with tobacco-related diseases and alcohol abuse. “The Tariff Technical Committee (TCC) recommended the slight adjustment in the excise duty charges after cautious considerations of the Government’s

Fiscal Policy Measures for 2018 and the reports of the World Bank and the International Monetary Fund Technical Assistance Mission on Nigeria’s Fiscal Policy. “The effect of the excise duty rates adjustment on trade and investment was also assessed by the Federal Ministry of Trade and Investment and it adopted the recommendations of the TTC. Furthermore, peer country comparisons were also carried out showing Nigeria as being behind the curve in the review of excise duty rates on alcoholic beverages and tobacco,” the minister said. Following the President’s approval, she said the new excise duty rate on tobacco was now a combination of the existing advalorem base rate and specific rate while the ad-valorem rate was replaced with a specific rate for alcoholic beverages. “For alcoholic beverages, the current ad-valorem rate will be replaced with specific rates and spread over three years to moderate the impact on prices. This will curb the discretion in the Unit Cost Analysis (UCA) for determining the ad-valorem rate and prevent revenue leakages,” she said. Regarding tobacco, she noted, “the government will maintain the current ad-valorem rate of 20 per cent and introduce additional specific rates with the implementation to be spread over a three-year period to also reasonably reduce the impact on prices.” Under the newly approved excise duty rates for tobacco in addition to the 20 per cent ad-valorem rate, each stick of cigarette will attract a N1 specific rate per stick (N20 per pack of

20 sticks) in 2018, N2 specific rate per stick (N40 per pack of 20 sticks) in 2019 and N2.90k specific rate per stick (N58 per pack of 20 sticks) in 2020. The Minister explained that Nigeria’s cumulative specific excise duty rate for tobacco was 23.2 percent of the price of the most sold brand, as against 38.14 per cent in Algeria, 36.52 percent in South Africa and 30 percent in Gambia. The new specific excise duty rate for alcoholic beverages cuts across beer and stout, wines and spirits for the three years 2018 to 2020. Under the new regime, beer and stout would attract N0.30k per centilitre (Cl) in 2018 and N0.35k per Cl each in 2019 and 2020. Wines would attract N1.25k per Cl in 2018 and N1.50k per Cl each in 2019 and 2020, while N1.50k per Cl was approved for Spirits in 2018, N1.75k per Cl in 2019 and N2.00k per Cl in 2020. The minister added that the new excise duty regimes were in line with the Economic Community of West African States (ECOWAS) directive on the harmonisation of member-states’ legislations on excise duties. It would be recalled that the ECOWAS Council of Ministers had at its 62nd and 79th Ordinary Sessions in Abuja in May 2009 and December 2017, respectively, issued directives on the harmonisation of the ECOWAS Member States’ Legislations on Excise Duties. The directives seek to harmonise member-states’ legislations on excise duties of non-oil products and also stipulate the scope of application, rate of taxation,

Monday 04 June 2018

BUSINESS DAY

Monday 04 June 2018

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Banana island residents disrupt Army’s Apple Island project

RMB Nigeria engages stakeholders on sustainable growth, economic diversification

he downturn in the oil price over the past five years, coupled with changing global trade policies and the emergence of alternative regional economic destinations, has once again highlighted the need for the Nigerian economy to diversify beyond the production of oil. Consequently, as part of activities to mark its five years anniversary celebration, Rand Merchant Bank (RMB) Nigeria has concluded plans to engage industry stakeholders including investors, corporates and policymakers, in a dialogue on the pr incipal building blocks that promote investment and economic growth in Nigeria, as well as discuss lessons learnt by experienced captains of industry, which have influenced investment and economic diversification in the country. The conference scheduled to hold in June 7, will focus on ‘Connecting the Building Blocks to Drive Inclusive and Sustainable

esidents of Banana Island e s t at e i n L a g o s Sa t u rd ay disrupted an attempt by the Nigerian Army to take over the estate’s children’s playground and the adjoining recreational area to create an access to an “Apple Island” being promoted by some private groups working with the Nigerian Army’s Properties Limited (NAPL). The first indication of trouble was noticed on Friday, when a detachment of soldiers was sent to the elite estate to take position at the estate gate as well as the piece of land, earmarked for the estate’s boat club house. The men brought down signs erected by the residents’ association and erected another sign on the property. E a r l y t h e n e x t d ay , another set of soldiers and mobile policemen arrived the estate early in the morning ostensibly to secure the estate ahead of the planned visit by the Chief of Army Staff, Gen-

eral Tukur Buratai. When the army chief arrived minutes after noon, he was met by a delegation of angry residents and property owners who denounced the invasion by soldiers and went on to painstakingly presented their case. The protest by the residents, while vocal, was peaceful during the entire period the army chief spent in the estate. Chairman of the residents’ association Charles Ubosi expressed surprise that the army and its repres ent at ives s ought to forcibly enter the estate, take over private property and then build an access to a massive development of 43 hectares to emerge from the waters off the estate. He said while the residents of the estate slept the day before a detachment of soldiers took position in locations in the estate without any consultation with property owners. “If allowed, the army will go ahead to build a highway and thoroughfare right in the middle of

the estate, deny children of their playground, and open the estate to yet unestimated environmental degradation that will follow the displacement of water from a patch as massive as 43 hectares,” Ubosi said. Burutai, who apparently had not been properly briefed, was accommodative and refraining from going ahead with the elaborate arrangements that had been made for him by leaders of NAPL. The army boss assured the residents and property owners that the army would not forcibly take any private property, and then directed his men to seek an alternative access to the planned island. As a mark of respect for the concerns of the property owners and residents, Burutai stopped short of cutting the tape that had been provided for him to inaugurate the Apple Island project and signal the formal commencement of work. He also directed his men to put back the estate sign that they had removed.

HOPE MOSES-ASHIKE

A7 NEWS

BUSINESS DAY

Growth: Investment and Economic Diversification’. The keynote speakers are Vice President Yemi O s i n b a j o, O k e c h u kw u Enelamah, minister of trade and industry, while the key discussants include Amine Mati, senior resident representative, IMF, Yewande Sadiku, executive Secretary, NIPC, Enase Okonedo, RMBN non-executive, Kunle Alake, GMD, Dangote Group, Doyin Salami, an economist, Andrew Alli, CEO, AFC, Funke Opeke, CEO, MainOne Cable Company, Raj Gupta, CEO, AIG, Mitchell Elegbe, CEO, Interswitch, and Eme Essien, CEO, IFC. Michael Larbie, CEO Rand Merchant Bank Nigeria said he is positive the conversations at the upcoming Business conference will stimulate the minds of the participants and stakeholders to support and drive the ongoing diversification efforts of the current administration. RMB Nigeria is an integral part of RMB, a division of FirstRand, one of the largest financial services groups in Africa.

NNPC dismisses rumour of impending N36bn royalty to Alesa-Eleme community HARRISON EDEH, Abuja

anagement of the Nigerian National Petroleum Corporation (NNPC) has dismissed insinuation of an approved N36 billion compensation said to be due to Alesa-Eleme community in Rivers State as royalty for playing host to the Port Harcourt Refining Company, a subsidiary of the corporation. Ndu Ughamadu, group general manager, Group Public Affairs Division of NNPC, in a statement on Sunday, traced the origin of the phantom compensation story to a traditional ruler regarded as a claimant to the Alesa-Eleme traditional stool. According to the corporation, the said traditional ruler went to town with the fake story after a purported meeting with the minister of state for petroleum resources and board chairman of the corporation, Ibe Kachikwu. NNPC affirmed that checks with Kachikwu indicated that no such meeting at which any such approval or promises were made took place, noting that the apparently fabricated story was designed to cause disharmony between the NNPC and the hospitable Alesa-Eleme community.

BUSINESS DAY

Monday 04 June 2018

BUSINESS DAY

A10 BUSINESS DAY NEWS NUPENG issues 21-day ultimatum to IOCs JOSHUA BASSEY

igeria Union of Petroleum and Natural Gas Workers (NUPENG) on Sunday issued a 21-day ultimatum to international oil companies (IOCs) and employers in the oil and gas industry to stop unfair labour practices or face sanction. Williams Akporeha, NUPENG president, said at a news briefing in Lagos that over 500 contract workers engaged by some IOCs including Chevron had not been paid. “Some of them have died, some are roaming the streets,” Akporeha said, saying apart from not paying their salaries, the companies had continuously ill-treated the workers who were also casuals. He said the companies do not allow unionisation, refuse collective bargaining negotiation, non-payment of end of contract benefits and practice other anti-labour activities. ‘’This is alien to our extant industrial rules. Some of the workers have died, while others are roaming the streets because they could not get their money. “A prominent oil company who is among the debtors claimed that it cannot locate the contractor who hired the workers to do the job. This is sad,” Akporeha said. He said the union was dismayed about the activities of some contract workers’

contractor that were engaged by some oil companies who refused to pay workers their benefits after their service. The unionist urged the oil companies to prevail on such contractors to do the needful as it was criminal and a slap on the government. He further said it was unfair that the Nigeria Association of Road Transport Owners (NARTO) had also failed to implement the 2016 agreement reached with the union on tanker drivers. “It is few months to the expiration of the agreement and Petroleum Tanker Drivers have shown considerable tolerance and endurance in denial of their rights,’’ he said. He noted that these workers had risked their lives to contribute to development of the economy, especially in the downstream value chain. He stated that the union was against multinational companies enslaving the workers and causing them to live in precarious condition. The union leader warned that the case would be reported to the world body to take decisive action if the organisations failed to respect the government and its laws and settle the workers. He said the ultimatum would take effect from Monday, and urged the affected organisations to resolve contending issues to avoid further action.

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UN, group mark International Cycling Day in Lagos JOSHUA BASSEY

nited Nations (UN) in partnershipwithCycology Club, a non-profit organisation, at the weekend, in Lagos, markedthefirsteverInternational Cycling Day. TheUNrecentlydeclaredJune 3, as International Cycling Day, as a way of encouraging the culture of bicycle riding and promotion of clean environment. Bimpe Olufemi, captain of the CycologyClub,whoaddressedthe mediaafterleadingmembersona bicycle ride in Ikoyi, said it was to promote a healthy lifestyle. “Cycology is a cycling club withover300registeredmembers. It was founded in 2011 by a few cyclists to promote cycling as a healthylifestyle,andcreateawareness on social issues. “Other cycling organisations have been birthed as a result of Cycology, many of which we have strong collaborations with: African Cycling Foundation and Sustainable Cycling Foundation, to mention a few. Together we have worked very hard to deliver aspects of the World Bicycle Day initiativesasstipulatedbytheUN,” Olufemi said. Olufeminotedthatthecycling world in Nigeria, which started off as a small community, was fast growing, and that government bodies were beginning to take cognisance of the developments. “There are indicators that suggest ongoing discussions at various levels of government to change the landscape of cities like Lagos, Abuja into environmentally friendly, cycling cities. Not only does this make sense

financially because of its positive health impact on society, but it also reduces public transportation dependency thus opening up opportunities for growth in rural areas. “We urge our government to fully sign up to this initiative and develop policies and strategies aligned to the vision, followed with strong execution,” she said. She said the cycology on its part, planned to work with governmental bodies to deliver one three key objectives. These, according to her, include ‘share the road’ campaign, launched on 7th April this year, to educate and create awareness among road users,theaimbeingtoprovidethe knowledge so that we have fewer deaths on the roads. “We applaud the United Nations for making this day a reality globally.Eachyearaswecelebrate thisday,wewillmoveclosertoour goals of sustainability, environmental friendliness and a healthy global community,” she said. Ronald Kayanja, director, UNIC, Lagos, explained the reasons why the UN declared June 3 as International Cycling Day. According to Kayanja, it is to encourage the use of bicycles as tools of empowerment, as people including women and youths can use bicycles to move their products to the markets. Kayanja said it was meant to improve the environment. According to him, in line with the millennium development goal 13, the use of bicycles will help in reducing the amount of carbon monoxide emission from massive use of cars as means of transportation.

The proposed Apple Island Project by the Nigerian Army Properties Limited (See story on page A7)

Ebola: Enugu airport reinforces passengers’ screening, partners WHO IFEOMA OKEKE

s part of its efforts to contain the spread of the deadly Ebola Virus Disease (EVD) that broke out recently in the Democratic Republic of Congo, Akanu Ibiam International Airport (AIIA), Enugu, had since commenced full blown thermal and body screening of all passengers coming in and going out of the international airport. Mgbemena Orjiako, airport manager of AIIA, Enugu, who disclosed this to journalists at the weekend, said the airport

had also been able to get the cooperation of the World Health Organisation (WHO), which had assisted in giving sensitisation talks with all the agencies in the airport. According to Mgbemena, the talks, which are not only centred on Ebola, also extend to other communicable diseases that are possibly moveable through the air or by means of air travel. “You know air travel is the quickest means of moving around from continent to continent. So if there is a contagious disease of such magnitude it can easily move from country

to country. So, WHO has been here and has equally assisted us in giving talks on how to tackle it and what to watch out for and what to do to prevent the spread,” Orjiako said. On what the airport is doing to avoid any spread, the airport manager said that the Port Health Authority (PHA) in collaboration with other agencies at the airport had held an emergency meeting where they carefully planned on how to forestall Ebola Virus Disease (EVD) at the airport. He said Enugu airport was very serious on controlling the

Ebola outbreak in DR Congo because international flights are coming into the airport three times a week. Orjiako noted that the airport had also created an area where they can take away any passenger that was discovered to have an abnormal temperature. “That area in the arrival hall where we keep them and also check their temperature discreetly while they are coming in without their knowing. We also have sanitisers in different corners at the airport where people can wash up themselves”,he said.

Monday 04 June 2018

Nigerian youths canvass for financial inclusion, women’s empowerment BUNMI BANJO

group of young Nigerians under the auspices of ‘One Young World’ in a dialogue on financial inclusion convened in Lagos, weekend, canvassed for more financial freedom and women’s empowerment in building Nigeria’s future. The group believe that while technology and financial services may be providing more access to economic participation, women remain vastly under-empowered and Nigeria faces a significant challenge with lack of trust in institutions. A panel convened by One Young World’s Africa local organising committee, led by Catherine Peter, comprised One Young World ambassadors - Kennedy Ekezie and Tife Soloye alongside Chinwe Egwim of FBNQuest Merchant Bank, Bola Adeeko of the Nigerian Stock Exchange, Amaka Nwaokolo of FATE Foundation, and Orode Uduaghan of Exclusive Brands Africa. Gbolade Okeowo, West African coordinating ambassador, said the dialogue presented an opportunity to showcase what One Young World was all about, which was connecting young leaders and amplifying their voices. According to Orode Uduaghan, there is a need to think about the cultural biases that women have to deal with on

a daily basis – not just for women in the rural areas, but women in urban communities too. “The gender pay gap applies also to rural women who work on farms and there are also serious cultural biases in health.” In discussing economic participation, audience commentary concluded there was a need to learn how to communicate with youth and marginalised communities at every level, and that there was an opportunity to demystify institutions and the economy, which could have profound effects on whole communities as well as rebuild trust. Tife Soloye, a One Young World ambassador, highlighted the vast lack of access to basic feminine hygiene products and knowledge and that girls still had to fight for an education, saying, “We have more women in Nigeria than men, and there is still a huge disparity in pay and financial inclusion,” and highlighting the possibility that it could take 200 years to close the pay gap between men and women. It was highlighted that, whilst the tools at hand such as mobile and technology have made transacting, for example, easier and more accessible, there are serious cultural forces p re ve nt i ng p a r t i c u l a r l y women from participating economically.

Monday 04 June 2018

BUSINESS DAY

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A15 NEWS

BUSINESS DAY

FG spends over $9bn on infrastructure in 3yrs - Lai Mohammed OYIN AMINU, Abuja

ederal Government has spent over $9 billion on the building of infrastructure since the commencement of Buhari’s administration, minister of information and culture, Lai Mohammed, said on Sunday. Mohammedsaidthisatapress briefing in Abuja to commence the three-day 61st meeting of the UN World Tourism Organisation UNWTO-CAF, which begins on Monday in Abuja. Explaining that the increased infrastructuraldevelopmentacross the country has helped attract moreforeigninvestors,theminister said this led to Nigeria’s improved ranking on the World Bank global ease of doing business. The theme of the UNWTOCAFmeetingis,“TourismStatistics: A Catalyst for Development’’ and according to the minister, this fits very well into Nigeria’s quest to improve on her tourism statistics forplanningpurposesandtheultimate development of her tourism. About 166 foreign delegates, 26 ministers and 332 Nigerian delegateshaveconfirmedattendance while many more are still being expectedforthemeetingwhichseeks to explore how tourism can be better deployed for development. “Allthenecessarypreparations have been made to ensure this. The main committee, as well as the many sub-committees, have workedtirelesslytomakethisevent

a huge success. We also expect an impressiveattendance.Asattoday, we have confirmation from 166 foreign delegates, 26 ministers and 332 Nigerian delegates, excluding the gentlemen of the press. Several delegates have arrived and many more are expected in today.” He said the meeting is being hosted in Abuja following huge successesrecordedbyBuhari’sadministration in fighting insecurity. “Four years ago, hosting this event in Abuja would have been a pipe dream, considering the level of insecurity,” he said. “Nigeria is safe and secure for its citizens and for foreign tourists and investors. Whatever pockets of criminal acts that exist are being addressed squarely.” Some of the highlights, the minister said include the opening ceremony, to be performed by President Muhammadu Buhari, followed by Ministers’ meeting. The meeting is expected to wrap up on Wednesday by the Technical Visit of the delegates to the Eko Atlantic City in Lagos. Mohammed said Nigeria will also use the event to showcase of the rich and diverse culture of Nigeria; the Seki Dance Drama from the South-South, the commandperformanceofthegloballyacclaimed ‘Fela and the Kalakuta Queens’byBolanleAusten-Peters, the Drum Assembly, the Ekemini DancegroupfromAkwaIbom,the Benue State Cultural Troupe, and the Ebonyi State Cultural Troupe.

NERC jettisons multi-year tariff order STEPHEN ONYEKWELU

he Nigeria Electricity Regulatory Commission (NERC) has jettisoned the Multi Year Tariff Order (MYTO) with which it regulates the cost of electricity in the Nigeria Electricity Supply Industry (NESI). James Momoh, chairman of Nigeria Electricity Regulator y Commission (NERC) spoke May 30, in an interview, at NERC building, Abuja. The purpose of the MYTO is to set cost-reflective tariffs which will allow the power sector to be properly funded and functional. Momoh said the commission under his watch, shall not adopt the MYTO software that was handed over to him because as a programmer, he does not believe in it. The essence of the method, he said, is to cross check whether consumers are being cheated with the computation.

He said he has already raised a team of first class workers in the commission to calculate what it costs to produce electricity from the gas to power plants to the generation front, distribution and finally to the consumers. Multi Year Tariff Order (MYTO) is a methodology used for determining tariffs across the electricity value chain. MYTO sets a 15 year tariff path with bi-annual minor reviews (taking cognisance of macroeconomic indicators such as inflation rates, cost of fuel and exchange rate) and 5 yearly major reviews. Since the change in the Government electricity subsidisation policy, and in order to ensure financial sustainability of the Electricity Supply Industry, the Electricity Regulatory Authority through consultation with stakeholders established a quarterly tariff review methodology.

L-R: Ismaila Zakari, immediate past president, Institute of Chartered Accountant of Nigeria (ICAN); Yetunde Onanuga, deputy governor, Ogun State, and Rasak Jaiyeola, president, ICAN, during the 54th investiture of ICAN president in Lagos, at the weekend. Pic by Olawale Amoo

Private company CEO’s lagging in Travel passenger demand growth digital talent push —PwC survey slowed in April – IATA …says cyber threat, global market their biggest fears OLALEKAN IPELE

wC’s 21st CEO Survey has shown that nearly three quarters, representing 74 percent of private-company CEOs are lagging in digital talent push. The CEOs covered are concerned about the availability of digital talent amongst their workforce, and 50 percent say it is very or somewhat difficult to attract digital talent. Operating in a world of growing complexity and wideranging risks, private-company CEOs are freer to operate with a degree of agility, flexibility, and pragmatism than many of their counterparts at public companies. However, cyber threats, global market uncertainty and a shortage of digital talent are still key concerns for private-them. Despite these concerns, CEOs are optimistic about the future. In fact, 85 percent of them say they are somewhat confident or very confident about their organization’s prospects for revenue growth over the next 12 months. Another leading concern is the uncertain future of trading relationships, caused by reasons such as the UK’s impending exit from the European Union and rising protectionism in the US, which is driving private companies to seek new markets. 67 percent of the private companies that made a significant acquisition within the past 12 months did so mainly to gain access to a

new market. Another leading concern is the uncertain future of trading relationships, caused by reasons such as the UK’s impending exit from the European Union and rising protectionism in the US, which is driving private companies to seek new markets. 67 percent of the private companies that made a significant acquisition within the past 12 months did so mainly to gain access to a new market. Although private-company CEOs see how digital technologies offer their companies new opportunities, they also see how it creates new threats and wonder if they are prepared for the changes to come. In particular, 57 percent of CEOs of family-owned companies say attracting digital talent is very or somewhat difficult, in contrast to only 48 percent of private equity-backed companies who report similar levels of difficulty. At the same time, though, private companies trail other types of companies in developing and employing coherent strategies to attract digital talent, only 39 percent of private-company CEOs say their organizations have implemented continuous learning and development programs, compared with 46 percent of CEOs of publicly listed companies, and only 14 percent are relocating their operations to be closer to digital talent pools.

IFEOMA OKEKE

heInternationalAirTransport Association (IATA) has announced global passenger traffic data for April 2018, showing that demand (revenue passenger kilometers or RPKs) rose by 6.2 percentcomparedtoApril2017,which wasdownfroma12-monthhighof 9.7 percent in March. Comparisons with the previous year are impacted by developments, including the comparatively late timing of Easter in 2017, which boosted April traffic. April capacity (available seat kilometers or ASKs) increased by 5.9 percent, and load factor climbed 0.2 percentage point to 82.3 percent, which was a record for the month of April, surpassing last year’s record of 82.1petcent. “Demand for air transport continues to be above the longterm trend. However, increases in airline cost inputs, most notably fuel prices, means that we are unlikely to see increased stimulation from lower fares in 2018, compared to previous years,” Alexandre de Juniac, IATA’s Director General and CEO, said. April international passenger demand rose 4.8 percent compared to April 2017. All regions recorded year-over-year traffic increases but all were behind the pace of growth reported in March. Total capacity climbed 4.9 percent, and load factor slipped 0.1 percentage point to 81.4 percent

Asia Pacific carriers posted an 8.5 percent traffic rise in April, strongest among the regions. It was the first time since December 2017 that Asia-Pacific airlines led in growth. Passenger traffic has continued to trend upwards at an annualized rate in the region of 10 percent supported by robust regional economic expansion and ongoing growth in the number of flight options, which translates into time savings for passengers. Capacity rose 7.6 percent and load factor improved 0.6 percentage point to 81.0 percent. European airlines’ April traffic increased 3.4 percent compared to the year-ago period. While this was down compared to the 9.8 percent year-overyear growth recorded in March, demand picked up in April in seasonally-adjusted terms. Capacity rose 4.0 percent. While load factor dipped 0.5 percentage point to 84.6%, it still was highest among the regions. African airlines’ had a 5.1 percent traffic increase in April. Capacity rose 4.6 percent, and load factor edged up 0.4 percentage point to 72.8 percent. The upward demand trend remains strong, helped by continuing signs of improvement in the region’s largest economies: Nigeria and South Africa. This is only the fourth time in the past 41 months that both economies have been on an upward trajectory at the same time.

New land reforms seen aiding ease of doing business in Lagos JOSHUA BASSEY

agos is undertaking critical reforms in land transactions including the automation of land administration in what is likely to count for Nigeria’s quest for a better showing in the ease of doing business ranking. The reforms, among other things, will cut down on the time spent by members of the public, organisations and investors in processing and closing land-related transactions

with the state government. Key among the reforms is the harmonisation of Demand Notice and Assessment Letter to encompass all fees payable for Governor’s Consent on a property. Others include the introduction of automated searches at the land registry as well as the redesigning of the layout of the land registry to ensure the flow of processes with the ultimate aim of reducing turn-around-time. The harmonisation of the demand notice simpli-

fies the hitherto back and forth arrangement in which customers were required to interface with offices to seal transactional deals relating to payment of consent fee, stamp duty, capital gain tax, registration fee among others. Yetunde Onabule, the special adviser to the state government on urban development, who confirmed this to BusinessDay, said with the reform, the demand notice has harmonised fees to include consent fee, capital gain tax, stamp duty, registration

fee, neighbourhood improvement charge, charting fee as well as endorsement and Form 1c charges. “This new payment schedule affords applicants the opportunity to pay all fees related to the issuance of Governor’s Consent in a single transaction,” said Onabule. According to her, in addition to the newly introduced payment regime, the automated searches at the land registry are now conducted within one hour of submission of any request, which

means that applicants are no longer required to conduct, search prior to registration of title documents as had been the case in the past. “With this new process, there is already a significant reduction in the time frame for obtaining Certified True Copies (CTC) of the land title documents to a maximum period of two hours. “I have no doubt that by the time these initiatives are fully implemented; they will revolutionize land administration, not only in Lagos

State, but also in Nigeria. Our commitment is also to the country’s place in the ease of doing business up to 50 places,” Onabule said. Nigeria is ranked 145th position in the World Bank’s ease of doing business index. The World Bank in its recent report titled “Doing Business 2018: Performing to create jobs” said Nigeria moved up 24 points from 169 position on the 2017 ranking and also 170th position on the 2016 ranking to 145 in Bank’s 2018 report.

A16

BUSINESS DAY

Monday 04 June 2018

Live @ the Stock exchange Prices for Securities Traded as of Friday 01 June 2018 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 316,761.29 10.95 5.29 333 144,570,216 UNITED BANK FOR AFRICA PLC 376,193.64 11.00 1.85 184 59,979,214 800,610.59 25.50 -0.20 402 55,516,522 ZENITH INTERNATIONAL BANK PLC 919 260,065,952 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 364,337.22 10.15 -0.49 248 6,806,169 248 6,806,169 1,167 266,872,121 BUILDING MATERIALS DANGOTE CEMENT PLC 3,800,033.15 223.00 -7.08 170 1,140,514 LAFARGE AFRICA PLC. 294,896.56 34.00 -2.30 97 1,206,847 267 2,347,361 267 2,347,361 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY LTD 435,448.98 740.00 -0.43 17 27,401 17 27,401 17 27,401 1,451 269,246,883 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 6 212,906 76,312.80 80.00 - 27 187,327 OKOMU OIL PALM PLC. PRESCO PLC 75,000.00 75.00 - 11 10,255 44 410,488 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 1 10 1 10 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 2,310.00 0.77 - 10 154,237 10 154,237 55 564,735 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 1,403.06 0.53 - 4 7,200 221.82 0.57 - 0 0 JOHN HOLT PLC. S C O A NIG. PLC. 2,111.93 3.25 - 1 10 50,809.99 1.25 -0.79 103 7,077,609 TRANSNATIONAL CORPORATION OF NIGERIA PLC U A C N PLC. 42,355.06 14.70 - 39 300,906 147 7,385,725 147 7,385,725 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 1 100 1 100 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 36,366.00 27.55 - 15 67,511 ROADS NIG PLC. 165.00 6.60 - 0 0 15 67,511 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT CO. LIMITED 5,326.71 2.05 -4.21 11 520,000 11 520,000 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 2,000.00 100.00 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 11,300.89 45.20 - 0 0 26,682.70 10.00 - 1 87 UPDC REAL ESTATE INVESTMENT TRUST 1 87 28 587,698 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 1,431.80 0.30 - 3 2,548 3 2,548 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 15,658.99 2.00 - 21 469,718 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 208,086.37 95.00 -5.00 53 1,310,609 INTERNATIONAL BREWERIES PLC. 345,553.65 40.20 -9.66 41 448,832 NIGERIAN BREW. PLC. 823,680.91 103.00 -4.54 306 12,089,540 421 14,318,699 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 45,250.00 9.05 -2.16 91 1,459,464 DANGOTE SUGAR REFINERY PLC 209,400.00 17.45 - 48 169,714 FLOUR MILLS NIG. PLC. 127,521.81 31.10 - 76 501,323 HONEYWELL FLOUR MILL PLC 17,446.43 2.20 -4.35 78 3,115,482 MULTI-TREX INTEGRATED FOODS PLC 1,489.00 0.40 - 2 200 N NIG. FLOUR MILLS PLC. 1,167.21 6.55 - 2 400 NASCON ALLIED INDUSTRIES PLC 50,339.33 19.00 - 14 35,211 UNION DICON SALT PLC. 3,676.41 13.45 - 0 0 311 5,281,794 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 23,477.53 12.50 - 22 82,740 NESTLE NIGERIA PLC. 1,133,498.44 1,430.00 -2.89 71 181,358 93 264,098 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 2 2,001 VITAFOAM NIG PLC. 3,439.82 3.30 - 23 1,161,150 25 1,163,151 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 86,754.92 21.85 - 8 15,062 UNILEVER NIGERIA PLC. 295,580.53 51.45 - 33 328,622 41 343,684 894 21,373,974 BANKING DIAMOND BANK PLC 32,192.94 1.39 4.51 97 7,853,326 ECOBANK TRANSNATIONAL INCORPORATED 348,641.47 19.00 -2.56 59 2,460,439 FIDELITY BANK PLC 57,659.85 1.99 4.74 225 20,782,706 GUARANTY TRUST BANK PLC. 1,137,515.08 38.65 -4.57 316 24,008,634 JAIZ BANK PLC 19,741.05 0.67 4.69 17 2,626,100 SKYE BANK PLC 9,577.41 0.69 -1.43 36 1,536,561 STERLING BANK PLC. 36,851.74 1.28 -1.54 341 14,642,818 UNION BANK NIG.PLC. 161,620.18 5.55 - 56 466,795 UNITY BANK PLC 10,169.72 0.87 - 8 375,924 WEMA BANK PLC. 28,159.36 0.73 -3.95 31 1,193,394 1,186 75,946,697 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE COMPANY PLC 4,117.00 0.20 - 2 7,000 AIICO INSURANCE PLC. 4,019.52 0.58 -1.72 30 2,742,132 AXAMANSARD INSURANCE PLC 26,250.00 2.50 - 2 21,433 CONSOLIDATED HALLMARK INSURANCE PLC 2,170.00 0.31 -6.06 13 374,230 CONTINENTAL REINSURANCE PLC 14,833.02 1.43 - 4 109,924 CORNERSTONE INSURANCE COMPANY PLC. 5,155.33 0.35 - 1 8,000 EQUITY ASSURANCE PLC. 2,800.00 0.20 - 6 31,500 GOLDLINK INSURANCE PLC 2,411.47 0.53 - 0 0 GREAT NIGERIAN INSURANCE PLC 1,913.74 0.50 - 0 0 GUINEA INSURANCE PLC. 2,456.00 0.40 - 1 100 INTERNATIONAL ENERGY INSURANCE COMPANY PLC 539.32 0.42 - 0 0 LASACO ASSURANCE PLC. 2,782.90 0.38 -2.56 55 16,059,497 LAW UNION AND ROCK INS. PLC. 3,866.70 0.90 -4.26 1 350,639 LINKAGE ASSURANCE PLC 6,640.00 0.83 - 7 641,997 MUTUAL BENEFITS ASSURANCE PLC. 3,040.00 0.38 2.70 15 2,175,295 N.E.M INSURANCE CO (NIG) PLC. 13,518.09 2.56 -0.39 43 9,439,750 NIGER INSURANCE CO. PLC. 1,934.87 0.25 4.17 1 200,000 PRESTIGE ASSURANCE CO. PLC. 1,832.36 0.48 - 0 0 REGENCY ALLIANCE INSURANCE COMPANY PLC 1,667.19 0.25 -3.85 3 106,100 SOVEREIGN TRUST INSURANCE PLC 2,252.02 0.27 3.85 10 73,037,500 STANDARD ALLIANCE INSURANCE PLC. 5,422.63 0.42 - 1 5,000 4,483.72 0.48 - 1 1,000 STANDARD TRUST ASSURANCE PLC UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 15 630,160 UNIVERSAL INSURANCE COMPANY PLC 8,000.00 0.50 - 0 0 VERITAS KAPITAL ASSURANCE PLC 4,298.67 0.31 -3.12 6 422,336 WAPIC INSURANCE PLC 6,557.54 0.49 -2.00 62 2,706,754 279 109,070,347

Company MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 4,413.21 1.93 - 24 354,430 24 354,430 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 5,460.00 1.30 - 0 0 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 5,664.87 0.50 - 0 0 RESORT SAVINGS & LOANS PLC UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,940.00 3.97 - 51 293,780 28,703.50 4.88 1.67 14 521,595 CUSTODIAN AND ALLIED PLC DEAP CAPITAL MANAGEMENT & TRUST PLC 720.00 0.48 - 1 100 FCMB GROUP PLC. 43,169.91 2.18 -3.96 62 2,014,548 411.91 552.20 - 0 0 NIGERIA ENERYGY SECTOR FUND ROYAL EXCHANGE PLC. 1,749.43 0.34 - 0 0 3,312.39 103.20 - 0 0 SIM CAPITAL ALLIANCE VALUE FUND STANBIC IBTC HOLDINGS PLC 463,280.37 46.10 - 36 1,463,743 UNITED CAPITAL PLC 18,000.00 3.00 -1.67 68 1,411,014 232 5,704,780 1,721 191,076,254 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 1,492.32 0.42 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 0 0 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 9,000.00 6.00 -3.85 14 13,395,652 FIDSON HEALTHCARE PLC GLAXO SMITHKLINE CONSUMER NIG. PLC. 22,960.83 19.20 - 23 86,419 MAY & BAKER NIGERIA PLC. 2,597.00 2.65 - 32 491,141 1,139.49 0.66 - 6 6,120 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 477.00 2.20 - 0 0 PHARMA-DEKO PLC. 75 13,979,332 75 13,979,332 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 6 27,000 6 27,000 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 4 190 NCR (NIGERIA) PLC. 680.40 6.30 - 5 358 435.56 0.88 - 5 25,100 TRIPPLE GEE AND COMPANY PLC. 14 25,648 PROCESSING SYSTEMS CHAMS PLC 1,784.50 0.38 - 1 100 E-TRANZACT INTERNATIONAL PLC 19,110.00 4.55 - 0 0 1 100 21 52,748 BUILDING MATERIALS BERGER PAINTS PLC 2,608.41 9.00 - 7 12,859 25,760.00 36.80 - 5 21,390 CAP PLC CEMENT CO. OF NORTH.NIG. PLC 35,124.14 27.95 4.88 46 370,482 928.56 0.44 4.76 4 121,300 FIRST ALUMINIUM NIGERIA PLC MEYER PLC. 361.24 0.68 - 1 100 PAINTS AND COATINGS MANUFACTURES PLC 467.82 0.59 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,626.50 2.05 - 2 9,901 PREMIER PAINTS PLC. 1,279.20 10.40 - 0 0 65 536,032 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,641.98 3.00 - 17 369,883 17 369,883 PACKAGING/CONTAINERS BETA GLASS PLC. 43,672.55 87.35 - 5 200 GREIF NIGERIA PLC 388.02 9.10 - 2 20,790 7 20,990 89 926,905 CHEMICALS B.O.C. GASES PLC. 1,927.21 4.63 - 4 81,213 4 81,213 METALS ALUMINIUM EXTRUSION IND. PLC. 2,023.60 9.20 - 1 100 1 100 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 2 10,600 2 10,600 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 77.00 0.35 - 0 0 0 0 7 91,913 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,377.79 0.22 4.76 35 3,969,286 35 3,969,286 INTEGRATED OIL AND GAS SERVICES OANDO PLC 83,290.46 6.70 -1.47 112 2,837,927 112 2,837,927 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 59,317.92 164.50 - 28 24,337 CONOIL PLC 22,067.68 31.80 - 29 24,797 ETERNA PLC. 8,255.24 6.33 4.98 19 540,400 FORTE OIL PLC. 45,782.21 35.15 -5.00 103 760,346 MRS OIL NIGERIA PLC. 8,699.11 34.25 - 23 62,339 TOTAL NIGERIA PLC. 68,481.55 201.70 -4.86 28 75,914 230 1,488,133 377 8,295,346 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 20,866.39 2.14 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 564.65 0.48 - 3 1,600 3 1,600 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,536.98 6.00 - 0 0 TRANS-NATIONWIDE EXPRESS PLC. 384.45 0.82 - 2 52,400 2 52,400 HOSPITALITY TANTALIZERS PLC 1,156.19 0.36 - 1 100 1 100 HOTELS/LODGING CAPITAL HOTEL PLC 4,878.66 3.15 - 2 200 IKEJA HOTEL PLC 5,217.78 2.51 - 34 360,443 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 1 100 TRANSCORP HOTELS PLC 56,623.01 7.45 - 2 268 39 361,011 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 5,760.00 0.48 - 2 200 2 200 PRINTING/PUBLISHING ACADEMY PRESS PLC. 302.40 0.50 - 0 0 LEARN AFRICA PLC 1,064.60 1.38 - 2 3,892 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0

Monday 04 June 2018

C002D5556

BUSINESS DAY

A17

FINANCIAL TIMES Bayer announces €6bn cash call to finance Monsanto takeover

Merkel sets out views on eurozone reform

Page A18

Page A19

World Business Newspaper

US pledges total North Korean de-nuclearisation

Mattis says sanction relief will be contingent on verification KATHRIN HILLE AND BRYAN HARRIS

he US has pledged it will insist North Korea gives up all its nuclear capabilities and is subject to strict verification before sanctions are lifted, as it attempts to allay concerns that President Donald Trump could settle for a quick compromise deal at his summit with North Korean leader Kim Jong Un on June 12. “We will continue to implement all UN Security Council resolutions on North Korea,” Jim Mattis, US defence secretary, said after a meeting with his Japanese and South Korean colleagues in Singapore on Sunday. “North Korea will receive relief only when it demonstrates verifiable and irreversible steps to de-nuclearisation.” Mr Mattis’s remarks come as diplomats and military officials openly question whether the goal of “complete, verifiable, irreversible de-nuclearisation” of the Korean peninsula, laid down by the UN Security Council and known under the acronym CVID, can ever be achieved. At the Shangri-La Dialogue, a security conference in Singapore, the defence ministers of South Korea and Japan sparred over the degree of pressure required in negotiations with Pyongyang. “Japan, Korea and the US continue to agree that pressure needs to be applied on North Korea,” Itsunori Onodera, Japan’s minister of defence, said after his meeting with Mr Mattis and South Korean defence minister Song Young-moo. However, the joint statement after the trilateral talks did not mention pressure. A day earlier, Mr Onodera had urged the US not to reward Pyongyang “just for agreeing to talk at all”. In contrast, Mr Song cautioned negotiators not to repeat past mistakes by focusing on disagreement and preconditions which might prevent progress. South Korea’s preference for a phased approach has heightened alarm in

Tokyo. Japanese officials were already concerned after Mr Trump, announcing on Friday that the meeting with Mr Kim was back on, said that he would no longer use “maximum pressure” on Pyongyang, suggesting Washington had shifted to the softer, more diplomatic approach favoured by Seoul. “Japan has been sidelined in this,” said a Chinese military official at the Singapore conference. “Their hardline position, driven by narrow focus only on their own fears and interests, had started to impede the way forward other involved countries could agree upon.” Beyond the question of negotiating tactics, foreign policy officials and analysts said the very goal of CVID was unclear and even questionable. “It will have to be CVID-minus, they will have to acknowledge that at some point,” said Mark Fitzpatrick, an executive director and expert on the North Korea nuclear issue at the International Institute for Strategic Studies, the security think-tank that organises the Shangri-La Dialogue. Japan has pushed for a strict and farreaching definition of the de-nuclearisation goal, arguing that it should cover all delivery vehicles including short-range missiles — a position diplomats and security experts called unrealistic. A South Korean foreign policy official said: “We are talking about a long, long path ahead. Maybe eight years, 10 years, 15 years. We cannot put such maximalist demands on the table now.” Only after the summit would early signals emerge as to how concrete the goal of de-nuclearisation might be worded in follow-up negotiations, he added. “But right now, we have our eyes on whether the summit will happen next week at all. We may well see another rollercoaster ride before that.” As expectations over the Trump-Kim summit grow, North Korean state media on Sunday reported that Syrian leader Bashar al-Assad would travel to Pyongyang to express support for the regime.

US-China $100bn trade war nears as talks end without deal Fruitless negotiations in Beijing bring clash over tariffs a step closer TOM MITCHELL

he world’s two largest economies remained on track to commence a $100bn trade war as early as this month, after a third round of China-US trade negotiations ended in Beijing on Sunday without a breakthrough. Last week US president Donald Trump said he would move to implement previously threatened tariffs on $50bn worth of Chinese industrial exports “shortly” after June 15, which Beijing has promised to reciprocate. US commerce secretary Wilbur Ross and vice premier Liu He did not issue a joint statement after they

wrapped up two days of discussions. The previous round of talks, held in Washington in mid-May, ended with only a vague promise by Chinese officials to “substantially” reduce their country’s trade surplus with the US. In a brief statement, the official Xinhua news agency said Mr Ross and Mr Liu had made “concrete progress” without elaborating. But Xinhua also warned that any move by the Trump administration to impose punitive tariffs would derail the negotiations, which are expected to continue through the summer. The US delegation, which did not Continues on page A18

Banks and brokers suffer ‘dramatic’ fall in commissions Asset managers cut fees for share trading after introduction of Europe’s Mifid II rules

ATTRACTA MOONEY AND HANNAH

nvestment banks and brokers across Europe have suffered a “dramatic” fall in the fees asset managers pay them to buy and sell shares in a sign of how the recently introduced Mifid II rules have shaken up markets. According to research from financial technology company ITG, which looked at the trades of 172 asset managers globally, the commissions paid to brokers dropped 28 per cent in the UK during the first quarter compared with the same quarter in 2017, while the rest of Europe fell 30 per cent. The figures will be welcomed by investors, who should see their cost of investing come down. But the fall in commissions is a blow for investment banks and brokers, whose operating model has been upended by the introduction of Europe’s Markets in Financial Instruments Directive, or Mifid II. Under Mifid II asset managers had to end the long-running practice of

bundling together trading and research, a move that has forced investment banks and brokers to reassess the economic merits of their research and trading offerings. Andre Nogueira, a director of trading analytics at ITG, said commission payments were expected to fall on the back of Mifid II but the “magnitude” of the decrease was surprising. “It is good news. At the end of the day, pricing in terms of commissions is a lot more transparent now and you really know what you are paying for. [It is] hopefully good news for the end customer,” he said. Steven Fine, chief executive of broker Peel Hunt, said his company had seen a small rise in commissions year on year. But he added: “Most others are hurting.” According to ITG data, UK commissions dropped from 8 basis points in the first quarter of 2017 to 5.8bp a year later. In the rest of Europe, excluding the UK, commissions fell from 7.4bp to 5.2bp. “Every basis point counts,” Mr

Nogueira said. “Every basis point that can be preserved and paid to the end investor is a win.” He said brokers would come under increased pressure in the wake of Mifid II, suggesting they will have to do more trades to make up for lost revenue. Ross Mitchinson, co-chief executive of broker Numis Securities, said the company’s blended commission rate had fallen so far this year. But he added that Numis had invested in new trading roles, allowing it to win more small and mid-cap business. “This seems to be contrary to our big bank competitors who have generally reduced headcount within trading [and] sales trading and instead invested in technology around dark pools of liquidity and algorithmic trading solutions,” he said. The ITG research showed the fall in commission was consistently high across all European countries examined, while globally there was a much smaller fall.

UniCredit pushes for merger with SocGen No formal approach as Italian lender sets out to create cross-border European bank PATRICK JENKINS, RACHEL SANDERSON AND DAVID

taly’s UniCredit is plotting to merge with French rival Société Générale in a bold move that would see two of Europe’s big banks join forces, leading the way for an expected round of banking mergers on the continent. Jean-Pierre Mustier, Unicredit’s French chief executive, has been pioneering the idea for several months, according to people close to the situation. They said no formal approach has been made but SocGen directors have also been studying the possibility of a combination. Senior figures on both sides stressed planning was at an early stage and Italy’s volatile political situation had pushed back the timetable for a deal from the original plan of 18 months. Mr Mustier considers SocGen, whose investment bank he once ran, an ideal partner for the Italian lender, buttressing its investment

banking and eastern European operations. For SocGen, one of the main benefits would be gaining a leading position in Italy and Germany, both in retail and corporate banking. But any UniCredit-SocGen deal would be fraught with difficulty. Aside from Italy’s political turbulence — and hostility to foreigners owning or running Italian businesses — regulators may be unnerved by the combination of two lenders already deemed systemically important. A merger between the two has been considered by SocGen on several occasions over the past 15 years and in recent months by senior executives. However, on Sunday the bank denied “any board discussion regarding a potential merger with UniCredit”. UniCredit declined to comment. Europe’s banks are under increasing pressure to bulk up, due to their relative decline compared with booming US rivals. The Financial Times reported last month that

members of Barclays’ board had discussed a plan to combine with UK rival Standard Chartered. The European Central Bank has signalled it would like to see cross-border deals as part of efforts to champion the pan-eurozone banking union. Mr Mustier has been outspoken on the topic. At the IIF Brussels conference last month he said the bloc needed bigger, pan-European banks to fund credit demand and equity financing. According to senior financiers, Mr Mustier’s focus on SocGen was evident as far back as the Italian bank’s vital €14bn capital increase last year. During the fundraising he told staff he wanted Unicredit’s market capitalisation to surpass SocGen’s, according to people directly involved in the talks. At Friday’s close, UniCredit was valued at nearly €33bn compared with SocGen’s €32bn. The capital increase will have quashed opposition to any cross-border deals within the Italian banking industry.

A18

BUSINESS DAY

C002D5556

Monday 04 June 2018

NATIONAL

Trump probably has power to pardon himself, says lawyer President’s legal team asserts broad executive authority in dealings with special counsel KADHIM SHUBBER

onald Trump’s personal lawyer on the Russia investigation said on Sunday that the president probably has the authority to pardon himself, as his legal team asserts broad executive powers in its negotiations with Robert Mueller, special counsel.

Rudy Giuliani, the former New York City mayor now representing Mr Trump, said that, while the president has no plans to do so, he “probably does” have the ability to issue a pardon to himself. “He has no intention of pardoning himself, but that doesn’t say he can’t,” said Mr Giuliani on ABC’s This

Week. He conceded that “the political ramifications of that would be tough”. The comments are the latest assertion of the president’s executive power by his legal team. They argue Mr Trump could not have obstructed the Russia investigation because he has the constitutional right to exercise authority over the Department of

Justice. They also claim Mr Mueller cannot compel him to give testimony with a grand jury subpoena. The legal manoeuvrings are in addition to a continuing public relations campaign against the special counsel’s probe into Russian meddling in the 2016 election, and whether the president attempted to obstruct the investigation.

Wells Fargo eyes Paris and Dublin as post-Brexit hubs

US-China $100bn trade war nears... Continued from page A17 comment after the talks concluded, was due to fly out of the Chinese capital on Sunday evening. Two people briefed on the discussions said there was little progress on agriculture and larger structural trade and investment issues, as the two sides concentrated more on potential energy deals. “The focus was exclusively on narrowing the trade deficit, with a particular focus on energy exports,” one of the people said. “The focus was not what the US business community would like to see.” Speaking at a G7 finance leaders’ meeting in Canada on Saturday, Treasury secretary Steven Mnuchin said that Mr Ross’s discussions in Beijing were not just focused on deficit reduction, but also contentious Chinese trade and industrial policies that US businesses believe hinder their operations in the country. “This isn’t just about [China] buying more [US] goods, this is about structural changes,” Reuters reported Mr Mnuchin as saying. “If there are structural changes that allow our companies to compete fairly, by definition that will deal with the trade deficit alone.” In preparatory talks last week, US officials hoped that scaling back technical barriers to trade would double annual American agricultural exports to China to about $40bn. Chinese customs officials, for example, halt all American chicken imports whenever there is an avian flu case in the US. Other nations typically just suspend exports from the affected state and its immediate neighbours. Mr Trump’s renewed tariff threat last week surprised and angered Chinese officials, especially after it appeared to contradict Mr Mnuchin’s assurances a fortnight earlier that the two sides were “putting the trade war on hold”. “The Chinese are asking that the Trump administration publicly announce that they will not impose tariffs, and that’s a non-starter,” said a second person briefed on the discussions. Despite Beijing’s anger over Mr Trump’s renewed threat, in recent days the Chinese government has slashed tariffs on a range of consumer imports and also promised to relax foreign investment restrictions in sectors including energy and transport by June 30. The Chinese foreign ministry on Friday said that “our door for negotiations is always open”. During Mr Trump’s state visit to Beijing in November, China’s sovereign wealth fund and state-owned Sinopec signed a provisional agreement to participate in and source gas from a $43bn Alaskan LNG project. The target date for a finalised agree-

In recent weeks, as part of their criticisms of Mr Mueller’s probe, Mr Trump and his supporters have pointed to the FBI’s alleged use in 2016 of an informant who met with members of the Trump campaign. The president has called the issue “Spygate”, but Trey Gowdy, a Republican member of the house intelligence committee, has defended the FBI’s actions.

Latest sign of financial fragmentation across EU after UK leaves bloc

ALISTAIR GRAY, DAVID KEOHANE AND LAURA NOONAN

Angela Merkel, at Aachen last month with Emmanuel and Brigitte Macron, does not want to be seen as a roadblock to reform but her proposals are less ambitious than those of the French president © AFP

Merkel sets out views on eurozone reform German chancellor’s ideas fall far short of Macron’s ambitious plans GUY CHAZAN AND JIM BRUNSDEN

ngela Merkel has set out her views on eurozone reform in greater detail than ever before, in the clearest response yet from Berlin to Emmanuel Macron’s wideranging proposals on overhauling the single currency area. The ideas, presented in an interview with the Frankfurter Allgemeine Sonntagszeitung, underscore Ms Merkel’s reluctance to be seen as a roadblock to reform and opens up the possibility that this month’s EU summit could yield a deal that goes far beyond the modest proposals tabled so far, most of which revolve around strengthening banking regulation. But her ideas still fall far short of the French president’s ambitious plans for the eurozone. Ms Merkel spelled out her vision of a future European Monetary Fund and an investment budget designed to address “structural weaknesses” in euro area countries. But her concept of an EMF cleaves closely to the traditional German view that it should be a tool to strengthen

budgetary discipline, rather than the new, bigger instrument for fighting future financial crises in the eurozone proposed by Mr Macron. She said that the EMF should play a role in surveying national public finances,and that its long-term loans would be contingent on “wideranging structural reforms” and only awarded “when the whole eurozone is in danger”. It would also have “appropriate instruments that could be used when necessary to restore [a eurozone member’s debt sustainability]”, in an apparent nod to the possibility of sovereign bond restructuring. That could be hard for the French to swallow. Paris has resisted any move to include automatic debt restructuring as a condition of any loan issued by the ESM, the bailout fund that would form the basis for the future EMF. It is wary more generally of attempts by Germany and the Netherlands to push the issue of creditor writedowns. Italy would also reject such an idea, said Lucas Guttenberg, senior research fellow at the Delors Institute in Berlin. “It could change the market perception of how safe

sovereign bonds are,” he said. “It’s a very touchy issue.” Ms Merkel said the fund should also be able to disburse short-term credits, say with a five-year maturity. “In this way we could come to the aid of countries that get into difficulty due to external circumstances,” she added. But she rejected proposals from the European Commission to bring the EMF into EU law, which would weaken national vetoes on lending decisions. She insisted that it remain an intergovernmental body — an important issue for her CDU party. Similarly, her idea for a eurozone investment budget falls far short of Mr Macron’s concept of a fiscal capacity worth several percentage points of eurozone GDP. She said it should be in the “low double digits of billions” and be introduced gradually. It would be used to address “structural weaknesses in countries who are not in serious trouble” but are lagging behind in areas such as artificial intelligence. Ms Merkel also said that member states needed to “work out how to establish parliamentary control over how such funds are spent”.

Migrants risk family separations to enter US Central Americans fleeing gang violence say they have no other choice JUDE WEBBER MEXICO, AND COURTNEY WEAVER

ntil last October, Laura and her husband Roberto had never thought of leaving El Salvador for the US. But then they stumbled upon a gang murder — and felt they had no choice. After they witnessed the killing of a teenage schoolboy, gang members appeared at their home, beat up Roberto and told the family to leave. The next day the family fled El Salvador, beginning an odyssey that has landed Laura, 27, and two of her children — a son aged five, and a daughter, 20 months — in

a migrant shelter thousands of miles away in Tijuana, Mexico. Roberto and their other son, aged eight, made their way into the US separately. “Going to the US was never my dream,” Laura said. “I have family there who could have asked for a visa for me, but I wanted to stay in my country. But one way or the other we had to leave the country. We couldn’t stay there.” Laura hopes to join the rest of her family soon, but fears that she will be separated from her children at the border. “If they separate us, it’ll be hard for me,” she said. “I’ve come fleeing from one problem and I’d find myself in another . . . But I know it’ll

be worth it.” Laura is one of many hit by the double blow of rising violence in El Salvador, Guatemala and Honduras and a US crackdown on immigration. In the US, the already tense debate on border security has ratcheted up, as Republicans and Democrats attempt to capitalise on the issue ahead of November’s midterm elections. Donald Trump’s administration in May formalised a policy to bring criminal charges against any migrant crossing the border illegally — meaning parents are often sent to jail while their children are taken into care.

ells Fargo is eyeing a plan to use both Paris and Dublin as its post-Brexit hubs in Europe, becoming the latest global bank to prepare to shift some operations from London. The bank’s European business that could no longer be done in the UK after the country leaves the EU would be conducted in both the French and Irish capitals, according to people familiar with the matter. No final decision had been taken by Wells, the third-biggest US bank by assets, the people said. The company as well as the regulators Banque de France and Central Bank of Ireland all declined to comment. If it opts against a single alternative base, Wells would adopt a similar approach as several other banks. Goldman Sachs is dividing the Brexit spoils between Paris and Frankfurt while Bank of America Merrill Lynch chose Paris and Dublin. Such moves reinforce the view that financial services previously based in London will fragment across different European cities, rather than transfer to a sole centre. Amsterdam, Brussels and Luxembourg are among the other locations that have lured business from the UK. The moves are being prepared as Brexit threatens to strip financial groups of the “passporting” rights that allow them to operate seamlessly across the EU. Dublin is already Wells’ EU base for commercial lending, although it does not handle the bank’s securities business, such as trading and capital markets. The UK’s Press Association reported last month that Wells was considering enlarging its operation in Dublin as a Brexit contingency plan. The emergence of Paris as an additional alternative candidate for Wells is the latest boost for the French capital, where officials have talked up the city as a capital markets and corporate centre. JPMorgan Chase and HSBC are among several banks to announce plans to move parts of their trading businesses to Paris. JPMorgan is also enlarging its business in Dublin, along with Barclays, Morgan Stanley and others. Wells executives are said to be weighing up a range of factors, including regulation and cost. At present, Wells has only a small presence in both Dublin, where it employs only about 170 people, and Paris, where it has about 30. It is not clear how many jobs would be transferred from London, where the bank has a 1,200-strong workforce.

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Bayer announces €6bn cash call to finance Monsanto takeover Move brings closer creation of world’s largest maker of seeds and pesticides GUY CHAZAN

ayer, the pharmaceuticals and chemicals group, has announced a €6bn capital increase to finance its $66bn takeover of Monsanto, which cleared its last big regulatory hurdle last week. The deal is set to create the world’s largest maker of seeds and pesticides by far. The combined company will have sales of about €20bn, based on 2017 figures. The cash call is smaller than that for which Bayer initially planned because Monsanto cut its debt as the various antitrust investigations into the deal proceeded. Also, Bayer made more from selling down its stake in plastics maker Covestro than initially envisaged. Bayer announced on Sunday evening that it would issue nearly 75m new shares, priced at €81 each, to existing investors — who will be able to acquire two new shares for every 23 Bayer shares they own — generating gross proceeds of €6bn. Werner Baumann, chief executive, called it a “significant component of the financing for the acquisition of Monsanto and the final equity measure associated with this undertaking”. The announcement came five days after the US Department of Justice approved the Monsanto deal, removing the last remaining significant obstacle to the largest outbound German takeover since Daimler-Benz acquired Chrysler for $38.6bn in 1998. Bayer was obliged to make $9bn worth of divestments to BASF, the

German chemicals firm, as a condition of DoJ approval, which Makan Delrahim, US assistant attorneygeneral, called the “largest merger divestiture ever required by the United States”. The German company will have to divest businesses in which it and Monsanto compete directly, including its cotton, canola, soyabean and vegetable seed unit, along with its Liberty herbicide division, which competes with Monsanto’s Roundup. Bayer will also have to sell its seed treatment business to allay vertical competition concerns, as well as some intellectual property and “pipeline” research and development projects. Earlier this year the European Commission also gave the Monsanto acquisition the green light, after concluding that there would be “effective competition and innovation in seeds, pesticides and digital agriculture after this merger”. After the DoJ announcement, Mr Baumann said Bayer had now obtained “almost all clearances which are conditions for closing the transaction” and that it expected to receive all remaining approvals for the deal “very shortly”. The statement released by Bayer on Sunday evening said that senior bond issuances were also planned, with a total volume of up to €20bn. It said it would use the capital increase and the bond issues to repay the syndicated loan it took out to acquire Monsanto. The subscription period will start next Wednesday and end on June 19, and trading in the shares will start on the German stock exchange on June 22.

Blockchain start-up raises more than $4bn Auction shows strength of investor demand for cryptocurrencies NICOLE BULLOCK

blockchain start-up has raised more than $4bn in a year-long auction, topping nearly all initial public offerings this year in the latest testament to demand for ways to participate in cryptocurrency. Through a so-called initial coin offering, block.one, a Cayman Islands-based company, offered EOS tokens in return for ether, a rival cryptocurrency. The offering brought in the equivalent of $4.15bn based on Friday’s exchange rates, according to blockchain advisory New Alchemy, which uses multiple services that track transactions on the ethereum blockchain. Block. one declined to provide an official proceeds amount. At that size, block.one’s ICO surpasses the value of all but two IPOs sold worldwide in 2018, according to Dealogic, and ranks as the largest ICO ever, New Alchemy said. But unlike an IPO, a coin offering does not give the buyer a stake in the operation. Block.one is developing software that would power a blockchain, but none has yet been launched. ICO offerings have surged in the last few years, raising more than $11bn so far this year, up from

$6.4bn for 2017 and $88m in 2016, New Alchemy data show. Retail investors, chasing speculative returns associated with the sharp gains last year in bitcoin and other digital currencies, have piled into a wide variety of such deals, some backed by celebrities such as Paris Hilton. The industry has caught the eye of scammers and, in turn, regulators who have been cracking down. The Securities and Exchange Commission even set up a mock website with all the trappings of a typical ICO — a White Paper on the coins and an auction countdown clock — to warn the public of the risks. Matt Hougan, a veteran of the exchange traded funds industry who earlier this year joined Bitwise Asset Management, a crypto fund manager, said that while some buyers of the block.one ICO were following hopes of crypto returns, others could be “ethereum whales” who want to lighten up on their exposure without cashing out into fiat currency. “The crypto ecosystem is still in its early stage of development,” he said “Like any early stage tech, the long-term winners are not guaranteed. Sometimes Amazon wins, but sometime MySpace loses out to Facebook. You are better off with diversified exposure.”

Werner Baumann, chief executive of Bayer, said that the arrangement was a ‘significant component of the financing for the acquisition of Monsanto’ © Bloomberg

Google to disclose ethical framework on use of AI Industry leader faces tough questions over how it already applies technology RICHARD WATERS

n attempt by Google to put ethical guardrails around its future use of artificial intelligence is set to raise uncomfortable questions about how it already applies the technology, according to AI experts. The internet search company — widely regarded as having the most advanced AI — is planning to publish an ethical framework to guide its use of the technology this week. The move follows a decision not to renew a drone contract with the US Department of Defense. The Pentagon has been using Google’s vision technology to help drones interpret objects on the ground, prompting fierce opposition inside the company to its co-operation with the military. However, Google already uses AI in other ways that have drawn criticism, leading experts in the field and consumer activists to call on it to set far more stringent ethi-

cal guidelines that go well beyond not working with the military. Stuart Russell, a professor of AI at the University of California, Berkeley, pointed to the company’s image search feature as an example of a widely used service that perpetuates preconceptions about the world based on the data in Google’s search index. For instance, a search for “CEOs” returns almost all white faces, he said. “Google has a particular responsibility in this area because the output of its algorithms is so pervasive in the online world,” he said. “They have to think about the output of their algorithms as a kind of ‘speech act’ that has an effect on the world, and to work out how to make that effect beneficial.” Some other attempts to apply advanced AI to everyday services have drawn an even stronger reaction. Last month, the company caused a stir when it demonstrated a human-sounding voice

system making a phone call to book table at a restaurant without letting on that it was a machine. Any computer that impersonates a human — or creates things like images and audio that appear to come from a human — should be required to “disclose upfront that it is AI,” said Oren Etzioni, head of the Allen Institute for AI. He also suggested that Google’s attempt to draw a line just around AI was inadequate: “The desire for ethical use of all technology . . . is at the heart of this issue.” Google and its parent company, Alphabet, have also faced criticism for a lack of openness over how they apply AI, leading to calls for the new set of ethical rules to include far greater transparency. John Simpson of Consumer Watchdog, a consumer advocacy group, said that Alphabet’s driverless car unit, Waymo, has not been open about how its AI has been taught to behave when an accident is imminent and lives are at stake.

India’s Paytm comes under pressure from Silicon Valley rivals Leading financial technology start-up faces growing competition from WhatsApp and Google SIMON MUNDY

he Twitter feed of Vijay Shekhar Sharma, India’s youngest billionaire, is one of the most effervescent in corporate Asia, liberally peppered with emoticons and selfies of the beaming 39-year-old. But this year a darker note has occasionally appeared among the tweets as the founder of Paytm — the Indian financial technology start-up valued at about $10bn — has hit out at foreign tech groups, including Facebook and Google owner Alphabet, which are expanding into the company’s core field of digital payments. India, Mr Sharma wrote in one tweet, “must not let them colonise our internet. Their ambitions and intentions are clear in last few weeks!” Mr Sharma was inspired by Alibaba founder Jack Ma’s success in online shopping and financial services. His overtures to Mr Ma led to major investments in Paytm by the Chinese company and Japanese tech group SoftBank, Alibaba’s own biggest shareholder. But while Alibaba is China’s leader in mobile payments and ecom-

merce, Paytm’s online marketplace lags behind Indian market leaders Flipkart and Amazon. And although Paytm is still India’s largest mobile payments service, it is confronted by US rivals using payments to attack a digital market with huge projected long-term growth. In one of many bullish forecasts by analysts, Morgan Stanley predicts India’s annual digital payment flows will reach $1tn within a decade. The burgeoning sector is providing an arena for Facebook, Google and Amazon to develop digital payment technology. The tough competition facing Paytm underscores the challenges for India’s homegrown tech companies as the country has chosen to keep its digital sector open to the global groups. “Paytm is under pressure,” said Piyush Sharma, an analyst at GlobalData. “Competition in digital payments is now very high.” When Prime Minister Narendra Modi removed 86 per cent of India’s cash from circulation in November 2016, Paytm was one of the big winners. The company added 20m users in just five weeks after the shock an-

nouncement. But just a month later, Mr Modi was urging citizens to use a groundbreaking payments system that presented a threat to Paytm. Launched in August 2016, the Unified Payments Interface enables users to send money directly from one bank account to another through any compatible mobile app — the first system of its kind in the world. Created by National Payments Corporation of India, a joint venture among Indian banks, the technology dramatically lowered the barriers to entry for payments app developers. It also removed the need for consumers to keep money in a separate virtual wallet, as with Paytm’s main service or with Alipay and WeChat Pay in China. Google was the first big foreign company to jump on the UPI platform, launching its payments app Tez in September. It claims to have amassed 16m users, helping rapid growth in UPI transactions which reached $2.8bn in February — compared with $534m using Paytm’s virtual wallet and other prepaid instruments.

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Opinion Buhari insults Nigerians when he praises Abacha GLOBAL PERSPECTIVES

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

resident Buhari is a man who speaks his mind. He has an enormous capacity for shooting from the hip. As many of his off-the-cuff comments, such as calling Nigerian youths “lazy”, have shown, he is unfiltered and relishes provocation. He is much like President Trump, who is well known for “speaking his mind”, and for causing offence. But words are powerful, and presidents should be circumspect and sensitive to sensibilities across their nation. Sadly, President Buhari often fails this test. But he fails it profoundly with his frequent eulogising of the late despot and kleptomaniac, General Sani Abacha. Recently, when addressing his supporters, President Buhari said “I don’t care what opinion people have of Abacha”, saying that the late dictator “loved Nigeria”. But how? Well, because he set up the Petroleum Trust Fund (PTF), which he appointed Buhari to lead, and through which he “developed” Nigeria’s infrastructure i.e. by building roads. This was not the first time that Buhari would publicly endorse and panegyrise Abacha. In 2008, on the tenth anniversary of Abacha’s death, Buhari said he “never stole” Nigeria’s money. All of this is sad and odious. It’s so for two reasons. First, it is extremely offensive for President Buhari to ignore Abacha’s heinous crimes, his murderous repression, and elevate him to national heroship. Surely, Hitler built roads, hospitals and schools, but woe betide any German president or chancellor who says: “I don’t care about people’s opinion of Hitler, he loved this country, he built roads”. Abacha was Nigeria’s Mini Hitler – fascist and despotic. Even if he built roads – not with his own money, by the way, but with the nation’s resources – he terrorised this country, destroyed its soul and traumatised its people. The infrastructure development, if any, paled into insignificance beside the enormous damage he did to Nigeria’s polity and national psyche. Thus, by saying “I don’t care about” people’s opinion of Abacha, President Buhari gratuitously insulted this country and hurt the sensibilities of its people. Second, by saying that Abacha “never stole”, Buhari does irreparable damage to his anti-graft reputation. A leader who is seriously fighting corruption would not spare even his own family, but

Buhari has a long history of double standards, bias and selectivity, in his anti-corruption crusade. He often sees no evil, hears no evil and speaks no evil when corruption is detected in his camp, but huffs and puffs, threatening fire and brimstone, when corruption is suspected in the camp of the opponents. Recently, his government published a list of corrupt politicians in Nigeria, but they were all from the opposition People’s Democratic Party (PDP); none from his own party, All Progressives Congress (APC), even though many former PDP leaders accused of corruption are now in APC. It was a blatant trivialisation of corruption. But Buhari took that trivialisation from the ridiculous to the absurd when he said that Abacha “never stole”. Truth is, if Nigeria has a hall of infamy, and it should, Abacha’s name should be ingrafted in it. The evidence against the late despot is so overwhelming that no self-respecting individual, let alone the president of this country, should try to exonerate or rehabilitate him. Of course, Abacha’s kleptomania, his despotism and, indeed, his wreckage of the economy are matters of public knowledge. But as President Buhari and other Abacha apologists have engaged in Abachaic denial or revisionism, let us briefly remind ourselves of some of the late dictator’s atrocities. Take first his plundering of the nation’s resources. In 2004, Abacha was listed as the 4th most corrupt leader in

about US$480 million Abacha’s stolen assets were kept. A US Assistant Attorney General said in 2014 that “rather than serve his country, General Abacha used his public office in Nigeria to loot millions of dollars, engaging in brazen acts of kleptocracy”. In her book, Reforming the Unreformable, the former finance minister Dr Ngozi Okonjo-Iweala detailed with an impressive level of granularity how Abacha looted and laundered money out of Nigeria through the central bank and contract inflation. She said that in the five years of his rule, Abacha, his family and their associates looted and sent abroad “an estimated $3 billion to $5 billion of Nigeria’s public assets”. These sums, she added, “amounted to 2.6 to 4.3% of the 2006 GDP, and 20.6 to 34.4% of the 2006 federal budget”. She went on: “At the upper end of the range, the amount stolen is larger than the 2006 education and health federal budgets combined”. Yet, this was the same person that President Buhari said “loved Nigeria”. It beggars belief! But what about Abacha’s despotism? Well, he was also among the world’s most barbaric despots. General Abacha became head of state in November 1993 following General Babangida’s iniquitous annulment of the June 12, 1993 presidential election, and after easing out the feeble Shonekan-led interim government. Once he took over, Abacha used brutal force to entrench himself in power.

Buhari and Abacha were each other’s alter ego: taciturn, close-minded and extremely self-willed. As a military dictator, Buhari was almost equally brutal, and Abacha’s dirigiste economic policies mimicked Buhari’s own in the mid-1980s history. Even western governments, which are normally silent about foreign leaders hiding stolen money in their countries, could not ignore the damning evidence against Abacha. The Swiss government, having accepted that Abacha ran a criminal organisation that siphoned money out of Nigeria, agreed to repatriate about US$505 million of his frozen money to Nigeria. The American government, in fact, created what it called the “Kleptocracy Asset Recovery Initiative”, where

He forced several prominent Nigerians to flee the country, jailed or detained many of those who stayed at home, including the winner of the June 12 election, MKO Abiola, who later died in prison, and sent hired assassins to kill many pro-democracy activists. In his most brazen act of brutality, Abacha executed, in November 1995, Ken SaroWiwa and eight other Ogoni activists! Under his regime, Nigeria became a pariah state, ostracised by many other countries and ejected from the

Commonwealth. As a magazine publisher in London in the 1990s, I followed the June 12 saga and Abacha’s reign of terror closely. I remember interviewing Baroness Lynda Chalker, then Britain’s Overseas Development Minister, who said that the UK and the EU had stopped military assistance and other aid to Nigeria and that they would have no government-to-government contacts with Nigeria until Abacha returned the country to democratic rule. But Abacha had no such plan. Ironically, while he sent troops to restore democracy in Liberia and Sierra Leone, he brutally suppressed dissent at home. According to the Encyclopaedia Britannica, Abacha “assembled a personal security force of some 3000 men”. He wanted to be president for life. Well, he was. Except that it was a short life. He died in June 1998 at the age of 55! Amid all of this, Abacha wrecked the economy. When he took over in 1994, he introduced a massive programme of regulation and control, with pegged exchange and interest rates and other restrictions that created huge distortions and stifled the economy. Although his January 1995 budget was hailed for reversing most of the restrictions, the socalled “guided deregulation” that he introduced did not last. Following the killing of Saro-Wiwa in November 1995 and the attendant hostile international reactions, Abacha simply reverted to type. Meanwhile, massive disinvestments were taking place, as foreign firms pulled out of Nigeria in droves. The economy was in the doldrums; inflation was around 100%, budget deficit was 10% of GDP, unemployment skyrocketed, interest rate, even pegged, was 21%. Yet, for Buhari, Abacha was the best of Nigeria’s past leaders! It’s as if his stupendous kleptomania never happened; as if his reign of terror never happened; and as if he never wrecked the economy. Buhari is glorifying kleptomania and canonising terror, presumably because Abacha put him in charge of the PTF and he wants to defend a “legacy”. But, in truth, it’s more than that. Buhari and Abacha were each other’s alter ego: taciturn, close-minded and extremely self-willed. As a military dictator, Buhari was almost equally brutal, and Abacha’s dirigiste economic policies mimicked Buhari’s own in the mid-1980s. Little wonder, then, that Buhari is affectionate towards Abacha even in death. But Abacha’s rule was one of the darkest moments in Nigeria’s history. As president, Buhari shouldn’t be insulting Nigerians. But he is, with statements like “I don’t care what people think, Abacha loved Nigeria”. A key test in politics is “Whose side are you on?” By praising Abacha, Buhari shows he’s on the side of a fascist, a kleptomaniac! Sad!

fivethings for your new week

Fascinating business facts 2.3m

Is it already too late to listen to Martin Tallett, the consultant, who has more than four decades’ experience in oil refining. He presented research two years ago to the United Nations’ agency charged with setting rules for the maritime industry in which he warned oil markets would be strained if tough standards for shipping fuel were imposed from 2020. Today, Tallett says he’s more concerned by an unstoppable demand surge so great that by 2020 the world will need 2.3 million barrels more oil a day than was predicted when he did his previous research. That gap is about Germany’s daily consumption.

$79m South African prosecutors have filed a lawsuit aimed at recouping 1 billion rand ($79 million) in consultancy fees they say were unlawfully paid to McKinsey & Co. Inc. by the state power utility, after talks with the U.S. firm about voluntarily repaying the money stalled. The case is the latest twist in a series of scandals that saw billions of rand looted from state companies during Jacob Zuma’s nine-year tenure as president and has drawn in several international companies, a number of senior officials and politicians and business executives with close ties to Zuma.

75%

Goldman Sachs Group has shaken off its commodities woes, making more money in the sector in the first few months of this year than it did in all of 2017, according to people familiar with the matter. Bloomberg reports that in just four months, the bank’s net revenue in commodities surpassed its full-year performance in 2017, which had plunged to about $250 million to $300 million for the full year, the people said.

40%

Zimbabwe’s parliament has removed clauses that required foreign mining companies to list locally, according to an official record of parliament’s debates seen on Friday. The amendment to the bill also recognizes for the first time, small-scale miners, who produce more than 40 percent of Zimbabwe’s gold output . Minister Winston Chitando had last month promised to remove the requirements, which he said caused panic among foreign mining firms and worked against the government’s push to open Zimbabwe to foreign investors.

$3.52bn Ghana’s gold output rose to 2.805 million ounces in 2017, up 10.2 percent from the previous year, data from the Ghana Chamber of Mines showed on Friday. The growth reflected a general increase in output across most of the 12 mining firms operating in the West African country, the chamber said. Total gold revenues amounted to $3.52 billion in 2017, up from $3.25 billion the year before. Ghana is Africa’s second largest gold producer after South Africa.

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